The rare sale of a Francis Bacon painting depicting a full-figured female nude on a bed pushed sales at Christie’s Postwar and Contemporary Art auction this week to levels not seen since 2008.
When the hammer came down on the final lot, the auction house had pulled in £80.5m against expectations of between £56.7m and £84m and achieved its second highest earnings for a contemporary sale since they began in 1977.
The global economy may be struggling, but last year the auction houses Christie’s and Sotheby’s enjoyed strong revenues and are hoping that 2012 will continue the two-year bull run for art works at the top end of the market.
“There is a lot of cash around at the moment and not many places to put it. The financial crisis is not really having an effect on the super rich who are buying these works,” said Robert Read, head of art and private clients at specialist art insurer Hiscox.
Art experts say that growth at the top end of the market has been partly driven by a new wave of Asian billionaires, especially from China. Their investment helped drive Christie’s sales up 9 per cent in 2011 to a record £3.6bn.
Sotheby’s reports its results this month, but has said total auction sales rose 14.5 per cent in 2011, with contemporary art up 34 per cent.
Steven Murphy, chief executive of Christie’s, said growth had been driven by “collectors collecting more”, and “globalisation and the ease of connecting online pre-sale, which has exploded”.
After a sharp drop in interest following the 2008 crisis, global investors have turned back to art as a way to diversify portfolios and hedge against the negative effects of volatile equity and currency markets and high inflation.
In a survey of more than 70 bankers and investment managers by wealth management forum Family Bhive, art was identified as the asset class with the best chance of positive returns this year, ahead of alternative investment funds, soft commodities and property.
“The high level of uncertainty created by the eurozone crisis means that assets with intrinsic value are in increasing demand,” said Caroline Garnham, Family Bhive chief executive.
But rather than build up private collections, more investors are opting to buy into collective investment funds that provide returns by selling off individual pieces of art over a number of years.
Encouraged by record auction house sales, fund managers have started to compete more fiercely with private dealers for a stake in the market.
Many funds have linked up with wealth managers such as Santander and Citi Private Bank to provide access to clients whose interest in art is limited to the financial returns on offer.
Philip Hoffman, the former Christie’s finance director who set up the Fine Art Group of funds, said interest from emerging markets was still helping to drive demand.
“The Qatari government is dominating the market right now, as they purchase items for the country’s new museum, and we have Chinese fund managers approaching us to talk about including art in their portfolios,” he said.
“But we’ve also seen an increase in art [investment] from clients in countries such as Greece, Spain and Saudi Arabia, where investors are unsure how their local currency will hold up.”
The auction houses are now in the middle of an important fortnight of art sales. Francis Bacon’s portrait of “Henrietta Moraes” fetched £21.3m at Christie’s on Tuesday night. Its Impressionist and Modern auction last week pulled in £135m, beating its pre-sale target of £86.2m-£127.1m.
Helena Newman, chairman of Impressionist & Modern Art Europe at Sotheby’s Europe, said there had been strong bidding for surrealist and fauvist works. Sotheby’s auction of Impressionist and Modern Art this month reached £96m against pre-sale estimates of £94m-£135m.
Sotheby’s Contemporary Art evening auction on Wednesday fetched £50.6m, surpassing pre-sale expectations of £49.7m.
The top-selling lot was Gerhard Richter’s Abstraktes Bild which sold for £4.8m, exceeding its pre-sale estimate of £3m-£4m.
“Modern, Impressionist and post-Impressionist is where you are seeing the big prices at the moment. The focus is on the top end of the market,” said Mr Read.
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