Bubble hasn’t burst, but it is deflating fast

Art market puts a positive spin on a downbeat London fortnight

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The combined total for London’s February evening sales of Impressionist, Surreal, Modern, post-war and contemporary art came in below the auction houses’ pre-sale estimates. At £351.4m with premium, down from £597.3m the same time last year, the volume of sales also fell—by more than 40%.

But to say that the market crashed is an overstatement, as the auction houses and others in the trade were keen to point out. After Phillips’ below-par 20th-century and contemporary sale, Ed Dolman, the chairman of the firm, said: “This doesn’t feel like a crash; this is actually a more discerning market.” The art adviser Lisa Schiff said “no bubble is busting” and described the market correction as “healthy”. The rhetoric was similar after the Impressionist and Modern auctions. Thomas Seydoux, the former chairman of Impressionist and Modern art at Christie’s and now an art adviser, said: “If the volume of sales falls by 50%, does it mean the market has fallen 50%? Of course it doesn’t.”

On the whole, consignments were not as expensive as last year, which gave arguably undervalued artists such as David Hockney and Jean Dubuffet the chance to shine. Some sellers accepted lower returns—some even took losses. The houses battled hard to lower the reserves on many works, and there was a notable absence of guarantees, especially compared with last year’s glut. This is not the same overheated market of recent years, but one in which fresh and sensibly priced works can sell well. Auctions are, however, only one side of the market. Dealers say that their businesses are in rude health, although this is impossible to verify. “Private sales are doing very well,” says the London gallery owner Nick Maclean.

“Fresh” is king At the top end of the market, desirability is synonymous with freshness, and some key lots at the Impressionist, Modern and Surrealist sales had been seen fairly recently. At Sotheby’s, the Picasso cover lot, Tête de Femme (1935), sold for £16.7m (£18.9m with premium) this time around after fetching a much bigger £25.4m (with premium) when sold at Sotheby’s in 2013.

At Christie’s, the Surrealist cover lot, Max Ernst’s The Stolen Mirror (1941), made the highest price of the evening—£6.8m (£7.6m with premium)—but that was well down on its previous sale at Christie’s in New York for £10.3m (with premium) in 2011. “There is an economically irrational snobbism in the market against what is seen as unfresh,” says Olivier Camu, the deputy chairman of Impressionist and Modern at Christie’s.

By comparison, two works on the public market nine years ago gave better returns this time out. Egon Schiele’s large, early Self-Portrait with Spread Fingers (1909), sold for £6.4m (£7.2m with premium), fetching almost £2m more than when it last sold at Christie’s, in 2007. At Sotheby’s, Rodin’s lifetime bronze cast of Iris, Messagère des Dieux (1902-05), soared above its upper estimate to sell for £10.2m (£11.6m with premium), more than double what it fetched when it last came to market in 2007.

Giovanna Bertazzoni, the deputy chairman of Impressionist and Modern at Christie’s, said she was happy overall “because, all things considered, it was solid. The market at this level responded very well to our offer.”

Beating the export ban There has been speculation about whether planned German legislation, designed to prevent national treasures being sold abroad, is causing German collectors to sell their Expressionist works before the law is passed this spring. Ernst Ludwig Kirchner’s Bahnhof Königstein (1916), for example, from the Expressionist collection of Karl Hagermann, was on a long-term loan at the Städel Museum, Frankfurt, until last year; in February it sold above estimate at Christie’s for £2.1m hammer (£2.4m with premium).

The auction houses deny there is a noticeable link, but the dealer Richard Nagy disagrees: “Many works sold in the recent London auctions came out of Germany to beat the legislative curfew. Equally we have seen a reticence by German collectors to buy… works purchased outside Germany and imported there might someday be deemed German national treasures and refused an export licence.” Watch this space.

Expectations managed Christie’s and Sotheby’s both did well to offset some of the hits at the top end by securing low reserves on many less expensive works. Christie’s, for example, sold Picasso’s large Nature Morte (1937) for a £3.5m hammer price, below its £4m lower estimate, while Magritte’s Mesdemoiselles del l’Isle Adam (1947) sold for £1.7m against a lower estimate of £2m. Over at Sotheby’s, Fernand Léger’s Eléments Mécaniques (1919) managed to sell for £2.8m hammer against a lower estimate of £3m.

At Phillips’ 9 February sale, most of the Italian Modernist masters couldn’t quite hit their mark. Alberto Burri’s Legno (1959) should perhaps have done better given the recent buzz surrounding the artist’s retrospective at the Guggenheim, New York, but his oil and wood collage on canvas sold for £1.7m (£2m with premium, est £1.8m-£2.5m). The work was backed by a third-party guarantee and seemingly went to that underwriter.

Jussi Pylkkänen, Christie’s global president, says he told departments to price works at 80% of the value. “If you set your targets too high you stop people bidding and that can be problematic for the market. But it does require a commitment from owners.”

Average prices fall Expectation management kept sell-through rates respectable. But as the post-war and contemporary market shrinks, so does the average price of lots in Christie’s and Sotheby’s sales. The mean value of works at Christie’s this season was £1.1m compared with £2.1m in 2015 and £3.1m in 2014. The previous high was £2m in 2008 before the Lehman Brothers crash; in 2009 the average price plummeted to £290,000. The average value of lots at Sotheby’s has followed a similar, if less pronounced, pattern. In 2008 the average value was £1.7m, which plunged to £715,000 in 2009. Prices steadily rose until peaking at £1.9m in 2014 and 2015. The average value this season dipped to £1.6m.

Bonhams bucks trend Of London’s four major auction houses, only Bonhams met expectations in contemporary sales, bringing in a record total of £5.3m (£6.4m with buyer’s premium) against an estimate of £4.5m to £6.3m. However, a Warhol Electric Chair silkscreen (est £4m-£6m) strategically placed in a separate single lot sale failed to find a buyer. Unlike the Phillips and Sotheby’s auctions, where estimates bit off more than they could chew, at Bonhams almost three-quarters of works sold within or above estimate.

But competitive estimates did not help the five women artists on the block, who made a meagre £119,000, just 2.2% of the £5.3m total. Despite a concerted effort by Bonhams to raise Germaine Richier’s profile, her apocalyptic bronze horse sculpture was bought in at £190,000, just shy of its £200,000 low estimate.

Evening auction results, London, 2-11 February Impressionist, Modern and Surreal

Christie’s, 2 February

• Impressionist and Modern: £57.3m (£66.4m with premium).

Estimate: £57.4m-£84m

Sold by lot: 75%

• Surreal: £25.3m (£29.5m with premium)

Estimate: £26.3m-£39.4m

Sold by lot: 76%

Sotheby’s, 3 February

• Impressionist and Modern: £68.4m (£78.9m with premium)

Estimate: £85.9m-£121.9m

Sold by lot: 68%

• Surreal: £12.7m (£14.9m with premium)

Estimate: £11.8m-£16.5m

Sold by lot: 81%

Bonhams, 4 February

Sale total: £1.8m (£2.2m with premium) Estimate: £2.9m-£4.3m

Sold by lot: 65%

Post-war and Contemporary

Phillips, 9 February

Total: £20.8m (£24.6m with premium)

Estimate: £25.9m-£37.5m

Sold by lot: 79%

Sotheby’s, 10 February

Total: £59.4m (£69.5m with premium)

Estimate: £60.2m-£86.1m

Sold by lot: 78%

Bonhams, 11 February

Total: £5.3m (£6.4m with buyer’s premium) Estimate: £4.5m-£6.3m

Sold by lot: 79.2%

Christie’s, 11 February

Total: £49.8m (£58.1m with premium)

Estimate: £50.1m-£74.9m

Sold by lot: 89%

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