From Deseret News archives:
Art market robust yet turbulent
Despite turmoil in the financial markets, there are no signs that the art market is softening.
The fall auction season in New York saw robust prices across most categories, with postwar and contemporary works in particular going through the roof. It seemed like a new record was being shattered every time an art auction was held.
This record haul generated billions of dollars for auction houses such as Sotheby's, contributing to solid earnings but also exposing auctioneers to volatility when sales didn't go as well as expected.
The reason for the art market's strong showing? The weak dollar, expanding world wealth and new buyers from countries not previously associated with the art collecting community, experts say. Over the last five years, wealthy buyers from Russia, China, India and the Middle East have greatly helped fuel the art market.
The boom has occurred against the backdrop of a dreadful year for the financial sector in the United States a slump that seems to have been offset by the influx of foreign buyers and big American buyers who have not been affected by the uncertain economy.
Still, the art market hasn't been immune to turbulence.
Sotheby's suffered a lackluster modern and impressionist sale in November in which Vincent Van Gogh's "The Fields," estimated at $28 million to $35 million, failed to sell and many other works sold below their estimates. Sotheby's stock plunged 28 percent that day because of investors' fears that the company had overextended itself in guaranteeing sellers' reserve the price the house promises to pay if a certain item doesn't sell.
"What the market was saying was that the property being offered was very heavily estimated and the quality was not there to support this value," said Ian Peck, CEO of art-finance firm Art Capital Group.
"If you try to sell stuff for twice what it's worth, the market's going to say no," said Peck, adding that he heard that the Van Gogh later sold privately for about $20 million.
Peck says his blanket advice to clients is to take a wait-and-see attitude for the next year, and see how the art market plays out. "Our view is that within 12 months we'll know if this thing is getting worse, meaning if a recession occurs in the U.S. market or not."
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