A BEAUTIFUL MARKET FOR ARTAuction houses are lively as collectors pay top dollar again
A snapshot of a dramatic moment in this fall's art auctions: Renowned collector Eli Broad, chairman of financial services company SunAmerica Inc., is dueling at Sotheby's Holdings Inc. in New York with an unidentified telephone bidder for Forest Scene, a late painting by Roy Lichtenstein. Broad finally drops out, letting the work go to his rival for $2.1 million. Was he worried that the bidding was getting a little overheated? Hardly. ''If we hadn't bought three important Lichtensteins recently, I think we would have bid more,'' Broad says.
So it goes in the art market these days. Having hit bottom in 1991, many segments of the market have enjoyed steady growth for the past two years and show good prospects for 1997. Acknowledged masterpieces commanded top dollar at auction this fall. For instance, Woman, a 1949 painting by Willem de Kooning, fetched $15.6 million at a Christie's International PLC sale on Nov. 20. At Sotheby's, casino owner Stephen A. Wynn paid $2.9 million for a pastel by Edouard Manet, and a bronze of a dancer by Degas went for $11.9 million. But there has been no sign of the frenzied bidding that sent prices spinning out of control in the 1980s. ''The market has regrouped,'' says Broad. ''We've had two years in which a floor has been well established.'' Adds Christopher Burge, chairman of Christie's Inc.: ''Right now, the art market is growing at a beautifully controlled pace.''
LOVE FACTOR. Not all works, however, are participating in the buoyancy. The Daily Telegraph Art 100 Index, calculated by London analyst Robin Duthy using auction results from 100 top artists, fell 1.3% in 1996. That's largely because of weak demand for Latin American art, some European works, and contemporary art. At Sotheby's, about one-third of the Impressionist and contemporary works offered at auction this fall didn't sell. ''The market is pretty good at the middle-to-top-end,'' says Sotheby's CEO Diana D. Brooks. ''But it gets weaker as you go down. If you've got a good $100,000 work, it will sell. But if it's a third-rate Renoir, it's tough to find a bidder.''
Indeed, many experts see plenty of scope for bargain hunters, particularly if they buy through art galleries. After suffering through most of the 1980s, the gallery business is making something of a comeback. ''More galleries have opened this fall than at any time since the late 1980s,'' notes Barbara Pollack, editor of Art Newsletter. And existing galleries are doing better: New York dealer Tricia Collins estimates that her business is up 38% this year. Competition is intense, though, and dealers remain chastened by the recent hard years. Notes Michael C. FitzGerald, an associate professor of fine arts at Trinity College in Hartford, Conn.: ''Dealers aren't jacking up their prices. They're still desperate to sell.''
Where to start? Experts caution never to buy art solely as an investment. ''You should only buy works you love,'' says Sotheby's Brooks. ''It's something you have to live with, as well as insure and care for.'' After that, the near universal advice of collectors is to pick one area of interest and research it intensely--something most art shoppers these days are doing in spades. ''The buyers we're seeing right now are very informed, people who are buying to collect or keep things in their homes,'' says New York dealer Jeffrey Deitch. ''There's very little speculative buying right now.''
And what's really hot right now is American art, especially pre-World War II works. At Sotheby's, for instance, Cashmere, a painting by John Singer Sargent, was bought by an unidentified buyer for $11.1 million, nearly double initial estimates. Wall Streeters and entrepreneurs, flush from the market's boom, are said to be doing much of the buying. However, demand has pushed prices up, so caution is advised. Among potential buys, Burge suggests artists who are still a bit out of vogue, such as those in the turn-of-the-century Ashcan School, including such painters as Robert Henri and William Glackens. ''You can get something really major for $200,000,'' he says. He also suggests looking at the better Hudson River School painters, such as John Frederick Kensett and Sanford Robinson Gifford.
A riskier area of interest is contemporary art. Arthur A. Goldberg, a principal at New York money managers Neuberger & Berman, who with his wife, Carol, is a longtime collector, notes that prices there are still ''scraping along the bottom.'' He suggests going straight to the cutting edge: works of little-known and generally young artists. ''Collectors should explore what's troubling to them,'' Goldberg says. ''They should spend a lot of time studying things they think are not art.''
In the Goldbergs' case, that philosophy has led to the recent purchase of a wide range of works by U.S. and foreign artists, among them Chen Zhen, a Chinese sculptor and installation artist living in Paris; Jason Rhoades, a young American sculptor and environmental artist; and Ian Hamilton Finlay, a Scottish sculptor and poet. Other collectors are acquiring work by artists included in the last Biennial show held by New York's Whitney Museum of American Art. Broad, for instance, recently bought a work by Ellen Gallagher, a young Boston painter. Such art can appreciate rapidly in value: Works by Toba Khedoori, another Biennial alum, have tripled in value, to around $15,000, in recent months. Another good, if pricier, bet are works by contemporary German and English artists, such as Georg Baselitz and Damien Hirst, who Goldberg feels are undervalued.
OVER-THE-TOP FIGURE. Indeed, international artwork generally provides good value. Asian art, both classical and contemporary, is starting to get very hot. Most New York galleries have been adding young Asian artists to the coterie they represent. Historical works, especially from China, also are appreciating in value. For instance, one rare glazed Northern Qui Dynasty stone figure sold at a Christie's auction in November for $453,500, vs. a top estimate of $250,000. But prices usually are lower, notes Theow-Huang Tow, a Chinese art expert at Christie's. ''At my sales, anyone with $10,000 to $20,000 is an important collector, '' says Tow.
Burge suggests there are even bargains in the second tier of the European Old Master's market. ''You're not going to get a da Vinci,'' he says. ''But there are many good works available right now at quite reasonable prices.''
Even if the market weakens next year, art is likely to be a reasonably good investment. The Railways Pension Fund in Britain next year plans to sell off the last 160 works of a collection of 2,000 works accumulated since the 1970s. Its annual return, it figures: a respectable 13%. ''If we had a 15% drop in the stock market, people might get nervous and hold on to their wallets a little more,'' says SunAmerica's Broad. But, he notes, true collectors never stop buying entirely.
By Thane Peterson, with Julia Flynn in London
Updated June 13, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.