Down Art Market (financial crisis)

Financial Crisis Cools Down Art Market
Sian Evans 10For months, art dealers, critics and auctioneers have claimed that the art market would remain miraculously immune to the global financial crisis. As if Damien Hirst were some kind of thaumaturgical icon that could save the day with his formaldehyde sacred cows and sharks, or that Russian and Middle Eastern collectors, with their seemingly unlimited wealth, would shield the market by continuing to waggle their bidding paddles with abandon at auction..31.08, 7:20 PM ET
 

There were warning signs from the market. Sotheby's (nyse: BID - news - people ) stock is down 83% from this time last year. And on Oct. 15, as the art world entered its biggest season for sales, the Dow plunged more than 700 points again, forcing many dealers, auctioneers and other cheerleaders to recant prior bravado.

Fall really is the season for the art market. Gallerists, auction houses and collectors spend the sleepy summer vacation looking forward to the biggest fairs worldwide and major auctions of modern, contemporary and Asian art--three sectors that have been keeping the art market afloat in recent months. All eyes were on London in recent weeks as Sotheby's, Christie's and Phillips de Pury held their major fall evening sales of contemporary art in conjunction with one of the world's most important art spending sprees, the Frieze Art Fair.

Based on what went down in London, it seems that the once-healthy art market may have finally caught that financial cold that has laid the rest of the world low.

In Pictures: Art At New York's November Auctions

Sotheby's sold 72% of the art offered at its Friday evening sale, meeting only 70% of its low pre-sale estimate. The following evening, Phillips could only unload 54% of its lots and Chairman Simon de Pury admitted to being "disappointed" by the results. Christie's finished out the weekend on top. While only selling 55% of its offerings, it sold about $52 million worth of art, which was, for the record, still far below the house's advance estimate.

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Things at Frieze didn't do much to cover up the bruising, either. Although attendance of around 68,000 visitors was on par with last year, everyone seemed to be pinching their pennies a little more. As auction houses attempted to mitigate consignors' fears by guaranteeing their lots, essentially conceding to purchase the work at a fixed price if it fails to sell, dealers at Frieze took a number of additional approaches to assuage buyers' fears.

Among the more practical strategies--including shelving the custom of wait-listing clients and focusing on work that is easily transportable in order to diminish installation and shipping costs--dealers took a sunny tone in their booths, well-aware that they no longer hold such a position of power in relation to potential clients. This is no longer a seller's market.

New York magazine's veteran art critic, Jerry Saltz, has been one of the few art naysayers. He recently described Frieze as evidence of the bursting of the art world's economic bubble. Saltz's sinking feeling, however, is tempered by an interesting optimism: a disgust at the reckless inflation that has pervaded the scene for a number of years now and a hope that a market slump could usher in a new era of art for art's sake, so to speak. "Recessions are hard on people, but they are not hard on art," writes Saltz. "The '40s, '70s and the '90s, when money was scarce, were great periods, when the art world retracted, but it was also reborn."

In Pictures: Art At New York's November Auctions

The coming month will help diagnose the health of the art market, as Christie's and Sotheby's hold important modern and contemporary art sales in New York. The two houses, which have been exhibiting $500 million worth of art in Moscow in October, continue to court the Russians. There will also be a slew of American and international art fairs throughout the fall that should help gauge how the market is actually fairing. Were the past few weeks a hiccup? A bruise? Or perhaps a symptom of something larger?

Undoubtedly, there will be a few blockbuster pieces that will sell for record prices this season. There will always be collectors who believe some art is worth the price. But we might be approaching a paradigm shift, big or small, which could very well change not only the climate on the auction floor and at the art fairs, but also in the studio and the gallery space.

In Pictures: Art At New York's November Auctions