Take in the numbers: $84.2 million for Barnett Newman’s “Black Fire I”; $66.2 million for a purple and orange Mark Rothko canvas, and $30.1 million for Andy Warhol’s self-portraits in a spiky fright wig.
So went the buying frenzy during two weeks of marathon auction sales this month in New York. A string of evening and day sales at Sotheby’s, Christie’s and Phillips of Impressionist, modern, postwar and contemporary art tallied about $2.2 billion, handily surpassing previous results. Last May, both evening and day sales in these categories totaled $1.5 billion. In November, $1.8 billion worth of art was sold.
Asian collectors fueled the bidding and buying during both weeks, snapping up pieces by Claude Monet, Henri Matisse, Alberto Giacometti and Francis Bacon. Sotheby’s said collectors from Asia accounted for 30 percent of its evening Impressionist and modern art sale.
“Wealthy buyers are willing to pay above the high estimates for iconic works that they want to own and feel they may not have other opportunity to acquire,” said Jeff Rabin, a principal at Artvest Partners LLC in New York. “For a regular person, a special dinner is the equivalent of these multi-billionaires spending $10 million on a work of art.”
Such prices may not be sustainable, he said.
“I don’t think it’s the ‘new normal,’” he said, referring to a phrase popularized by Pacific Investment Management Co. in 2009 to characterize the economic environment.
The sales also showed that art produces solid returns as an investment, according to a study by the Mei Moses Art Index, which measures art performance by tracking repeat auction sales.
“These sales have been the strongest we’ve seen, certainly in the past five years,” Michael Moses, a retired professor of economics at New York University’s Stern School of Business and co-founder of the index, said in an interview today. “The worldwide wealth keeps growing and more people are considering art as an asset and a pretty good store of value.”
Almost 40 works offered during the evening sales of postwar and contemporary art this week have previously sold at auction, yielding an average compound annual return of 18 percent. “If you had invested an equal amount in the Standard & Poor’s 500 Index, it would have returned 11 percent,” Moses said.
While Christie’s won by the volume of sales, Sotheby’s (BID) led on returns on investment, with an 18.4 percent compound annual gain compared to Christie’s 18 percent, according to Moses. Impressionist and modern art returns during evening sales earlier this month averaged about 7.2 percent, he said.
Dozens of artist records were set at the postwar and contemporary sales, the auction houses said. A Joan Mitchell painting set a record for a female artist at auction by selling for $11.9 million; Alexander Calder’s hanging mobile of a fish fetched an artist record of $26 million.
Emerging artists, with hot speculative markets, also reached record prices. Alex Israel’s first artwork at auction, a painting of the California sky, surged to $1 million. Tauba Auerbach’s 2011 trompe l’oeil canvas fetched $1.8 million.
A Mark Rothko painting owned by Microsoft Corp. co-founder and billionaire Paul Allen sold for $56.2 million at Phillips, according to two people with knowledge of the matter.
In November 2007, Allen bought the work for $34.2 million at Christie’s. He realized a 7.5 percent compound annual return on his Rothko, according to Moses, who added that if the $34.2 million had been invested in the S&P 500 Index during the same holding period, the return would have been 6.1 percent.
Christie’s sold a record $745 million of art in three hours in May 13, led by Newman and Rothko works as well as Bacon’s “Three Studies for a Portrait of John Edwards,” which fetched $80.8 million.
“At those price points, the likelihood that you will make a good return on your investment is very low,” said Rabin.
Meanwhile, a Keith Haring painting, depicting a small human figure being pulled in different directions, delivered a compound annual return of 43 percent to its owner, according to Moses. The 1985 canvas fetched $3.7 million at Sotheby’s on May 14. Its seller bought it in 2010 for $1.1 million, according to a price database by Artnet Worldwide Corp.
“We’re at the top of the cycle,” Jim Chanos, the hedge-fund manager known for betting against companies and markets, said in an interview at the SkyBridge Alternatives Conference in Las Vegas today.
The head of Kynikos Associates LP said the market is being inflated in part because of “hot money” from Chinese buyers.
“Everytime the market gets very bubbly, people who remain bullish say ‘Its different this time. We’re going to turn Sotheby’s into an art fund,’” he said. “The whole thing is bizarre to me.”
The auction results weren’t all rosy. Some works by blue-chip artists, including Rothko and Yves Klein, were left on the table. Sales were mixed at Sotheby’s, which brought in $364 million, half of Christie’s auction the night before. A big casualty was Willem de Kooning’s “Untitled,” which was estimated by Sotheby’s for $18 million to $25 million and failed to sell. At Christie’s a Clyfford Still abstract painting “PH-1033” from 1976 fetched $17.5 million; the seller bought the piece in 2011 for $19.8 million at Sotheby’s.
“No matter how much wealth there is in the world, the art market has a point where it pulls back,” Rabin said.
To contact the editors responsible for this story: Christian Baumgaertel at firstname.lastname@example.org Mary Romano, Pierre Paulden