Contemporary Art Tops the Auction Charts
From New York to Jakarta, contemporary artwork is riding an unprecedented wave of commercial success. New Indonesian and other Southeast Asian artists are commanding five- and six-figure sums for their work, which is being snapped up by collectors, galleries, and auction houses around the world. Takashi Murakami, often called the Japanese Andy Warhol, has become a household name thanks to his whimsical designs for Louis Vuitton (LVMH.PA) bags and his major expositions this year at the Museum of Contemporary Art in Los Angeles and the Brooklyn Museum in New York. And in 2007, Warhol himself unseated Pablo Picasso from the top spot on a list of painters ranked by sales of their works at public auction.
"Contemporary art is now the driving force of an auction house," says François Curiel, the Paris chairman of Christie's Europe. Last year, Christie's International achieved $1.56 billion in sales of postwar and contemporary art around the world, 25% of its total revenues, narrowly edging out Impressionist and Modern art sales. A May auction of Andy Warhol's Green Car Crash at Christie's New York brought in $71.7 million, the highest price fetched at the auction house last year.
At Sotheby's, contemporary art sales grew 107% over 2006 to $1.34 billion, becoming the auction house's top-selling category for the first time. In comparison, sales of Impressionist and Modern art rose by 24%, to $1.16 billion. The sale of contemporary Irish painter Francis Bacon's Seated Woman (Portrait of Muriel Belcher) in Paris last December fetched the highest price for a work of art in France since 1989: $20 million.
Weak Dollar Draws Foreign Buyers
Auction house representatives in Europe, North America, and Asia say the rise in prices is continuing unabated despite the economic downturn in the U.S.—even in the capital of the art world, New York—because of the international nature of the market. Auctions in New York draw bidders from Russia, the Middle East, and other cash-rich regions, and don't rely on local collectors to sustain sales. Furthermore, the weakening dollar has proven a big draw for foreign investors while wealthy Americans have turned to collecting as a safer form of investment than stocks and money markets.
The rising popularity of contemporary and postwar art—the two are often coupled but comprise different genres—stems in part from the lack of older works available for sale. They have largely been acquired by museums. A decade ago, Christie's began introducing at auction in London and New York contemporary works that had been created in the previous three or four years. Until then, young artists had launched their careers primarily through dealers, says Brett Gorvy, the international co-head of postwar and contemporary art at Christie's New York. The open competition at auction houses drove prices for fresh art way up, generating a new market for works by young artists.
A plentiful supply of contemporary works is fueling the boom in sales. "The good thing about Warhol is, he's a serial artist," Gorvy says. If one Campbell Soup (CPB) painting sells well, that virtually guarantees the next Campbell's painting will fetch an even higher price, and so on. The trend also "reflects people's confidence in their own culture," says Jonathan Stone, international business director for Asian art at Christie's in Hong Kong. Artists who may have once tried to emulate European or American masters are creating new styles drawn from their own cultures, as seen in Japan's flourishing contemporary market (BusinessWeek.com, 7/25/07).
France Plans to Boost Home Market
One country that has had difficulty cashing in on the contemporary craze is France. While works by artists born after 1945 account for 10% of global art sales, the figure is less than 3% in France, according to Artprice, a French group that tracks fine-art sales from 2,900 auction houses worldwide. Part of the problem is a tax of 1% to 4% on art created by living artists or those dead fewer than 70 years. Also, many young French artists have moved to places with lower costs of living such as Berlin, creating a dearth of talent back home. "You have a great horse," says Curiel of the contemporary market, "but you can't give him hay."
On Apr. 2, French Culture Minister Christine Albanel announced a plan to revitalize the country's art market by providing zero-interest loans of €5,000 to €10,000 ($7,865 to $15,706) for buyers, more tax breaks for companies that purchase contemporary art, and fewer restrictions on auctioning, among other initiatives. Currently, France controls 6.4% of the global fine-art market, vs. 43% in the U.S., 30% in Britain, and a surprising 7.3% in China, according to Artprice.
Albanel's proposals, if ratified by the French Parliament, will take effect by June, 2009. Given that auction houses waited 450 years to be able to hold sales in France—the first took place only in 2001—they'll undoubtedly take the yearlong delay in stride. In the meantime, the global stir is encouraging ever more creative types to jump on the contemporary bandwagon. Says Francis Outred, head of evening auctions and private sales at Sotheby's in Britain, "It's not such a bad word now to be an artist these days."
See the BusinessWeek.com slide show for a look at the 10 artists who generated the most revenue at auction in 2007.