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Art market faces jittery times as economy slows

It took only about 120 seconds last week for a Monet to exchange hands for a small fortune.Christie’s auctioneer Christopher Burge started the bidding at $26 million for a 1873 Claude Monet painting of two puffing locomotives crossing a river bridge.The price then zoomed up, in $1 million increments.Two minutes later, interest slowed. A deep-pocketed bidder on the phone to the right of Burge had
/ Source: The Associated Press

It took only about 120 seconds last week for a Monet to exchange hands for a small fortune.

Christie’s auctioneer Christopher Burge started the bidding at $26 million for a 1873 Claude Monet painting of two puffing locomotives crossing a river bridge.

The price then zoomed up, in $1 million increments.

Two minutes later, interest slowed. A deep-pocketed bidder on the phone to the right of Burge had apparently outlasted all others. The room grew quiet.

“Fair warning. At $37 million,” Burge said. “Selling right for $37 million.”

Crack went his gavel.

The sale of “Le Pont du Chemin de Fer a Argenteuil” (“Railroad Bridge at Argenteuil”) for a total of $41,481,000 — including commission — can be seen as a bridge over troubled waters, a sign the art market is doing just fine despite the subprime mortgage crisis and whiff of recession.

After all, the price easily beat the previous $36.56 million record for a Monet, and Christie’s reaped more than $277.2 million during the 58-lot evening impressionist and modern art sale May 6.

Cracks in the canvas

But could there be cracks in that bridge? Only 44 of the lots sold and Christie’s fell short of its low $286 million pre-sale estimate total. Plus, two other works by Monet as well as works by Picasso, van Gogh, Gauguin, Renoir and Matisse failed to reach minimum bids.

There were parallels over at Sotheby’s a day later. The auction house raked in $235.3 million at its sale of impressionist works, easily meeting its total pre-sale estimate.

But there also were lows: Eleven of 52 lots didn’t sell and the auction house disappointed investors with a first-quarter loss, saying revenue from auctions had declined. Its stock has lost half its value in the past year.

“The art market is alive and well. But is it booming? No,” says Howard Godel, whose Manhattan gallery specializes in 19th-century and early 20th-century American art. “I would say that there’s more caution in the air than there was six months ago for sure.”

That anyone is buying art right now might seem a minor miracle, what with stock markets struggling, credit tight, gas high, food expensive and consumer confidence tanking.

Then again, experts say any trend downward has been offset by new, hungry collectors emerging from abroad, a weak U.S. dollar making art here look cheap, hedge fund-fueled megawealth impervious to dips, and classic supply and demand.

“The art market is a funny market — it’s unlike any other,” says Betty Krulik, whose company advises, appraises and brokers American and European art from the 19th and 20th centuries.

“If you were to compare it to a world, I’d say that you could compare it to real estate more than the stock market. There are things of great value, limited supply and unique for the most part.”

Krulik says collectors with a lot of money or who are serious collectors haven’t yet slowed down their buying, but those spending $50,000 to $300,000 have.

“As far as recession goes, not knowing how long and how deep it might be, a lot of people are just holding their money, especially people in the middle market,” Krulik says.

ArtTactic Ltd., an independent art market research company, has found a troubling sign. Its data shows confidence in the art market fell by 37 percent between May 2007 and November 2007, the most recent data available. The biannual survey is based on the perceptions of about 160 art professionals.

“The likelihood of a soft landing is becoming ever more distant as the art market continues to diverge away from the underlying economic realities,” Anders Petterson, ArtTactic’s founder, wrote in a recent editorial.

But Marc Porter, president of Christie’s Americas, sees the market steadily expanding upward despite turbulent swings in the financial markets in the past few months.

“There has been an acknowledgment that art has been a good and stable store of value over the long term and none of the problems associated with the sort of financial stress that we now see in the financial markets are associated with works of art,” says Porter.

Art, he says, particularly the blue chip art from the auction houses, can offer investors a measure of stability not easily found in fly-by-night tech stocks or risky derivatives.

“Title is clear, ownership is clear, what you have is clear. How one sells it is clear, what it is is clear. All of those aspects of assuring that the money you’re spending is appropriately spent on what you think you’re buying are all boxes that works of art check very well.”

Good art is good art

Susan Dunne, vice president of PaceWildenstein, which exhibits and represents artists at three Manhattan galleries, says she hasn’t seen much weakening in the market.

She notes that Art Basel Miami Beach, the largest U.S. contemporary art fair with works generally under $1 million, was crowded in December and PaceWildenstein ringed up its most sales ever there.

Other good signs for the company: PaceWildenstein’s recent exhibitions in Chelsea of works by Thomas Nozkowski and James Siena — most under $200,000 — practically sold out in the first few days. And PaceWildenstein plans to soon open a new gallery in Beijing.

“There’s a feeling that even in a climate where people may not be inclined to spend money, if they love and collect art and still want to, they’re going to feel easier making a purchase by an artist of a certain caliber and standing from a gallery of a certain caliber and standing,” says Dunne.

Thea Westreich, a private art consultant, isn’t personally worried about the climate. She stresses quality and value to her clients regardless of market swings. Good art, she says, is good art.

“It’s very important to remember that in the real world, art going up and down in value is no different than real estate going up and down in value,” she says. “Fifth Avenue is hot property. And whatever happens to the market, having a 10,000-square foot apartment on Fifth Avenue is a good thing no matter what.”

Those well-off Fifth Avenue residents so far haven’t run away from art, these experts say. In fact, the megawealthy have kept prices — especially for contemporary art by the likes of Damien Hirst — high.

“The fact that you have these hedge fund guys that are making millions a day — or losing a millions a day — they’re the ones that don’t mind paying $1 million for something because all their buddies are going to say, ’Oh, you got that?’ It’s the power of recognition,” Krulik says.

Other than the hedge fund guys, money from newly rich collectors in Asia and the former Soviet Union also have helped prop up the high end of the art market. And a weak dollar helps make a painting look like a bargain these days in euros: Francis Bacon’s “Triptych, 1976” fetched more than $86 million at Sotheby’s on Wednesday.

“There’s really a lot of wealth out there chasing too few goods,” Godel says. “When I used to look at the Forbes 400, you needed about $400 million to be a member. Now you need $1 billion.”

Ultimately, Godel says, it may be too soon to see how global financial turbulence has affected the art market. That means another few months at least of jitters.

“The jury is still out whether there will be little fissures or cracks or if the market will not perform,” he says. “We won’t know until June or July if the party’s over.”