Quality Counts In Vibrant Art Auction Market - Experts

Charles Paikert Family Wealth Report Editor New York November 17, 2009

Quality Counts In Vibrant Art Auction Market - Experts

The takeaway from last week’s fall art auctions can be summarized  in one word, say art experts: Quality.

Investors and collectors looking at art as an asset class in the coming months should “stick to quality,” said Michael Plummer, a partner at Artvest Partners, an art finance advisory firm in  New York. “That’s where value holds in this market, and it’s still an uncertain market.”

“Buy the best of the best, but you must pay attention to the quality of the piece,” Mr Plummer advised. “This market is not artist dependent but work of art dependent.”

At a time when investors are still licking their wounds from last year's financial turmoil, and concerns may be growing about the threat of rising inflation, the art world is continuing to draw considerable interest from high net worth and ultra HNW individuals, as they regard the sector as a potentially solid store of value with robust investment prospects.

“Not only is money chasing quality, as far as names are concerned, but money is also chasing the best possible pieces of an artist's work,” said Jim Carona, co-owner of  Heather James Fine Art in Palm Desert, Calif.

“For example, an "A" quality Peter Doig painting just sold for over $10 million,” Mr Carona explained. “While Peter Doig is somewhat of a Blue Chip contemporary artist, he is not in the same league as Warhol or Kiefer.  However, a fantastic painting by Peter Doig should hold its value, and a collector was willing to make that bet.”

Indeed, the star of last week’s auctions was a coveted painting by Andy Warhol, “200 One Dollar Bills,” which sold for  $43.7 million at Sotheby’s.

All together, sales of Impressionist, modern and contemporary art at Sotheby’s and Christie’s totaled nearly $600 million last week.

Many in the art world hailed the figure as proof that confidence had returned to the market.

“The sales at both Christie's and Sotheby's showed that the widespread fear of spending money has clearly evaporated,” said Lillian Heidenberg, owner of  the Lillian Heidenberg Fine Art Gallery in New York. “Sales were strong and quality works of rarity did extremely well. The atmosphere seems to be much more buoyant but the buyers are cautious and selective.”

The auctions also demonstrated  “that there is tremendous liquidity available for high-quality works,” Mr. Carona said. “Europeans saw this as an opportunity to take advantage of the weak dollar. Also, buyers are looking for hard assets as a possible hedge against inflation in the future.”

But art market observers also noted that volume in the fall public auctions remained significantly below the market’s peak of $1.6 billion  two years ago.

“While a rebound may be under way, it is premature to say we are on our way back to the heady days of the past,” Mr Plummer said.

Investors and collectors shouldn’t overlook the private art market, added  Jeff Rabin, Mr. Plummer’s partner at Artvest.

“A lot of the activity in the art space is being done in the private market,” Mr Rabin said. “People want anonymity, discretion and access. If someone needs cash, they need it when they need it and can’t necessarily wait for an auction.”

He advised investors and collectors to “approach the market conservatively, buy the best of the best and have access to the best expertise available.”

Ms Heidenberg  advised collectors to look at the modern master sector of the  market.

“The best values are in finding works by modern and some contemporary artists that seem to be undervalued in today’s market,” she said.

“It is best, and safest, to buy Blue Chip names like Picasso, Monet, Matisse, Pissarro, and Rothko,” Mr Carona said.

On November 28, his Heather James gallery in Palm Desert will present a Picasso exhibition featuring Cubist paintings and a private collection  of the artists’ ceramics never before shown in public.

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