Simon de Pury explains why he remains bullish on the art market despite economists waving the red flag

Each month in The Hammer, art industry veteran Simon de Pury raises the curtain on his life as the ultimate art world insider, his brushes with fame and his invaluable insight into the workings internal art market.

Even for an incurable optimist, the events unfolding at the beginning of this decade and particularly in the first half of this year are, to say the least, depressing. The conjunction of a pandemic that seems far from over, a raging war, the onset of an unprecedented famine, the acceleration of global warming, the loss of hard-fought freedoms for women, of ever-increasing polarization in politics, an upsurge in homophobia, and a general trend towards totalitarianism and the awakening of the worst demons of the 1930s are just a brief catalog of some of the problems facing our world .

In the art world and the art market in particular, we often seem to live in our own bubble or ivory tower. It is only when the general economic situation deteriorates that some protagonists begin to notice this. The combination of the highest level of inflation in 40 years, the temporary collapse of cryptocurrencies, the expected significant rise in interest rates and an energy supply crisis, must surely have an impact. at some point on our highly privileged microcosm. Some hotspots in the world of finance are privately warning that even our seemingly impermeable art market will soon have to feel the pinch.

Andy Warhol, self-portrait (1986). Image courtesy of Sotheby’s.

Spring auctions in New York were extremely strong in terms of quality, with the second installment of the Macklowe collection and the exquisite Anne Bass collection. The most expensive works are not only crucial for the marketing of auction houses, but also act as locomotives that pull all the rest of the material. The “don’t want to miss the boat” syndrome was in full swing with works that were available on the primary market less than a year ago for only a fraction of the price to the lucky few “serious” collectors who had been chosen by the galleries. . Now was an opportunity for some of these serious people to turn the works around immediately and take advantage of the fierce competition among the many potential candidates who, in some cases, had not even been deemed worthy enough to be put on the waiting list by the galleries. Anna Weyant ($1.6 million), Avery Singer ($5.3 million), Christina Quarles ($4.5 million), and Shara Hughes ($2.9 million), to name a few a few, broke new records for paint that was still practically wet.

Just over a month later, the London sales of Christie’s, Sotheby’s and Phillips took place under very different circumstances. Traditionally these sales have weaker works than the New York sales. They are also not helped by their timing after Art Basel, when many people are already starting to think about their summer holidays. In a fast-paced world, a lot can happen in a matter of weeks. Between May and June, stock markets were down sharply and there was no sign of inflation abating. In this context, the sales results from London can be considered as solid. There were less dramatic spikes for the emerging artists category, but they still managed to rake in solid profits for their shippers.

There is a finite amount of truly exceptional artwork that can potentially hit the market. But when they do, there’s more money in the coffers of high net worth individuals than ever before. The number of billionaires has risen sharply over the past few decades, and during the pandemic alone, most of the super-rich got even richer. The conclusion, then, is that at least at the high end of the market, we should see a steady increase in demand and price levels that none of us would have imagined possible before. However, it is medium-quality works that are more likely to be affected in turbulent times. How many people will be stuck holding hot potatoes for emerging artists when interest in their work inevitably declines after one or two auction seasons?

£43.3million Francis Bacon portrait of Lucian Freud, the most expensive contemporary painting sold in London since 2014. Photo by Haydon Perrior, courtesy Sotheby's

£43.3million Francis Bacon portrait of Lucian Freud, the most expensive contemporary painting sold in London since 2014. Photo by Haydon Perrior, courtesy Sotheby’s

There are very few people left in the art market who have known anything other than an ever-growing market. The last downturn in the art market dates back to October and November 2008. The crash of the financial markets at the beginning of October was immediately felt in the percentage of works which did not sell in the main auction houses in auctions, i.e. which have not reached their confidentially agreed reserve price. rise above 50 percent. However, this sudden stop was very short-lived. Good auction results in early 2009 meant that it was a sharp V-shaped recession and prices have been rising ever since.

Things were very different in June 1990. May sales in New York that year had broken all records. Meanwhile, the Japanese buyers who had been primarily responsible for the art boom of the 1980s withdrew abruptly. Unsold rates for June sales were around 54%. It took at least six to seven years thereafter for the art market to gradually recover. The auction rooms were always full of people for the big evening sales but auctions were very rare. There were no third party guarantees protecting all the featured lots and I remember evenings when, apart from the Nahmad or Mugrabi families, there were hardly any bids. Going against the grain of the times, they laid the foundation for their fabulous art fund of today.

It was in 1974/75 that I took the Sotheby’s internship in the hope of being offered a job at the end of it. Inflation was so bad at the time and the economic climate so gloomy that Sotheby’s had to lay off en masse. On the last day of the Sotheby’s Works of Art course, I still hadn’t been offered a job. In a desperate act of defiance, I said I would not leave London until I was offered a job. I started working at the front desk on an unpaid basis, knowing that I could only last a few months at most. Luck would have it that a position was finally open in extremis. This was when the British Rail Pension Fund set up an art investment fund to hedge against inflation. It was a revolutionary decision because at that time, the financial world looked at the art market with great suspicion. It’s only in the past two decades that financial institutions have begun to consider art as an alternative asset class.

London to Paris 20th/21st Century Evening Sales at Christies, London and Paris.  Courtesy of Christie's.

London to Paris 20th/21st Century Evening Sales at Christie’s, London and Paris, 28 June 2022. Courtesy of Christie’s.

What has always struck me about the few downturns in the art market I have experienced in 50 years in the market is that very few of the wealthiest collectors are unaffected when the general mood suddenly rocks. Even if they have the means and buy above all out of passion, they will be less resistant to the ambient atmosphere. Those who, precisely in these moments, go against the grain and are bold are ultimately the winners.

In the midst of the 2008 financial crisis, I was asked to participate in a panel discussion with two Nobel laureates in economics. During the lecture, I said “it doesn’t matter if you are optimistic or pessimistic, in the end you are always right”. One of them replied “what you just said is like saying: my watch is broken but I don’t need to fix it since it tells the time twice a day! All this to say that I am ill-equipped to consult my crystal ball for the fall let alone the years to come. However, despite everything, I still want to have a long-term vision and remain resolutely optimistic.

Simon de Pury is the former President and Chief Auctioneer of Phillips de Pury & Company, former European President and Chief Auctioneer of Sotheby’s and former Curator of the Thyssen-Bornemisza Collection. Today he is an auctioneer, curator, private dealer, artistic advisor, photographer and DJ. Instagram: @simondepury

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