A growing class of super rich collectors — many from Asia, Latin America and the Middle East — is putting money into fine art both to gain status and to invest in something new.
By Alana Semuels
December 8, 2013, 5:00 a.m.
NEW YORK — The painting once hung in the Cleveland Museum of Art. And there was no shortage of people who wanted it in the crowded Christie's auction room.
The artwork, "Women Reaching for the Moon," is a blur of a woman in a red dress. It was painted by
Rufino Tamayo, the famed Mexican creator of abstract works that combine European and Latino influ-
ences. Though bidding started at $500,000, it quickly reached $1 million. The standing-room-only crowd murmured as auctioneer Adrian Meyer parried with the remaining bidders, and workers wheeled in rows of extra chairs.
"Look at the painting, at least face it. You still have a chance," Meyer said to a woman in the audience who had been bidding, as the price went up to $1.2 million. "For $50,000, it could be yours."
When Meyer finally knocked his hammer against the lectern, signaling that the painting had sold for $1.2 million, "Women Reaching for the Moon" became the most expensive work to pass through Christie's for the evening. The auction, held two weeks ago, was part of Christie's biannual sale of Latin American art.
But it was not the most expensive to be sold at the auction house this season.
In October, Christie's sold a triptych by renowned British figurative painter Francis Bacon for $142.4 million, a record price for a painting at auction. The auction house also set a record for the most expensive work by a living artist when it sold a steel sculpture, "Balloon Dog" by American contemporary artist Jeff Koons, for $58.4 million.
Economists may still be worried about consumer spending as the holiday season approaches, but if the art market is any indication, the world's wealthiest have lots of money to spend.
As small groups of people get richer in various countries across the world, observers say, they're putting money into art both to gain status and invest in something new. Many have never put their money into art before.
"What we're seeing is that wealth is expanding in Latin America and the Middle East," said Phillip Hoffman, head of the Fine Art Fund Group, which consults with wealthy clients who want to buy art. "The new rich like to enjoy art, show it off, have it as an alternative asset."
Hoffman's company is 30 times bigger than it was three years ago, he said, as more wealthy clients become interested in owning art. He has 120 clients — most from Asia, Europe and Latin America — who have never owned art before. In fact, one of them dropped $67 million on two paintings.
About 3% of the world's wealthy now own art, but Hoffman estimates that figure will grow to 30% to 40% in the next decade.
Art as an investment really didn't come into vogue until the British Rail Pension Fund, which had begun acquiring art in the 1970s, began to divest of its artworks, said Barbara Guggenheim, of the art consultancy Guggenheim Asher Associates. The sales, which mostly occurred in the 1980s and 1990s, netted tens of millions of dollars for the fund, leading to an 11% return.
"For the very first time, Wall Street had something very concrete to look at as a model," she said. "And Wall Street loves graphs."
The global art market is now worth about $60 billion.
These days, though, it's not just art. Wary of losing wealth in the shaky stock market, the super wealthy are also putting money into alternative investments, such as classic cars, wine, gems and watches. Sotheby's sold a giant flawless pink diamond for $83 million in Geneva last month, the highest ever paid for a gemstone at auction.
But as sales of other luxuries including high-end condos boom, art can go hand in hand, said Martin Friedrichs, assistant director of the Hollis Taggart galleries on New York's Upper East Side.
"There's a boom of high-end condos here, and people need something to put on their walls," he said. "It's much nicer to hang a piece of art than a printout from your online brokerage account."
These kinds of high-end investments have been surging as the number of millionaires around the world has increased dramatically in recent years.
According to Wealth Insight, a British firm that tracks global wealth, the number of millionaires in China grew 90% between 2007 and 2012. The number of billionaires in that country grew 400% from 2008 to 2012. And the number of high-net-worth individuals in the Asia-Pacific region grew 29% between 2007 and 2011.
Chinese buyers bid heavily for modern art: Picassos, for example. But Hoffman said they've also begun to invest in Chinese antiquities.
Growing wealth among the rich in Mexico has led to more competition for Mexican and other Latin American art, as collectors with more money begin to buy works by artists from multiple countries.
In Mexico, the number of millionaires grew 32% between 2007 and 2012, according to WealthInsight. There were 145,000 millionaires in that country by the end of 2012, holding $736 billion.
"We've seen in the past five to seven years clients who did not exist before who are buying quite heavily," said Gabriela Lobo, director of Christie's Mexico.
That's driven up the price of some Latin American artists who barely sold at all a decade ago. At the Latin American art auction, a painting by Austrian-Mexican artist Wolfgang Paalen sold for $200,000; pre-auction estimates had valued the painting at $40,000 to $60,000.
"Some of these things, we couldn't give them away, or we'd sell them for nothing," Lobo said. "Now there's a bigger market for these names."
Diego Uribe flew to New York from Miami for the Christie's auction with his wife and bid on a work by Carlos Cruz-Diez. They were outbid. Two out of three of the works for sale by the Venezuelan artist sold for tens of thousands more than Christie's top estimates.
"You have to have a budget," Uribe said.
Still, he wishes he'd been able to walk away with something.
"It will get more valuable," he said.
It's still not clear whether art is actually a smart investment, especially since the market is considered opaque because many deals are done in private. This puts even more value on the public auctions to gauge how art might be appreciating or depreciating.
"There are periods where art outperforms equities and periods where it underperforms, but the important thing is that it has a low correlation with equities," he said.
From 1987 to 2012, the Mei Moses World All Art index showed an average annual return of 5%, while the Standard & Poor's 500 index added 9.6%. Over 60 years, the art index showed average annual returns of 9.5%, while the S&P was up 10.3%.
But for many super rich with extra money on hand, it doesn't matter whether the artwork becomes more valuable or less. They like to look at it on their walls, regardless of what it costs.
"We don't buy to sell, but we know it is going to be an asset," Uribe said. "But if it loses value, I don't care."
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Detroit’s A Paul Schaap is stepping up to try to organize a public campaign to secure DIA’s art collection. He says he’s good for $5m and will talk to the judge who is acting as mediator between the city and creditors about organizing a broader campaign:
“I believe there are more than just a few people in the metro Detroit area who would step up and see this as something we should all try to do to save the pensions and stabilize the DIA,” Schaap said in an interview Friday. […]
“We have a passion for the city,” said Schaap, who lives next door in Grosse Pointe Park and was a Wayne State University chemistry professor before starting his own technology company. “We go to the DIA, the symphony, ballgames. We’re Detroiters. Maybe this is a way to help.”
Nothing can be beautiful which is not true. John Ruskin
A work by the late British painter Francis Bacon set a new world record for the most expensive painting ever auctioned off after being sold for almost £90million.
His iconic 1969 triptych “Three Studies of Lucian Freud” led to a frenzy of telephone bids after the piece went on sale at Christie’s in New York.
The auction house have refused to confirm who bought the painting after their bid $142 million - was successful.
It took seven superrich bidders to propel a 1969 Francis Bacon triptych to $142.4 million at Christie’s on Tuesday night, making it the most expensive work of art ever sold at auction. William Acquavella, the New York dealer, is thought to have bought the painting on behalf of an unidentified client, from one of Christie’s skyboxes overlooking the auction.
The price for the painting, which depicts Lucian Freud, Bacon’s friend and rival, perched on a wooden chair, was more than the $85 million Christie’s had estimated. It also toppled the previous record set in May 2012 when Edvard Munch’s fabled pastel of “The Scream” sold at Sotheby’s for $119.9 million and broke the previous record for the artist at auction set at the peak of the market in May 2008, when Sotheby’s sold a triptych from 1976 to the Russian oligarch Roman Abramovich for $86.2 million.
When the bidding for “Three Studies of Lucian Freud” finally stopped, after more than 10 fraught minutes, the overflowing crowd in the salesroom burst into applause. Two disappointed bidders could be seen leaving the room. “I went to $101 million but it hardly mattered,” said Larry Gagosian, the super-dealer who was trying to buy the painting on behalf of a client. Another contender was Hong Gyu Shin, the director of the Shin Gallery on Grand Street in Manhattan, who said he was bidding for himself.
“I was expecting it to go for around $87 million,” Mr. Shin said. Although he explained that he collects mostly Japanese woodblock prints and old master paintings, he found the triptych by the Irish-born painter, who died in 1992, irresistible. “I loved that painting and I couldn’t control myself,” he said. “Maybe someday I’ll have another chance.”
For more than a month now, Christie’s has been billing the sale as a landmark event with a greater number of paintings and sculptures estimated to sell for over $20 million than it has ever had before. The hard sell apparently worked. Nearly 10,000 visitors flocked to its galleries to preview the auction. The sale totaled $691.5 million, far above Christie’s $670.4 million high estimate, becoming the most expensive auction ever. It outstripped the $495 million total set at Christie’s in May.
Of the 69 works on offer, only six failed to sell. All told, 10 world record prices were achieved for artists who, besides Bacon, included Christopher Wool, Ad Reinhardt, Donald Judd and Willem de Kooning.
The sale was also a place to see and be seen. Christie’s Rockefeller Center salesroom was standing room only, with collectors including Michael Ovitz, the Los Angeles talent agent; Aby Rosen, the New York real estate developer; Martin Margulies, from Miami; Donald B. Marron, the New York financier; and Daniel S. Loeb, the activist investor and hedge fund manager.
The Bacon triptych was not the only highflier. A 10-foot-tall mirror-polished stainless steel sculpture that resembled a child’s party favor, Jeff Koons’s “Balloon Dog (Orange)” sold to another telephone bidder for $58.4 million, above its high $55 million estimate, becoming the most expensive work by a living artist sold at auction. The pooch was being sold by Peter M. Brant, the newsprint magnate who auctioned the canine to raise money to endow his Greenwich, Conn., foundation. In the 1990s, Mr. Koons had created the sculpture in an edition of five, each in a different color. Four celebrated collectors own the others: Steven A. Cohen, the hedge-fund billionaire, has a yellow one; Eli Broad, the Los Angeles financier, owns a blue one; François Pinault, the French luxury goods magnate and owner of Christie’s, has the magenta version; and Dakis Joannou, the Greek industrialist, has his in red. Christie’s had estimated Mr. Brant’s sculpture would fetch $35 million to $55 million.
(Final prices include the buyer’s premium: 25 percent of the first $100,000; 20 percent of the next $100,000 to $2 million; and 12 percent of the rest. Estimates do not reflect commissions.)
Another strong price was set for a classic image in contemporary art history — Andy Warhol’s “Coca Cola ,” one of only four paintings of a single Coca-Cola bottle that the artist made in 1961 and 1962. Jose Mugrabi, the New York dealer, bought the painting from S. I. Newhouse Jr. in 1986 and he was said to be selling it on Tuesday night. That painting made $57.2 million. It had been estimated to sell for $40 million to $60 million.
Three bidders went for Rothko’s “No. 11 (Untitled),” one of the artist’s abstract canvases, this one in an orange palette and created in 1957. It was being sold by the estate of Bruce J. Wasserstein, the financier who died in 2009. Christophe van de Weghe, a Manhattan dealer, bought the painting for $46 million, above its high $35 million estimate. Mr. van de Weghe also bought “Apocalypse Now,” a seminal painting by Mr. Wool, whose work is currently the subject of a major retrospective at the Guggenheim Museum. Bidding on behalf of a client, he paid $26.4 million for the painting. Created in 1988, the white canvas is filled with the words “Sell the House Sell the Car Sell the Kids,” a line from the Francis Ford Coppola movie of the same title. The painting belonged to David Ganek, the former New York hedge fund manager and Guggenheim board member. Mr. Ganek has since resigned from the board.
After the sale, Jussi Pylkkänen, chairman of Christie’s Europe and the evening’s auctioneer, noted how international the bidding was. Besides a healthy showing of American bidders, there were also a lot of potential buyers from Asia and Europe trying to get into the action. “There were more players from the New World than ever before,” he said, “and more people spending over $20 million.
“But,” he warned, in order to have such a successful sale, “you have to have the material
Former Prime Minister Margaret Thatcher once described Francis Bacon as “that man who paints those dreadful pictures”.
However, despite being reviled by many his work was equally acclaimed for his bold, graphic and emotional paintings.
Bacon was born in Dublin in 1909 to parents of English heritage.
Despite his family’s wealth, throughout his teenage years he drifted through life often turning to petty crime to make ends meet.
He began painting in his early 20s although his success was not immediate as he struggled to find a style that suited him.
However, in 1944, after being declared unfit for military service, he gained a reputation for being an observer of the darker aspects of humanity with his seminal piece Three Studies for Figures at the Base of a Crucifixion.
A year later he met Lucian Freud who, despite being 13 years younger, formed a friendship with Bacon.
Despite their closeness the pair were also bitter rivals famed for their post-war paintings.
On April 18, 1992, Bacon, who was openly gay, died of cardiac arrest that was a complication of his asthma.
His entire estate worth 22 million was left to his close friend John Edwards, an illiterate former barman from the East End of London.
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