2 January 2005

Art Market Notebook: Summer 2005

Chalk up another astounding performance for the Australian art market in 2004, begging the question, just how long can these good times roll?

The most transparent barometer of artworld economic activity remains the auction scene and 2004 continued the stellar growth that has marked the longest upward trend in the domestic market's history. In terms of total sales at auction, the market has been growing at around 10 per cent per annum, according to records kept by the Australian Art Sales Digest. At the time of writing, 2004 was on target to break the magic $100 million barrier in total sales at auction, meaning the secondary market has increased in volume five-fold since 1993 when turnover was just $19.4 million.

Where’s the money coming from? 

It’s not coming from traditional collecting institutions, whose acquisition budgets are shrinking. And corporations and companies have been actually divesting themselves of non-core activities like art for several seasons now. New collectors, more than likely, are readers just like you: some, no doubt, have heard of the booty to be had in John Kelly’s Cow’s or Tim Maguire’s petunias and are seeking a “piece of the action”; others have simply done the math and are choosing art over other investment options; others still have caught the collecting bug and now officially count themselves art lovers.

While the auction sector has been stimulated at the top in recent years by furious competition between the so-called "big three" - international firms Sotheby's and Christie's, and locally-owned powerhouse Deutscher~Menzies - a raft of second tier (in terms of turnover) players - like Shapiro's, the new joint-venturers, Bonhams & Goodman, Lawson~Menzies, and Leonard Joel - now account for roughly a quarter of all auction activity.

At the blue-chip end, the lightning rod for much of this frenetic competition has been cleaning magnate Rod Menzies and his successful partnership with Melbourne dealer, Chris Deutscher. Since D~M's first Auction in April 1998, annual turnover has increased from $8.5 million in 1998 to $21.2 million** in 2003. As we write D~M was the only house to sell individual works for more than $1 million in 2004: Frederick McCubbin's Childhood Fancies (1905) for $1.23m in March and Brett Whiteley's Lavender Bay at Dusk (1984) for $1.17m in June. Tellingly, both benchmarks were sold at Sydney sales, which anecdotally at least is now the nation’s art collecting epicentre. Menzies’s foray into Sydney with his 2001 purchase of Lawsons has been tumultuous to say the least, with the proprietor's hands-on management approach spawning upheaval in terms of staff turnover. Latest casualty at the top is Paul Sumner, the former MD of Sotheby's Australia, who was engaged by Menzies upon his return from Sotheby's in London to reright the good ship L~M in 2003. Sumner and Deutscher, as naturally competitive heads of rival firms ignored the fact they were owned in the same interest, and set about competing for the same market. Menzies finally called a halt to the dog-eat-dog set-up early in 2004 when Sumner announced all the fine art business would henceforth be referred to Deutscher and L~M would concentrate on mounting a challenge to Sotheby's in the bull-market for Aboriginal art. Now Sumner himself has departed L~M and is running his own business "auction-broking", and marketing personalities.

The move into Aboriginal art for Lawsons was a case of join the bandwagon, with several firms in 2004 jumping into a sector which Sotheby's has had to itself for several years. Credit where credit's due, Sotheby's had done the hard yards developing the Aboriginal market both locally and internationally for a decade. It must irk them to now see its market share now being poached by "upstarts" like Christie's, Bonhams & Goodman, and Lawson~Menzies.

L~M offered 400 lots in their second Aboriginal art sale for the year in late November with sales hitting 80% by both volume and value. Highlights included the sale of Rover Thomas's major 1990's commission Wily Wily for $240,000, Dorothy Napangardi Robinson's Salt on Mina Mina for $85.400, and Turkey Tolson Tjupurrula's The Straightening of the Spears for $58,560. Shaun Dennison, Christie's new Aboriginal art specialist, adopted a more rigorous approach for his first sale with a small but select draft of 160 works. While the spin is rosy Dennison will want to improve rapidly on clearance rates of just over 50 per cent.

Earlier in the year Sotheby's Tim Klingender mounted his usual two-session blockbuster of indigenous art, clearing $6.6 million worth of works for the New York Stock Exchange-listed firm. The sale’s success was overshadowed by the failure of the sale’s “hero” lot, Rover Thomas’s Uluru (Ayers Rock) 1987, to meet it’s ambitious estimate of $700k-$1m. When it should have been bathing in adulation over a sale that could set 17 individual artist sale records, Sotheby’s copped media flak for inflating market expectations at the prospect of the indigenous art sector’s first “million dollar painting”. Some people are never satisfied. Ironically, sources say two private treaty sales of works by Emily Kame Kgwarreye and Thomas have both eclipsed the magic million mark, albeit away from prying eyes.

Kngwarreye and Thomas continue to dominate the market in terms of volume. Forty-nine Emilys changed hands at auction in 2004, out of 83 offerred, with works with a Delmore Gallery provenance featuring heavily among those lots passed-in. Female artists continue to be prominent with works by Queenie McKenzie, Dorothy Napangardi Robinson, Minnie Pwerle all keenly sought. The sudden interest in Central Desert painter Maggie Watson Napangardi is notable. Not often seen in the saleroom, her sale-topping Digging Stick Dreaming fetched $185,225 at Christie’s in October, more than double her previous auction record.

2004 was also the year the phrase “self managed super fund” became more popular among collectors than “your commission is how much?”. Suddenly self-styled art “consultants” are popping from behind plinths to spruik the attractiveness of buying fine art for your personal super fund. Such was the flurry of activity, the Australian Tax Office issued statements and directives that while art can be considered a bona-fide asset class, “storing” your investment above the mantelpiece to enjoy while you wait to retire could mean a “breach of the sole purpose test”. Until a test case is brought before the courts, we can assume that breaches are being made right across the country, such has been the market activity driven by this new source of funds.

Mid-year was dominated by John Shaeffer’s financial travails which necessitated dumping a lifetime’s collecting onto the market. Christie’s handled the so-called “garage sale of the century" - Shaeffer’s Bellevue Hill mansion - with $5.3 million worth of aplomb. Shaeffer’s main game would be played offshore, in London, where the cream of his collection of 19th century British art went under the hammer. The big loser was the Art Gallery of New South Wales and it’s art-loving public, which has seen scores of works “on loan” from Shaeffer retrieved and sold.

Outside the auction scene, commercial galleries continue to thrive, if this year’s Melbourne Art Fair in October is any indicator. Now run exclusively by the fair’s not-for-profit foundation after a bumpy history partnering with the Australian Commercial Galleries Association, this year’s fair showcased the wares of some 800 artists, represented by 81 galleries. Sales of $8 million represented an expected jump from 2002, when $6.3 million worth of primary works by living artists found homes. With 70 per cent of works selling for under $5000, the MAF offered testimony that bedrock of this bull market is the army of small collectors who have entered the market in the past five years.

** All prices quoted include the buyer's premium, and where applicable, GST.


First published in Australian Art Collector

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