The Old Masters market

 Paris  |  4 August 2017  |  AMA  |  Tweet  |  LinkedIn

Between a reality often distorted by figures, and the legendary discretion of art dealing, it’s difficult to grasp the health of the Old Masters market. While the July sales in London struck it lucky, where does the Old Masters segment really stand? An investigation.

The market is a drama… nourished by signs and symbols. Every year, it is played out, once again, according to a perfectly rehearsed staging, by big auction sessions, report publications and grand dinner occasions. According to whether prices are up or down, whether interest rates flash green or red lights, we scream bloody murder or else murmur congratulations at fairs, all the while speculating on art-market bubbles. In the meantime, the media monitors the scene, rushing to spread news on the latest favourites on the stage of this worldly theatre.

According to dealer Arnaud De Jonckheere, “these figures conceal the reality”. Figures, in fact, reflect auctions and reports. They are indicators that are necessary for objectivising a market which begs for analysis and commentary. The problem is that these curves are today largely indexed on a few records that bring joy to major auction houses, with an inclination towards sourcing out new works. Meanwhile, reports rely on resources that are necessarily incomplete, often data on the dealing world, dependent on the goodwill of professional syndicates. Hence a bothersome dialectic: figures and reports hide as much as they reveal. The paradox comes to the fore all the more in a world marked by secrecy, as remarks Bertrand Gautier, from gallery Talabardon & Gautier: “We used to be a profession based on a certain notion of secrecy, and we remain discreet people. But in the last ten years, the profession has changed in colossal proportions.” How exactly, we might very well ask.

A globally stable market

The Art Market 2017, the first edition of the report on the global state of the market, produced by Clare McAndrew for Art Basel and UBS, offers the first keys to an answer. In terms of its total value, including both dealers and auction houses, Clare McAndrew estimates that the Old Masters market came to 1.4 billion dollars in 2016, going up by 5 % compared to 2015. The report’s analysis includes non-European Old Masters. Without them, the economist values the market at $594 million in 2016. But this isn’t the point on which great changes have operated as trends denote a relative inertia over a long period. In 2007, Clare McAndrew had calculated that the European Old Masters market would peak at $906 million before collapsing by 30 % in the next two years. After this spasm, the market became globally stable, with a sales volume of between $600 and 800 million, depending on records. 2014 was subsequently the most solid year, with a turnover of $838 million, boosted by a few healthy auction results: Rome, From Mount Aventine by William Turner, sold by Sotheby’s London for $42 million, or else Bacchic Figure Supporting the Globe, a bronze by Adrien de Vries acquired from Christie’s New York for $24.7 million by the Rijksmuseum in Amsterdam. 2015, on the other hand, was the least profitable year, yielding $561 million. Indeed, no European Old Masters figured amongst the year’s top 100 sales – in other words, none sold for more than $15 million. We can once again deduce, from this wide contrast in results, the influence of big auction sales on the market’s global results, for both dealers and auctioneers.

Almost all players point out the market’s stability. According to Florence Evans, director of the Weiss Gallery in London, “the market is steady, it doesn’t change much whether in terms of values or clients”. To which Diek Grœnewald, deputy director of Daxer & Marschall in Munich adds: “There are always evolutions in tastes and fashions. But a distinction needs to be made between taste and quality. There’ll always be a market for works of superior workmanship. Tastes change but not quality. It’s the intermediary market which evolves, not the upper-end segment.” Meanwhile, London dealer Fergus Hall is optimistic: “The Old Masters market has always been quite stable. It generally does very well from periods of inflation. In the 1970s, when currency fell out of correlation with gold, there was massive inflation that was altogether profitable for the market. Since 2008, we’ve been re-experiencing a massive currency-issuing sequence that generates inflation, which will make it stronger in the coming years. I’m very optimistic about the mid- and long-term.”

However, the sector has lost market shares, unable to follow the rise of prices seen in the modern and contemporary segments. European Old Masters represented only 2.60 % of auctions in 2016 (in terms of value), and only 1.8 % in 2015. But these figures went over 3 % just a few years ago: 3.45 % in 2009, 3 % in 2006. The sector is far from the era when Rubens beat all the records out there, with the sale of Massacre of the Innocents at $69 million scoring the top auction performance in 2002 – three times better than Picasso who took out the second position that year. But this state of affairs doesn’t dampen Fergus Hall’s confidence: “It’s a fact: the number of masterpieces on the market is declining. At the same time, many works remain, and the best of them are tending to go up in price. We need to remember that rarefaction also reinforces demand. In the contemporary-art segment where the offer is huge, we can be sure that there’s going to be a massive collapse, heavy correction. The uniqueness and rarity of the Old Masters make them more special, more stable, and surer over time.”

Evaporation of collectors

In the market’s upper-end segment, resale encounters no problems. According to Florence Evans, “buyers focus on higher-end works. The intermediary market is diminishing. The reason is that the number of buyers is declining.” The Weiss Gallery director continues: “Auction houses are partly responsible for keeping at a distance less wealthy collectors or those uninterested in the greatest signatures.” The same observation is made by Fergus Hall: “In the last 25 years, many intermediary collectors who didn’t have great purchasing power but who were numerous, have turned away from the market. And the big fortunes have become even wealthier.”

But things haven’t changed much in terms of the geographical origins of buyers. “There haven’t been any fundamental changes,” notes dealer Didier Aaron. “At one point, there was a strong emergence of Russian clients but this has collapsed. Finally, the market is stable, primarily composed of Europeans and Americans.” Florence Evans makes a similar assessment: “Asian clients come to our gallery more than before. But we keep a fairly traditional line, and we predominantly sell to Europeans and Americans.” A situation reflected by figures. According to the Art Market Report 2017, three-quarters of the Old Masters market, in terms of value, is shared between the United Kingdom (43 %), the United States (28 %) and France (7 %).

What’s new, perhaps, is a change in the mentality of collectors. The first evolution: even if resale of a work to the historic dealer is still widespread, the practice has been modified in a few ways. According to Pierre-Antoine Martenet, who cofounded the art consultancy agency Quirinal two years ago, “the reflex, in the case of an inheritance, is not necessarily to go and see the dealer; it’s to try out auctions. Heirs are attracted by records. The strength of auction houses is their ability to communicate extremely well about their good results whereas dealers are more discreet.” For Arnaud De Jonckheere, the behaviour of collectors is also evolving: “Collectors are buying works from a wide range of eras. Those with modern and contemporary works have no problem with setting their sights on Flemish pieces as well. A Bosch or a follower of Bosch can meet with great success, for example. Tastes have become more eclectic.” This mention of the contemporary-art market in particular is significant: “Many collectors are cautious about the contemporary-art market, and are delaying their sales, hoping for equivalent returns. On the Old Masters market, prices are settled, and we note fewer big surges.”

The “last-chance syndrome”

“Big surges” aside, the market’s polarisation is nonetheless a reality. According to Clare McAndrew, 39 % of European Old Masters paintings sell for less than $1000, and less than 0.5 % for more than $1 million. The number of paintings that went for over a million increased by 19 % between 2015 and 2016. These few paintings represent, in terms of value, 51 % of the market. In other words, the value of major pieces is soaring while that of paintings bought for decorative purposes remains constant, or is even diminishing.

Even if no Old Masters are found in the 2016 list of the top 20 artists at auctions, the Rubens which Christie’s London sold in July 2016, Lot and His Daughters, for an impressive $58 million (without expenses), was the year’s fourth best auction result, behind Monet, de Kooning and Picasso. The sale tempered the uncertain climate surrounding the Brexit and offered reassurance regarding London’s capacity to remain the market’s epicentre. But this Old Masters work still fell short of the old 2002 record, also for a Rubens – The Massacre of the Innocents, sold by Sotheby’s for $69 million. Didier Aaron offers an analysis of the model: “Works are getting rarer, and a phenomenon of financial investment is falling in place for the most important works. I wouldn’t say that it’s speculation.” The phenomenon is partly due to the “last-chance syndrome”, as New York Times journalist Souren Melikian dubbed it in 1998: a consciousness that the chance to buy masterpieces like these probably won’t come up again. For it’s a reality that these pieces are becoming harder to come by. In the TEFAF Art Market Report 2017, Rachel Pownall underlines that consignments at auctions fell in 2016 for the third year in a row. According to Diek Grœnewald, it’s nothing to get too worried about though: “When we look at what used to happen via old sales catalogues, there’s a lot to envy. But today, we’re selling what others will envy us for in a few years’ time. Rarity is increasing. There are new niches – Scandinavian works, for example, less known in Europe. It’s also the work of the dealer to find opportunities and to promote less-known artists.”

The new sourcing stakes

This rarefaction means that sourcing represents increasingly higher stakes. Didier Aaron explains: “It takes more effort than before to find less works, but we still find some. Even if Internet has changed practices by enabling us to reach places that are further away, the sources remain the same: private collections, brokers, auction houses.” According to Florence Evans, the impact of Internet, coupled with the market’s globalisation, has deeply modified sourcing. “It’s been facilitated and the origins of works are more transparent. Research is faster and more efficient now, even if the number of pieces is tending to diminish. Competition has also gone up as a result.”

Knowing how to source a piece is also a matter of taste – and the latter’s evolutions. “At the moment,” explains Fergus Hall, “clients are looking for works with strong visual impact. Caravaggio-like and Flemish paintings work better than Dutch painting which was nevertheless in great demand a few years ago.” Flemish works incidentally were successful at the last auctions. At Christie’s London in July 2017, a triptych by the Master of 1518 raised $1.24 million while a still life by David Rijckaert II produced $720,000. At Sotheby’s London, a grisaille portrait of the engraver Jean-Baptiste Barbé by Antoine van Dyck multiplied its estimates by five times, reaching $2.1 million, whereas an oil-on-panel by Pieter Brueghel the Younger went for $2.33 million. Adopting a long-term vision, Fergus Hall specifies: “Flemish works work well, but Dutch paintings are currently an excellent buying opportunity.”

According to Diek Grœnewald, “there are basics: a portrait of a woman sells better than that of an elderly man. Today, vedute are popular, still lifes with animals less so, unlike those with flowers or fruits.” It’s difficult to say that he’s wrong, in the light of the most recent results. On 6 July, Christie’s London sold, at its Old Masters Evening Sale, a painting by Francesco Guardi, Venice: The Rialto Bridge with the Palazzo dei Camerlenghi, for the plump sum of $33.8 million. While on the previous evening, Sotheby’s had set a new record for a work on paper by Canaletto: the drawing sold for $3.4 million. Results that can partly be attributed to various vedute exhibitions such as “Canaletto and his Rivals”, presented in 2010-2011 at the National Gallery.

A favourable context?

A final signal regarding the health of the market: the specialised July sales at Christie’s and Sotheby’s in London. With 85.3 %, Sotheby’s achieved its highest percentage of lots sold at an Old Masters evening sale ($67.88 million). Christie’s, in the meantime, also congratulated itself for the sale of a marble by André Beauneveu for $12 million during a sale with an inviting title: “The Exceptional Sale”. Many professionals today see the market in a favourable light. Pierre-Antoine Martenet, for example, observes that “since the sub-primes crisis, we’ve felt a desire amongst investors to acquire more tangible, less liquid assets. I think that there’s also a desire to return to investments with meaning, less finance and private equity, but a promotion of heritage assets, in which art obviously has a major role to play.”

Others see the new sourcing modes as an opportunity. This is the case of Bertrand Gautier who declares: “Today, it’s difficult to find works, but at the same time, opportunities have never been so great. The rarefaction of goods is coupled with a globalisation of supply. The market is rediscovering things as a result of studies being easier to consult. The market is benefiting from art history.” This year, at the Maastricht Fair, gallery Talabardon & Gautier displayed one such rediscovery: Ignace-François Bonhommé, a proto-realist painter, who produced a view of a foundry in Abainville, in the French region of La Meuse. The work sold very quickly, on the evening of the opening. And as tradition has it, without any price stipulation… For Diek Grœnewald, one thing is certain: “The market is doing well. Collectors are ready to buy, interest rates are low. There are many reasons to buy art, the best reason still being to buy what one likes.” In this sector, as in any other, it’s a very useful thing to bear in mind!

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