Angus Maguire is a private art consultant based in London. He can be reached through www.angusmaguireltd.com.
Far too much has been written lately on the economics of the incredible boom in prices for Gerhard Richter’s work – especially the later abstracts – both at auction and on the private market. But as rumours begin to percolate of a recent sale in London of a picture rated to be ‘in the top five works of his entire output’ in and around the $50m mark, perhaps it is time to reassess just how far this market can go, who is fuelling it, and how it may stop (assuming it will).
Charles Ponzi is credited as one of the great financial con artists of the last 100 years, his schemes mimicking a kind of pass the parcel game which relied on the fact that someone is left holding a package that got ever more expensive the more it passed from person to person. Suddenly, when the music stops, there is no one left to pass the parcel to. Simplistic I know but the ever-present mini-markets that inhabit the speculative end of the contemporary art market look to be based on the same short-sighted and potentially criminal understanding of business practice. But perhaps the granddaddy of contemporary painting is different.
Richter’s prices began to move as far back as 2002-3 when $300,000 would buy you a great later abstract measuring 120 x 80 cm. That work would now be marked at around the $5m level on the private market or $3-4m at auction. The same work may have gone unsold at the tag end of the last recession in 1993-4 at only $50,000. At this time only patriotic German collectors (as well as super-savvy international buyers) were interested but it was a new wave of collectors from USA and South Korea from 2002 that began the price correction that we are still witnessing. Then the Russians and Chinese piled in, and are continuing to do so.
Certainly the more domestic sized canvases will continue to sell well at auction at the $5m level as entry level collectors chase trophy works for their new-builds. At the very top, things may well peter out sooner rather than later. The artist produced 1600 of these abstract paintings, about 50% of which were produced in the years 1984-1995. The largest size canvases are in the region of 250 x 200 cm of which there are approximately 100 examples, 58 of which were produced in the most coveted years 1989-1995. Of these, 12 have already been sold at auction at prices where there is no one yet to pass the parcel to, and another 14 are in Museums and Institutions from where they will never be offered again. This leaves 32 extant works of which we need to discount about 10 examples as being weaker. So, all in all, there are roughly 20 masterpieces still to be offered, some of which may already have changed hands privately.
There is little doubt that the demand for these works is still there from new collectors who missed out on Richters when they were cheap. Combine this with a seemingly unlimited wall of money swishing around these emerging markets and it is hard to see an end to these ballooning prices. But the crucial question is whether the current demand can outstrip what is in fact still a large supply. If so, then prices will continue to push upwards, further encouraging owners to consign such works for sale at what are already inflated prices. Perhaps one of these masterpieces might make it to the $100m level, and perhaps there will be other examples of sales in the $80m region. We shall see. It was only last year that Francis Outred at Christie’s London made the extraordinary announcement that during his lifetime he expected to see an artwork sell for $1 billion.
One such masterpiece is appearing next week at Christie’s Evening sale (lot.15) at $12-$18m. It shouldn’t get up to the level seen at Sotheby’s in London for Eric Clapton’s incredible painting ($34m), but if it gets near then we know the game is still in play. Doubtless it will perform well, as will other examples over the forthcoming months but if the clients begin to dwindle before the supply runs out then we are in for a meltdown. Prices will fall off a cliff, as the music will have effectively stopped. Someone somewhere will be left holding a very oversized parcel.