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One of the biggest surprises of the November, 2016 marquee auctions in New York is the presence of seven large abstract paintings by Gerhard Richter in the three evening sales. Richter’s abstracts had been a staple—in fact a driver—of the post-credit crisis art market. Over a seven year period, the works went from being merely valuable to becoming extraordinarily valuable. When the market seemed to have finally have burned itself out in February of 2015 when Chicago collector Kenneth Griffin topped the market with an extraordinary $46m purchase of Abstraktes Bild (599.)

In the nearly two years since, the Richter abstract market had shifted to smaller paintings or works on paper. The abstracts still commanded million-dollar prices. The taste for the biggest pictures, the ones with intimidating presence that elicited prices commensurate with their size, seemed to have petered out. Of the more than 6o sales of large abstract Richters that took place in the last 15 years, only three eight-figure sales were recorded after Griffin’s buy.

In June of 2016, a consignor withdrew an abstract with a big league estimate rather than face the potential for a burnt picture. Buyers, or their representatives, all considered the market a no-fly zone. Which was one of the reasons that Sotheby’s decision to guarantee the Ames collection with its three Richter abstracts alone carrying nearly $50m of the low estimate seemed like a incautious gesture.

If Sotheby’s was taking a risk by bringing three works to a quiet market, Christie’s was doing something riskier by assembling its own raft of Richter abstract paintings led by the third of Eric Clapton’s brilliantly bought triptych of Abstraktes Bild 809-1, 809-2 and 809-4. The legendary bluesman had made what will remain a legendary art trade no matter what happens with Christie’s picture because he turned a $3.4m investment in November of 2001, sales that took place in the context of a city still smoldering with the wreckage of the World Trade Center attacks, into $54m so far and still counting. Even if Christie’s painting sells below the low estimate, Clapton will have made 20-times his money on the trade.

The Richter Market Hits a Wall

This isn’t the first time it seemed like there were too many big Richter abstract paintings on the market in one single week. We’ll get to that story further below. In the meantime, the artist’s market has been experiencing a retrenchment. Drawing on a database of the top 10,000 works sold publicly, Athena Art Finance provided these numbers that illustrate Richter’s recent market momentum from 2010 to the first half of 2016. These chart above does only covers the most valuable Richters sold, it is not a comprehensive tally of every Richter traded publicly. Nonetheless, we can see that after five years of steady growth in the average price of a top Richter work, the market has paused.

If we were to add the two works sold in London in October of 2016 for a combined total of more than $15m, the chart would still tell the same story. The average price of a top Richter (the red bars above), not limited to the abstracts, peaked in 2104 at close to $12m. That same year, as you can see from the light blue line connecting the circles, the volume of top Richters (not all) got over $225m before falling back precipitously to a number well below the break out year of 2010.

Does this chart mean that Gerhard Richter has ceased to be an important factor in the global art market? Of course not. It shows a market of increasingly strong activity that had come to dominate the broader Contemporary art market. The sales peak also coincided with an overall peak in the art market providing a capstone to a run that had started in the nadir of the global financial crisis in 2009. Six years of un-interrupted growth is unusual for most markets. Although the neither art market nor the global economy was in a “usual” cycle for much of that period, it would unrealistic to expect those numbers, especially the average prices to keep moving steadily up and to the right on the chart.

A Brief History of the Richter Abstract Market

Behind the numbers, every market has a story. The growth in value of Gerhard Richter’s abstract paintings has its own multiple narratives that intersect with the price action at auction. To begin with, let’s look at the properties of these paintings that have made them particularly valuable. By the dawn of the 21st century, Gerhard Richter had become a globally recognized and lionized post-war painter. His numerous bodies of work had challenged and extended the role of painting in contemporary art. His many museum shows had confirmed him to be one of the world’s greatest living artists. The abstract painting series was both voluminous, comprising more than 1,000 paintings and well-regarded. Of Richter’s entire output, 38% of the works are in museums.

The abstract paintings, especially the large ones that are more than five feet tall, also have strong museum representation. There are also far fewer of those works than one might think. Some of those most involved in the making of the Richter abstract market say there are probably no more than 120 canvases that are larger than six feet tall, the minimum size for true wall power. With museum attrition and some accounting for quality, the actual available body of works that can perform on the market is closer to 40 or 50. With the right level of demand, prices can go through the roof.

Demand in the Richter market is also a function of the abstract qualities of the work. The artist’s concern in making abstract work was entirely aesthetic. But the result of these immediately recognizable works by a world-famous artist without any discernible subject matter that might alienate or offend buyer was also to create a body of work that could easily become a talisman of great import and, therefore, value.

Richter’s works were always valuable. As we can see from the chart above. The rise in the value of the abstract paintings took place through three distinct phases over a decade and a half. The first phase began at the end of 2006 as a number of works came to market together but achieved prices at Richter’s already established single-digit seven figure level.

Those successful sales built market interest that peaked, somewhat inconceivably, after the first stirrings of the financial crisis in the otherwise crippled Autumn sales in New York. After two years of treading water with only the occasional sale at prices near the low end of the pervious period, Richter’s market for large abstracts started to show life again in the beginning of 2011.

That second phase of sales which included the decisive moment in November 2011 when Sotheby’s brought the eight Sursock collection canvases to market. All sold very well setting up the peak in June of 2013 when Christie’s sold the first of Eric Clapton’s three works for a record $34m.

The next market phase validated prices between the Sursock high of $2om and the Clapton record of $34m with more than half a dozen sales solidly in that price band. In this last phase, the majority of the big abstract works brought to market made prices above $20m with only a rare market failure. The price action culminated in hedge fund founder Kenneth Griffin’s record $46m price that seemed to shut the market with a resounding clang.

Price Action 

The next chart presents the same information within a different framework. If we separate the sales of big Richter abstracts into two phases, the one before the credit crisis and the one that followed the financial markets seizing, we can see that the second followed a similar array of prices but on a larger scale.

From 2007 to 2009, big Richter abstracts rose in price from the bottom. Although there were three strong sales that set reference points for the top of the market, the majority of the prices rose along a slope defined by the lower range. In other words, as buyers recognized the potential value of these paintings, they cautious bid up the minimum price it took to acquire one.

In the second phase, from 2009 to October of 2016, we can see that prices began to rise along the lower boundary before switching in mid-2011 to a progression along the upper slope of the price range. Instead of cautiously raising the lowest price, bidders opened a wider range of potential outcomes. To be sure, numerous works sold in the $5 to $10m range during the 2011 to 2013 period. Still, a significant gap developed between market above $10m. It really became a market between $15m and $25m for a quality Richter abstract.

As noted on the chart, 17 works sold during the first phase. Only three of those works made more than $10m. During the second phase, 41 works sold. Just about half of those achieved prices above $20m.

Exceptional works—and nine of them sold publicly during this period—were now priced above $25m which just happens to be the middle of the estimate range on two of the Ames works and the high estimate for the Clapton painting.

Getting to Griffin

So how did we get from one market phase to another? The first signs of life in the Richter market actually came in November of 2007. The Contemporary art market was in full bloom. Prices for many artists were pushing higher and higher. Sotheby’s under the leadership of Tobias Meyer brought Abstraktes Bild 596 to market with a $6 to $8m estimate range. The painting beat the estimates to sell for nearly $10m.

This woke Meyer up to the market’s potential. At the next possible sale, Sotheby’s brought Struktur (1) to the auction block with a conservative estimate of £1.5m to £2.5m. Meyer might have been work’s general lack of color. He might have simply been unwilling to commit to the price signal of the previous sale. Either way, the signal was confirmed. Struktur (1) more than doubled the high estimate to sell for £4.6m or nearly $9m, pretty much what 596 had sold for.

If there had been doubts about those prices, Christie’s dispelled them the next May when it sold Abstraktes Bild 625 for $14.6m over a confident $7-10m estimate. Almost to illustrate how Richter abstracts had ‘moved from money to big money,’ as one market player remarked, the 625 had traded at Chrstie’s 5 years earlier for a quarter of the price or $3.36m.

The very next night, Roman Abramovich pushed the price point higher to $15.1m when he bought lot 23 at Sotheby’s for his girlfriend Dasha Zukova. We know this because she was photographed a few years later sitting beneath the work.

The secret to the Richter market at that time was Meyer’s ability to compare the abstracts to Monet’s waterlillies, another very valuable series of works with abstract elements that lacked market supply. Having persuaded potential buyers who were not Richter collectors that the abstracts presented a similar body of work—many pictures but only a few great ones—Meyer was further able to convince his buyers that the abstracts were a worthy substitute for a work by Monet.

The final confirmation of Richter’s price potential came almost too late. In November of 2008, as the auction houses groaned under the weight of their guaranteed offerings that buyers avoided out of an abundance of caution in those first days of what would become the Great Recession, abstract number 710 rang the bell at $14.8m or nearly the same price as six months—and a world—earlier.

Meyer and Sotheby’s would have to wait another two years before the Richter market showed signs of life again. During the November 2010 Evening sales of Contemporary art, there were two Richter abstract paintings on offer. 584-1, a landscape oriented work, sold just below the low estimate to make $4.3m. But another, larger work, 780-4, sold for $11m against a $7m high estimate. The price didn’t quite match the $15m mark hit three times in 2008 but it was strong enough to embolden Meyer and his team.

There were a number of sales during the next year but the inflection point came in November when Sotheby’s brought the Sursock collection of eight Richter abstract paintings to market. The Autumn of 2011 presented huge test for the large abstract market. Sotheby’s work of the previous year had five serious bidders chasing the lot well above the estimate range. Five bidders was strong but the remaining four bidders weren’t enough to absorb the Sursock works—three of which were large scale abstracts and the remaining five were more domestically sized—along with a smaller abstract at Christie’s.

The abstracts passed the market test with flying colors resoundingly beating estimates across the board sometimes by multiples of the high estimate. The three largest works sold in order of their respective sizes for $20m, $18m and $14m. Lily Safra, who only a year and a half before had announced the surprising return of the masterpiece art market with her $104m purchase of Alberto Giacometti’s Walking Man, bought the top lot for $20.8m and promptly donated it to the Israel Museum.

Bidding was so intense on the largest works that the underbidder for the second biggest work of the evening, Gudrun, had to wait another 5 years before finding a worthwhile alternative.

Safra’s highly visible purchase—and donation—set off a rush of interest in the Richter abstract market. Global trophy hunters, safe-haven seekers and museum board prospects all turned their sites toward the Richter abstract market.

A year later, Christie’s brought the first of the Eric Clapton works to market during the Frieze auctions in London. They set a new record for the abstracts at $34m. The upper boundary of the market had been moved again making room for more works to sell between $20m and $30m.

Just to illustrate this process, Sotheby’s sold abstract 712 from 1990 in November, 2012 for $17.4m. Eighteen months later, in May of 2014, the same work was resold for $29.2m. Something similar happened with abstract 712 which had rekindled the market in 201o. That work has a very interesting sales history. In 2005, it made $1.2m at Chrsitie’s. In 2010, as was mentioned above, it sold for nearly 10 times that amount or $11.2m. Another five years on, in 2015, the same painting traded for $28.5m at Sotheby’s again.

That sale marked the end of the most recent active phase of the Richter abstract market. This week, we’ll learn a great deal more. Has the market hiatus primed a new group of buyers who will compete for the three works in the $20+m estimate range. Will those strong sales spark another round of buying—and selling?

Some experts in the market say that after Griffin’s purchase and the resale of 712, all of the buyers who wanted a large abstract now had one. A shallow pool of bidders would make it difficult to revive the market. But as we’ve seen, Christie’s chose this same moment—when Sotheby’s has three large examples on the market—to bring the last of the Clapton works. We’ll soon see what they know about the market that no one else does.