And we continue to… pontificate – Russian Art Week winds up

Nov 29th, 2014 | By | Category: Journal


Results at Russian Art week were uneven.  A couple of important pictures attracted attention and Serov’s lovely portrait of Maria Zeitlin set a new auction record for a Russian artwork of pounds 9.2m beating the pounds 7.88m raised for Nicolai Roerich’s Madonna Libris at Bonhams in summer 2013.  However, only 47% of lots sold against the average selling rate of 54% in Russian art sales.  A few rich buyers felt confident enough to go after the masterpieces by the big names and there were at least 4 bidders after the Serov but the middle market is falling away with the US led sanctions starting to bite and the rouble losing 40% of its value this year against a basket of international currencies.

Meanwhile the global standoff between the US and Russia continues.  The US uses Russia’s behaviour in Ukraine as a cover for sanctions designed to damage the Russian oil industry as a punishment for Russia trying to diversify sales of oil out of the US$.  In the short-term Russia is suffering and Moscow’s international hotels were empty on a recent trip along with most of the restaurants.  In the long-term Russia will adjust to the sanctions and find a way forward just as Iran has done after being sanctioned in a similar way.  Meanwhile Putin hints that the drop in the oil price is caused by the Saudi’s(who have exported more oil to China than the US since 2009) who are trying to weaken the US Shale oil industry whose costs of extraction are higher than their own and those of Russia.

With Europe’s dependence on Russia’s energy supplies(Germany 30% of their energy needs met by Russia, Italy 23%, Netherlands 34%, Poland 91%, Sweden 46%, Finland 76%, Lithuania 92% and even the Uk at 13%) Europe is uneasy about the growing crisis whereas the US is almost self-sufficient in energy due to the shale gas and oil revolution.  Russia continues to develop its own exports of oil, gas and uranium as well a buying up other sources in Africa and Asia.  In the short-term denying Russian companies access to Western Capital Markets and Western know-how in exploration and engineering is slowing down Russia’s plans but in the long-term these resources are there with Russia holding the largest reserves of both oil and gas.

And the art market will follow.  In the short-term rich collectors will focus on the masterpieces they know they cannot miss and the middle market will languish but, in time, when Russia sorts out the current issues, they will continue to dominate the European energy markets (in 2014 Russia was the largest oil producer in the world with an average daily production of just over 10m barrels) and the fortunes created by these astounding figures will propel the Russian art market to new heights.  And this effect will not be limited just to the Russian art market.  As Russian collectors become more sophisticated they continue to buy the best of their own art, such as the Serov, but rather than hoovering up anything Russian as before, and thus supporting the minor artworks in the Russian art sales, they are diversifying into the Western Art Markets.  They want great art whether Russian or not and, despite years of false starts, are finally becoming a force in the Western Art Market. If the demand for second-rate Russian artworks completely tails off, and it has been suprisiing how long this market has gone on for, then major Russian artworks may start being placed in more general sales with the second-rate artworks abandoned to minor auction houses.

A breakdown of the recent sales follows :-
















The following analysis of the Russian art week sales comes from the New York Times, Scott Raeburn, Nov 28th 2014, “At Auctions, Russians start to hedge their bets.”

LONDON — The art market is sometimes said to be a “lagging indicator.” If there’s a downturn in the economy, the effects can take time to percolate through to the buying habits of wealthy collectors.

On Sept. 15, 2008, the day Lehman Brothers, the United States’ fourth-largest investment bank, filed for bankruptcy protection, Damien Hirst sold 70.5 million pounds, or about $127 million, of his works at Sotheby’s in London. Some dealers at the sale hailed the result as proof that the market for contemporary art had finally become impervious to the economy’s fluctuations.

Over the next nine months, auction prices plummeted by as much as 50 percent.

Circa 1922 Seascape by Nisolas Roerich 'And we continue Fishing' sold for pounds 1.2m at MacDougals

Circa 1922 Seascape by Nicolas Roerich ‘And we continue Fishing’ sold for pounds 1.2m at McDougall’s

There was no such time lag last Monday evening when Sotheby’s tried to sell 37 lots of high-value Russian art, a market dominated by affluent Russians.

Earlier in the day, Russia’s finance minister, Anton Siluanov, announced that the combination of Western sanctions triggered by his country’s interventions in Ukraine and a 30 percent drop in the price of oil would cost his economy $140 billion. Meanwhile, the ruble has lost 30 percent of its value this year and inflation in Russia is predicted to reach 9 percent by the end of 2014, blighting the country’s nascent middle class.

At Sotheby’s, only 12 of the lots, or 32 percent, found buyers.

One of the failed sales was Konstantin Makovsky’s garage door-size 1914 painting of the 17th-century Russian patriot Ivan Susanin being murdered. “It is your patriotic duty to buy this painting, ladies and gentlemen,” the auctioneer Mark Poltimore had gamely and futilely pleaded. Its American-based private seller had been hoping for at least £1.5 million.

The session managed to raise £5 million, with a top price of £1.3 million given for a 1917 painting of the Crimean town of Bakhchisarai by the Russian painter and stage designer Boris Kustodiev. It sold to a single bid in the room. Sotheby’s equivalent auction last year took £7.8 million with a selling rate of 74 percent.

“It was a reflection of what’s going on in Russia,” said the London-based specialist dealer James Butterwick. “A lot of the usual Russian-based dealers weren’t in London. Collectors are distracted.”

As we know, a certain stratum of Russian society became immensely rich through the sell-off of state assets that followed the dissolution of the Soviet Union in 1991. According to the financial research database Wealth Insight, Moscow was home to 90 billionaires, the second most of any city, in 2013. Yet the Russian capital did not feature in Wealth Insight’s list of the top 20 cities for millionaires.

Yawning disparities in wealth all too often underpin extravagant spending on art. “National markets are an entry point for wealthy clients,” said the London-based art adviser Wendy Goldsmith, a former auctioneer at Christie’s Russian sales. “Then the auction houses’ dazzling marketing turns their heads and they see what else can be bought. But there is still money there for Russian masterpieces.”

On the morning of Sotheby’s sale, Christie’s was able to offer two outstanding paintings that were able to attract oligarch bidding.

One was a 1910 portrait of the beautiful intellectual Maria Zetlin, standing, Gustav Klimt-style, in front of an open window, by Valentin Serov (1865-1911), a Russian artist associated with the Vienna Secession movement. Widely recognized as a late masterpiece, it was in the collection of the Municipality of Ramat Gan, Israel, and was sold to benefit the region’s museums. The Serov, estimated at £1.5 million to £2.5 million, sold to a telephone bid of £9.3 million, the highest price ever achieved for a painting in a Russian art sale. The buyer was identified by dealers as the London-based billionaire collector Viatcheslav Kantor, the major shareholder in the Russian fertilizer maker OAO Acron.

A 1910 portrait of Maria Zeitlin by Valentin Serov sold at Christie's for pounds 9.3m

A 1910 portrait of Maria Zeitlin by Valentin Serov sold at Christie’s for pounds 9.3m

“For the top Russian pieces, people will pay crazy prices,” said the underbidder, Alex Lachmann, a dealer based in Cologne, Germany. “Trade for the middle market is rubbish now.”

Yuri Annenkov’s 1922 mixed-media portrait of the writer Aleksandr Tikhonov is a landmark Russian avant-garde painting, reflected in the £2.3 million paid for it at Christie’s in 2007. When it reappeared at the same auction room on Monday it was bought by a Russian-speaking woman on a cellphone within the estimate for £4 million.

Nevertheless, the selling rate dropped from 71 percent at the equivalent sale last year to 57 percent, though the two paintings’ high prices helped lift the total sale amount to £20.2 million, an increase on last year’s £16.9 million. Sotheby’s rival four-session offering took £10.8 million.

Bonhams also struggled to find buyers at its more mainstream 178-lot Russian sale on Wednesday. Just 38 percent of the material was sold, raising a modest £1.7 million. A top price of £302,500 — well below the low estimate of £500,000 — was given for Aleksandr Yakovlev’s 1918 tempera-on-canvas painting of an audience at a theater in China, “Loge de Théâtre à Pekin.”

The selling rate dipped to 34 percent on the same day at the specialist Russian art auctioneers MacDougall’s, but among the 340 lots, a circa 1922 seascape by the Symbolist painter Nicholas Roerich, “And We Continue Fishing,” did sell for a low estimate of £1.2 million. The total proceeds were £7.8 million.

London’s “Russia Week” auctions have contracted to about half what they were in 2007, when the November series was worth £96.6 million, according to statistics from the website Russia’s wealthy collectors are now concentrating more on big-ticket Old Masters, Impressionist and Modern and contemporary art. That said, they are still willing to splurge on an occasional trophy painting or a status-enhancing piece of Fabergé. A typically exquisite circa 1900 Fabergé enamel and rock crystal study of a cornflower sold to a Russian private bidder for £314,500 at Christie’s.

The question is, if Russia’s economy tips into recession, or extreme geopolitical crisis, will there be enough domestic demand left to sustain a category of “national” sale that has been a feature of the London auction scene since the 1980s? Or will the focus of demand simply switch more to London itself, which, according to recent rough estimates, is home to a shifting population of 150,000 to 400,000 Russians? On Nov. 25, the London real estate broker Knight Frank said that 21 percent of the properties it had sold for more than £10 million in the past six months had been bought by Russians. During the previous six months Russians had bought 13 percent.

“The auction houses will probably have to drop the idea of evening sales and just take in fewer lots,” said Mr. Butterwick, the London dealer. “There might be fewer buyers based in Russia, but there are plenty living here.”

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Tags: Roerich's And we continue fishing, Russian art market., Russian art week, Russianartandculture, Serov's Maria Zeitlin, US sanctions against Russia

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