NEW YORK - Art is hot.
Despite turmoil in the financial markets, there are no signs that the art market is softening.
The fall auction season in New York saw robust prices across most categories, with postwar and contemporary works in particular going through the roof. It seemed that a record was being shattered every time an art auction was held.
This record haul generated billions of dollars for auction houses such as Sotheby's, contributing to solid earnings but also exposing auctioneers to volatility when sales didn't go as well as expected.
The reason for the art market's strong showing? The weak dollar, expanding world wealth, and new buyers from countries not previously associated with the art-collecting community, experts say. During the last five years, wealthy buyers from Russia, China, India and the Middle East have helped fuel the market.
The boom has occurred against the backdrop of a dreadful year for the U.S. financial sector - a slump that seems to have been offset by the influx of foreign buyers and big American buyers unaffected by the uncertain economy.
These buyers paid astronomical amounts for art. An Andy Warhol painting sold for more than $71 million at a May auction that brought in a total of nearly $385 million. A Matisse fetched more than $33.6 million at a November sale that took in nearly $400 million. A limestone lion sculpture that measures 31/4 inches sold for $57 million earlier this month.
Still, the art market has not been immune to turbulence.
Sotheby's suffered a lackluster modern and impressionist sale in November at which Van Gogh's
, estimated to be worth $28 million to $35 million, failed to sell and many other works sold below their estimates. Sotheby's stock plunged 28 percent that day because of investors' fears that the company had overextended itself in guaranteeing seller's reserve - the price the house promises to pay if a certain item doesn't sell.
"What the market was saying was that the property being offered was very heavily estimated and the quality was not there to support this value," said Ian Peck, chief executive officer of the art-finance firm Art Capital Group.
Peck says his blanket advice to clients was to take a wait-and-see attitude for the next year. "Our view is that within 12 months we'll know if this thing is getting worse, meaning if a recession occurs in the U.S. market or not."
Generally, the art market trails the Dow Jones industrial average and other market indexes by about six to eight months, Peck said. Stocks have been volatile since the summer, but people at auction houses have not yet seen much of a downturn because of problems on Wall Street.
"If you look around, particularly in New York, it seems like everyone's a billionaire and they don't seem to be affected terribly by this credit crunch," said David Nash, of Mitchell-Innes & Nash, a private New York art consultancy and gallery.
Art from all eras is selling well, but works by modern masters such as Warhol and Mark Rothko and living artists including Richard Prince and Damien Hirst are especially hot. In Middle Eastern countries such as the United Arab Emirates, the appetite is for modern American works by such artists as Keith Haring, Jean Michel Basquiat, and Warhol, Peck said.
"The most money is chasing these modern and contemporary names, and that's just what's in fashion," Peck said.
Michael Moses, cofounder of the Mei Moses All Art Index, which looks at the historical performance of art as an investment and asset class, said that the art-buying public has become global.
"It's a relatively new precedent that there is so much wealth being created all over the world," he said.
"My experience over the last month or so is that there is a lot of money around, a lot of people looking to buy things," Nash said. "There are not very many people who've said I'm not going to buy this now because I'm worried about the state of the economy."