When even the experts are warning that prices for works of art have become obscene, it is probably time to run a dispassionate eye over the multimillion-dollar frenzy for certain works.
Last week, Nu couché (sur le côté gauche) by Amedeo Modigliani sold to an unnamed buyer for $157m, and a new record was set for a David Hockney painting when Pacific Coast Highway and Santa Monica was bought for $28.5m.
Clare McAndrew of consultancy Arts Economics says: “It’s slightly obscene, isn’t it? When you think of the other artists who could be supported by that money.” She adds that the Modigliani transaction is an illustration of the wealthy elite’s predilection for untamed spending: “To spend money on one thing like that shows ultra wealth gone wild.”
The price reached at the Modigliani auction reflects the state of the world economy, says McAndrew, who also compiles an annual study of the global art market with Art Basel and Swiss bank UBS. Stronger growth is fuelling the market, spiralling prices reflect rising rampant and rising inequality across advanced economies.
The art market broadly matched the growth rate of the global economy between 2000 and 2017, according to the latest Art Basel and UBS report, with world GDP and wealth both rising last year. Even so, some paintings are so famous they can fetch dizzyingly high prices when the economy is in a downturn.
Simple economics suggest the price of an artwork is determined by how much a buyer is prepared to spend and what a seller would accept. The cold equation of supply and demand also means the death of an artist – immediately limiting their output – raises the value of their work.
But unlike widgets, whose value can be calculated by looking at rates of production and demand from consumers, there are myriad intangibles in the world of art. Any price tag at all can seem jarring for a creative medium where consumption is an issue of taste, not necessity, and the motive for the work is, ideally, creative expression, not financial gain.
Obviously some artists play the market. Purists have objected to Damien Hirst’s production-line techniques, and Andy Warhol turned the idea of authenticity upside down with his screen prints. Yet works by both artists have retained their value. Gustav Metzger, who died aged 90 last year, was revered for his auto-destructive art: he sprayed acid on canvas to cause damage over time, defying the notion of long-term commercial value.
For the most famous artists, the sums can be huge. With its $450m price tag six months ago, Leonardo da Vinci’s Salvator Mundi remains the most expensive painting ever sold. Thirteen Picassos were bought for $155m over two days in February by one art consultancy, while the overall value of global fine-art sales rose by 12% to $63.7bn last year.
Experts say the finest works rarely come up for sale, yet demand is increasing as newly wealthy Chinese buyers compete with financiers and Saudi sheikhs.
“Scarcity rules,” says McAndrew. “People are always waiting in the wings. It can be 30 years before a painting comes upand some never turn around in people’s lifetimes.”
Nu couché (sur le côté gauche), painted in 1917, three years before Modigliani’s death at 35, is one of the Italian painter’s largest works, and one of only five of his nudes ever to come up for auction. It was last sold in 2003, for $26.9m – reportedly to the Irish horse breeder John Magnier at Christie’s.
This would appear to make fine art a surefire winner for wealthy investors. But the market has crashed before, most spectacularly after Japanese buyers acquired half of all the impressionist art put on the market in 1990. The bubble burst a year later when Japan’s economy crashed after an unsustainable property boom.
Today, hedge fund billionaires and wealthy Asian investors trade canvases like stocks, bonds or commodities – mirroring a trend for the hoarding of fine wines, where crates of vintage red can be left unopened for decades, then sold at higher prices.
Mega sales may boost egos in the City but the Modigliani sale alone could put at least 10,000 students through a year of art school in the UK.
Andrew Renton, professor of curating at Goldsmiths University, agrees that the money could be put to better use elsewhere. “There are impossible amounts of money to be made in the world today. It can be used for good, or in a lot of very interesting ways. Culture is a good use, but I also think putting £1bn into curing cancer is also good.”
• This article was amended on 21 May 2018 to attribute to McAndrew a comment mistakenly attributed initially to Renton, to change Art Economics to Arts Economics, and to add Art Basel as a collaborator on the global art market study.
