Art prices look good for region after slide

Art prices are down by 50 per cent but they are stabilising and have created an attractive market for bargain hunters. says auction house.

Art prices are down by about 50 per cent compared with last year but they are stabilising and have created an attractive market for bargain hunters, according to the regional head of the auction house Bonhams. Matthew Girling, the chief executive for UK and Europe for the 216-year-old British auction house, said the return to normality after several years of record-setting prices was positive for the long-term health of the region's art market.

"What has happened here is that there was a bubble, a big spike called contemporary art," he said. "This region got carried along [by] that wave of emotions, which was fuelled to some extent by auction houses and the media, and it all got itself pumped up and out of proportion. "I think what's happening now is a good thing for the art market in the long run. It couldn't have gone on like that." Nevertheless, there is wistfulness in the way that Mr Girling describes the auction house's first sale in Dubai in March last year, which set a world record price for a Farhad Moshiri piece when it sold for US$1.048 million (Dh3.8m), triple the estimate.

"You could have blown my socks off when we made $15m on our first sale," he said. "But things making five, six or 10 times their estimates isn't the art market behaving in a normal, rational way." The global art market's return to rationality has not hurt Bonhams as much as its larger rivals Sotheby's and Christie's, mainly because it spent the boom years focused on mergers and acquisitions, while others spent them chasing the profitable but volatile contemporary art market - the art world equivalent of stocking up on credit default swaps.

When contemporary art prices took a dive, Bonhams suffered little, he said. As a result, it only had to lay off "relatively few" employees earlier in the year and only among the administrative staff. Today, Bonhams' more staid focus on older art is providing a solid source of income. "Old Masters paintings; we have had a fantastic year," he said. "Nineteenth-century paintings; we've had a great year. They didn't go up in the same way that contemporary art had done, and because there is still rarity there, they haven't suffered."

In fact, one of Bonhams's 19th-century pieces, Rudolph Swoboda's Orientalist painting The Carpet Seller, sold for a record $826,000 at the auction house's sale in Dubai in May. Hopes for a repeat of such prices are not as high for the company's October 12 auction at the One and Only Royal Mirage in Dubai, but Mr Girling is still optimistic. While this week marked the one-year anniversary of the fall of Lehman Brothers, it also marked the sale of the most expensive piece of artwork of all time: Damien Hirst's Golden Calf, which sold for £111m (Dh673.4m) at auction the same day the financial crisis began in earnest.

The art market, like all markets, is cyclical, Mr Girling said, and such astronomical price tags would return before too long. "Prices will get back to the heady levels and go beyond them in time," he said. "I think it could take 10 years, but in collectors' terms, that's not a long time." @Email:[e-mail]