• Art Market Holds its Nerve
• News in Brief
• Tax and Law - Points of interest

 
LUCAS CRANACH THE ELDER
Portrait of a Young Lady Holding Grapes and Apples
1528
oil on panel transferred to canvas, 32 1/8 by 21 5/8 inches.
sold for US$5 million (£2.6 million)

Art Market Holds its Nerve

Dealers and auction house specialists wondered what would happen as the first major art market events of 2008 coincided with a stock market plunge that forced the US Government to slash interest rates. Yet, not for the first time recently, sales proved remarkably resilient despite the world economy suffering another attack of jitters.

It helped that the parts of the art market suddenly in the firing line were Old Master paintings, sculpture and drawings which have a core of knowledgeable collectors less fashion driven than buyers of contemporary art and dealers who need to stock up for The European Fine Art Fair (TEFAF) in Maastricht in March. Old Masters do have a reassuring solidity about them but then the art market remains strong across many sectors. Last November's Impressionist and Modern Art sale at Sotheby's, heralded by some as the start of a collapse, was actually very successful (total sale figures over the three days being $269.7 million/ £128.8 million) apart from a few lots and Christie's auction the night before that went well (total sales $394.9 million/ £188.9 million).

Although Christie's has now moved its New York Old Master paintings sale to April, Sotheby's has stayed with the traditional January date. Its auction brought in a total of almost US$82.5 million (£42.2 million), midway between the low and high pre-sale estimates, which, given the wider economic picture, was a good performance. Less than two-thirds of the lots sold but that is not particularly unusual in a sector where finding enough works of the right quality has long been a problem.

Works by Jan Brueghel the Elder, Jacopo Tintoretto and Claude Lorrain with seven figure estimates failed to sell but there was plenty of good news with sculptures commanding the two highest prices. Three bidders competed for a rare south German limewood figure of Saint Catherine by Tilman Riemenschneider dating from c.1505. A telephone buyer paid a record US$6.3 million (£3.2 million) for the 41 inches (104cms) high carving. Not far behind was Donatello's The San Felice Madonna, a terracotta relief of the Virgin and Child from c.1450 - 60, which doubled its estimate to fetch a record US$5.6 million (£2.9 million). Two paintings by Lucas Cranach the Elder also performed well with an American private collector paying US$5 million (£2.6 million) for Portrait of a Young Lady Holding Grapes and Apples while the dealer Konrad Bernheimer bought Phyllis and Aristotle for US$4 million (£2 million).

Both major auction houses also held sales of Old Master drawings and 16 of the world's leading specialist dealers mounted simultaneous exhibitions in an event called Master Drawings in New York, which has developed from a similar initiative in London in July.

Master Drawings in New York is deliberately held to coincide with the auction house sales. Christie's auction was a low key affair bringing in US$4 million (£2 million) but 73% of the lots sold with private collectors buying the majority of the most expensive works. Sotheby's had a more impressive line-up with the American private investor Jeffrey Horvitz's collection of more than 100 Italian drawings meriting a separate catalogue. The collection produced uneven results but this was more due to the variable quality of the drawings and some optimistic estimates rather than the wider economic turmoil. Just 62.5% of the lots sold, which is low for a much-hyped single owner collection, although the total of almost US$5 million (£2.5 million) was in the middle of the pre-sale estimate. Part of the problem was that it was a lot of material for a highly specialized market to absorb. The best works performed well with an American collector paying a record US$385,000 (£196,710) for Agostino Carracci's St Jerome in His Study.

But the most expensive drawing of the week was in Sotheby's general sale. Fra Bartolommeo's A Double-Sided Sheet of Studies of Heads was one of the most important works to appear on the market for some time and soared past its estimate to sell for US$1.9 million (£993,767). Rarity and quality are still driving this section of the market and to bidders the madness of Wall Street seemed much further away than a short cab ride to downtown New York.

News in Brief

Art Market Sales Almost Double in Four Years

A huge growth in the international art market led to sales almost doubling in four years to their highest ever annual total of 43.3 billion (£32.3 billion) in 2006, a new report commissioned by The European Fine Art Foundation, which organises The European Fine Art Fair (TEFAF) in Maastricht, has revealed.

Between 2002 and 2006 sales in the world art market soared by 95% while the number of transactions increased by almost a quarter, according to the report The International Art Market, a Survey of Europe in a Global Context compiled by Dr Clare McAndrew, a cultural economist.

Among the report's other findings are that China has become the fourth largest national market in the world with a 5% share and that Europe's proportion dropped by 6.3% while the US increased by 2.4%. The UK remains the largest market in the European Union with 60% of the European market and a 27% global share while France, with a world share of 6.4%, and Germany, with 2.9%, have also remained in the top 5 countries.

Although the report only covers up to 2006, figures from Sotheby's and Christie's for last year show that the boom in the market continued. Christie's reported a 36% increase in sales to US$6.3 billion while Sotheby's recorded a rise of 51% to US$6.2 billion.

Russian Art Show Opens at the Royal Academy

After political wrangling between Britain and Russia over whether the show would be allowed to come to London, an important exhibition of masterpieces from collections in Russian museums opened at the Royal Academy of Arts. One of the highlights of From Russia, which continues until 18th April 2008, is Henri Matisse's The Dance.

Americana Week Totals US$32 Million

Sales in Sotheby's Americana Week in New York in January, which included furniture, folk art, silver, prints and other decorative works, totalled US$13.8 million while Christie's sales brought in US$18.1 million. The most expensive lot at Sotheby's was the McMichael- Tilghman Family tea table, made in Philadelphia about 1755, which fetched US$1.8 million but the highest price of the week was US$5.4 million at Christie's for the Stevenson Family Chippendale mahogany tea table, also from Philadelphia, dating from c.1770.

First Evening Sale in Hong Kong

The growing importance of the market for Asian contemporary and Chinese 20th century art has been underlined by Christie's announcement that it will hold its first evening sale of these works in Hong Kong on 24th May 2008.

Tax and Law - Points of interest

HM Revenue and Customs (HMRC) have recently published draft legislation to come into effect on 6th April 2008 covering:

The changes to the Capital Gains Tax (CGT) rules which, as reported earlier, will introduce a new flat rate of CGT of 18% and will abolish both taper relief and indexation for gains made by individuals. The Chancellor also announced a new relief for disposals of a business by individuals so that in effect a flat rate of CGT of 10% will apply to gains made on or after 6th April 2008 up to a lifetime maximum of £1 million, provided certain conditions are met;

Assets held on 31st March 1982 which will be compulsorily re-based to their market value at that date, whereas previously an owner could choose to use the acquisition cost or the market value on acquisition if it produced a smaller gain; and

Wide ranging changes to the rules relating to domicile and residence.

UK Export Licensing of Cultural Goods

It was generally accepted that the UK Export Licensing regime had not worked well for UK institutions in relation to Sir Joshua Reynolds' Portrait of Omai, which is now on loan to the National Gallery of Ireland in Dublin even though a matching offer was produced to secure the painting when it was offered for sale and export.

Following the Omai saga, The Quinquennial Review of The Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest produced recommendations that UK institutions should have a binding right to purchase in certain circumstances and this was endorsed by the Goodison Report with the proviso that the exact nature of the commitment required of a vendor should be made totally clear. Failure to comply with a binding offer to sell to a UK Institution would then lead to the application for a licence being refused and an `indefinite stop' being imposed.

These reforms were considered at a ministerial level and in October 2007 it was decided not to implement them and that, therefore, the existing regime will continue as usual.