Posted on December 2, 2009 - by Venik
Rising oil price refuels Russian taste for fine art
Oligarchs start spending again at London art sales
Four Russian art sales in London this week are expected to raise £55m as Russian oligarchs return with petrodollars burning a hole in their pockets.
Upmarket auction house Sotheby’s made a total of £19.3m at its Russian art sale series this week. A selection of treasures such as a Fabergé cigarette case and a pair of Fabergé cufflinks, which belonged to Russia’s royal family before they were killed in 1918, raised a staggering £7.1m – a huge increase on the expected £900,000.
The so-called “Romanov heirlooms” had been lost for more than 90 years before they were discovered in Sweden this year. The top-selling painting at the auction was Venice by Alexandra Ekster, which sold for £1,049,250.
The sale was a far cry from last year, when demand for art dampened in the midst of the credit crunch, and auctioneer Christie’s failed to sell a Francis Bacon self-portrait in New York.
Auction houses now hope wealthy Russians will help boost business after a year of decline. A large majority of the buyers at the Sotheby’s sale were Russian and an increasing number of the country’s billionaires appear to be returning to the high end of the art market as their economy, which is dependent on oil, starts to recover.
Oil prices now stand at around $77 a barrel after falling to a five-year low of about $35 in December 2008.
William MacDougall, co-director of MacDougall Auctions, which specialises in Russian art and whose client base is 90% Russian, said that he expected sales to pick up at his auction this week. “[The Russians] were a bit cautious from the crisis. Last November they didn’t know where they were … Now we know that we are not in a Great Depression. The worst cases haven’t happened. They may have lost a lot of money but they still have a lot. For example, someone who used to be worth £1bn may now be worth £600m, but that is still a lot of money.”
MacDougall believes that after the experience of the global financial crisis, the Russians now see art as a safer way of investing their money.
Neil Shearing, an expert on emerging Europe at Capital Economics, said that he expected the Russian economy to grow by 4.5% in 2010 after falling about 9% this year.
“The economy was freefall in the first quarter of the this year. [The government] put lots of stimulus into the economy so growth next year will look quite impressive,” he said.
However, he said that he did not think it would last because Russia’s economy is based on oil and oil prices were expected to fall back again. “All these oligarchs are based in the commodities sector.”
Russia’s billionaires were hit hard in the crisis. This year Forbes revealed that the number of billionaires in Moscow had fallen to just 27, which meant that it lost its title of world billionaire capital to New York, which had 55. London was second with 28.
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