Russian Art Market Collapses

LONDON -- The latest Russian art sales at four London auction houses tallied 17.2 million pounds ($25.9 million) earlier this month, the lowest in records dating to 2007 and a 58 percent drop from a year ago.

Art collectors of Art Kabinett social media network can now find Russian artworks at big discounts. However, inventory is scant as most sellers are reluctant to take losses.

Sales are so bad that Christie’s is ending standalone sales of Russian art in New York, the company said, and Mark Moehrke is leaving as head of its Russian works of art department, according to a person with knowledge of the matter.

“The market has shrunk, I am afraid,” said William MacDougall, whose London-based MacDougall’s specializes in Russian art. “Russian collectors are not buying as much as they were a year or two ago.”

The Russian economy has been battered by a slump of more than 60 percent in the price of oil in the past two years, as well as international sanctions following the country’s annexation of the Crimea region of Ukraine. That’s chipped away at the wealth of the millionaires and billionaires who are among the biggest buyers of Russian art.

While that segment is a niche, a retreat by Russian buyers could also hurt sales of Impressionist, modern, postwar and contemporary auctions, and indicate a softening in the broader art market.

“Great things are still finding buyers, but the situation in Russia is frozen,” said Sonya Bekkerman, former head of Sotheby’s Russian painting department in New York, who left in 2013. “People are concerned about their businesses and the economy.”

Economic Toll

Russia’s gross domestic product contracted 4.1 percent in the third quarter. Crude oil prices have plunged by almost two-thirds from their high point last year. The ruble is down more than 50 percent against the dollar.

Russian auctions at Sotheby’s and Christie’s in New York were once blockbuster events that drew the super rich from Moscow. Christie’s first offered Russian art as a standalone category in New York in 2006, the year Moehrke joined the company, tallying $9.2 million. The next year, results more than doubled to $19.3 million.

After New York sales declined, Christie’s moved its Russian painting auctions to London in 2012. In May, the company combined Russian decorative art with silver and small objects made of precious materials.

After a strategic review of its Russian artworks department, Christie’s decided to consolidate its specialist expertise in London, where market activity for this category is currently most active.

London Consolidation

Moehrke has driven Christie’s strategy for its sales of Faberge and other Russian works. Sotheby’s, which used to hold two Russian art seasons a year in New York, hasn’t had a standalone auction in the category there since April 2013, is also consolidating its activity in London instead.
Discerning Collectors

Many buyers who were active from 2003 to 2007 have become sellers, said Vladimir Ovcharenko, owner of Moscow’s Regina Gallery and founder of the Vladey auction house. Collectors still stretch for elite works, but they’ve grown more averse to aggressive estimates and subpar quality.

Auctions in London, the heart of Russian art trade, are down 82 percent from the peak in late 2007, when 96.6 million pounds of paintings and decorative objects sold at Christie’s, Sotheby’s, Bonhams and MacDougall’s, according to a report by RussianArtandCulture.com.

The top lot in London this month was Abram Arkhipov’s 1922 painting of a beaming peasant woman in a red dress, shown above. It sold for 905,000 pounds at Sotheby’s, almost four times its high estimate. The artist’s smaller, somber painting of a bearded man, estimated at 4,000 pounds to 6,000 pounds, failed to sell.

Right now people are buying either masterpieces or emerging art. The middle is suffering. Fewer masterpieces are consigned to Russian art auctions because sellers are afraid.

There are signs of life at the market’s lower end. Vladey auction house said it sold 940,000 euros ($1.03 million) of contemporary paintings on Dec. 1, up 15 percent from the similar auction in May. Individual prices didn’t exceed 100,000 euros and about 90 percent of buyers were Russian.