If the the 39-carat diamond auctioned by Christie’s recently, which went for $5.4 million, is any indication, then the luxury jewelry industry may be bouncing back quicker than other industries.

However the New York Times is suggesting something greater: that the entire luxury jewelry industry may, in fact, be recession–proof. Mark Dunhill, chief executive officer of Fabergé, is quoted:

“During times of economic uncertainly real luxury comes back,” Mr. Dunhill said. At the same time, however, “there is a tendency to approach special purchases in a more discerning and discreet manner.”

Jean-Christophe Bédos, Boucheron’s chief executive calls the new approach ‘Beyond Luxury’: “[A] unique expression of excellence in design and craftsmanship.”

What Mr. Dunhill calls “real luxury” are the kinds of things that Lambda personalities prefer — the truly exclusive products and experiences that bestow status.

This is consistent with what some in the luxe industry are calling a return to the roots of luxe. I wrote previously that it’s possible the only way back for the luxe industry is to go exclusive. Not all agree, however it will become a strategy for some brands going forward.

Following up on my previous post covering the Contemporary Art Auctions that took place in London in June, I can happily note that positive predictions proved accurate. Despite several pessimistic estimates by market pundits, outcomes are above expectations.

Prestigious auction house Sotheby’s sold 37 out of 40 lots for a total of £25,549,450 (almost $42 million). This is 92.5 per cent sold, a sell-through percentage which, according to Sotheby’s contemporary art expert Cheyenne Westphal, is “one of the highest ever”. The auction’s top price came for Andy Warhol’s Tunafish Disaster, which sold for £3,737,250 ($ 6.1 million). Ten of the lots at the auction sold for over $1 million.

At Christie’s 35 out of 40, or 88 per cent, of lots were sold for a total of £31,063,350 ($31,778,604). This minimal failure rate of 12 per cent compares with the auction house’s best performances, when the market was on its height. Peter Doig’s Night Playground went for £3,009,250 (ca $5 million), fetching the highest ever action price for the artist.

Phillips De Pury & Company sold 30 out of 39, or 77 per cent, of their lots for a total of 7,396,700. It set the sales record for an astonishing 18 artists including Jack Goldstein and Ashley Bickerton.

However, despite these delightful outcomes, sales results of auctions are still substantially below what contemporary art auctions achieved when the art boom was at its height.

As one could expect, this is not necessarily the fault of bidders, but largely due to consignors, who are unwilling to sell high-profile, high-value pieces in a weak market. Auction houses have also shown an unusual unwillingness to guarantee sellers minimum prices on lots.

Considering this, as well the current financial climate, bidders were impressively keen, chasing artists rarely or even never seen at auction. Art advisor Wendy Goldsmith, quoted at Bloomberg.com, said that buyers “now focus on the available material. The market has stabilized. From now on things will improve”.

Photo by Ehsan Khakbaz

Contemporary art auctions are happening left and right in London this summer. Sotheby’s had one on June 25-26, then Phillips de Pury (June 29), and now Christie’s is running one (June 30-July 1).

Some have expressed pessimistic predictions on sales figures. The famous British art critic Ben Lewis, who made the documentary “The Great Contemporary Art Bubble”, is among them. He depicts the art market in a far from flattering way, describing it as a world of secret business and market manipulation, where unscrupulous art dealers inflate prices.

On September 15th 2008, the day Lehman Brothers collapsed, and the world finance market began its worst downfall in decades, Sotheby’s held auctions that sold art for a record total of £111m. Because of the critical standpoint Lewis had taken, Sotheby’s had banned him from these auctions, accusing him of a negative view of contemporary art. However, the art market was not shielded from the blooming recession, and eventually the art bubble also burst. Since it’s peak in September last year, contemporary art prices have dropped in price by up to 50 percent.

However, this may be about to change again, and Lewis’s predictions may prove to be overly pessimistic. If the outcome of the recent Art Basel fair is anything to judge by, auction houses could expect good results to come. The art fair experienced its highest visitor numbers ever, and according to the Wall Street Journal, organisers talked of “unexpectedly strong sales”, and many galleries were reportedly satisfied with their outcomes.

This possible resurgence suggests that buyers interested in timeless luxury still see the long-term benefits that art can offer even amidst the recession. Art gives them the chance to invest in an asset that they can surround themselves with in their homes or work spaces, rather than just put in stock portfolios, and which offers social status on a level incomparable to other commodities.

The Wall Street Journal quotes the Cologne dealer Gabrielle Ammann, from Art Basel’s parallel fair Design Miami/Basel, who stressed, “This year we have had really important collectors who are interested in beautiful and timeless design, not those who want quick money-making blue chips”.

Both Theta and Lambda types should be attracted by the benefits that buying art has to offer. For Thetas, who use socially-derived understandings of product characteristics as a basis for their consumption, the social status that owning art brings will be appealing. For Lambdas, a piece of art could be seen as the ultimate expression of individuality, and purchasing it fulfils their wishes to stand out as unique.

Photo by amandafarah

Earlier this week, Pierre Bergé, partner of the late Yves Saint Laurent, put the pair’s large collection of art up for auction at Christie’s. The results were stunning in today’s economic climate–the works took in $264 million. It’s a good reminder that despite the recession, there are still plenty of wealthy people willing to spend on rare things that they interpret as truly luxurious. The Matisse paintings fetched a great deal in particular, because, as the New York Times notes

Few Matisse paintings of quality come on the market, and each of the three Matisse paintings did better than its estimates.

A Picasso was pulled from the auction when bidding stopped at 21 million euros, less than the 25-30 million euro range expected. Said Isabelle de Wavrin, deputy editor of BeauxArts magazine:

Picassos are not rare. But everyone is looking for a good Matisse.

Those who can afford true luxury will continue to seek it in today’s economic climate–luxury is what makes us human. Those who sell luxury need to ensure that what they’re offering is truly unique.

The New York real estate market has been hit hard by the credit crunch, experiencing a dramatic downturn in sales, to such an extent that realtors are turning to extreme and unusual methods to attract buyers for their homes.

Hall F. Willkie, president of Brown Harris Stevens, is holding a number of sophisticated events at his new residential developments to lure in the luxury buyer. He accepts that with slow markets there is a call for price cuts but still feels that there is a place for unique events. Recently, the firm has tried exhibiting a range of expensive jewellery, with a diamond expert on hand to offer advice. He has also joined forces with Christie’s, to hold a preview for an auction of modern South Asian art in their luxury apartments.

A different approach to securing a buyer could be offering one’s house as first prize in a raffle. This is indeed what Tim and Zoë Bawtree are in the process of doing. After the £850,000 house, which featured on Grand Designs, failed to sell through traditional methods, they dreamt up the contest in a bid to beat the housing slump. Each ticket has gone on sale for £25; however there is a catch – the three-bedroom “eco-home” home will only be given away if at least 40,000 tickets are sold. This is to cover the costs of stamp duty, furnishings and a donation to Cancer Research as well as the value of the house.

However, Michele Kleier, president of Gumley Haft Kleier, believes that the luxury buyer will not be seduced by gimmicky special events, calling it ‘a waste of time’.

“Nobody who’s spending $13 million on an apartment cares about your free vacation to Disney World or Chocolate tasting with five different chocolatiers. If you need a gimmick to get me in, there’s something wrong with this apartment”.

Only time will tell whether the gimmicks will lure and secure luxury house buyers, but in a period when the housing market has reached an all-time low, it might be worth staging fashion shows, art exhibtions and book signings to get the prospective buyer in.

A mid-century modernist house in the desert of southern California, outside Palm Springs, will go on auction next spring as part of an art auction through Christie’s on postwar and contemporary art.  It has a listing estimate of $15 to $25 million.

As prices in the art market have surged over the last few years, the idea that classic architecture (in this case, a design by Richard Neutra) is a form of high art is creating new opportunities in the luxury art market.

The home was bought about 15 years ago and had been advertised as a tear-down, according to a recent article in the New York Times.  After an exhaustive restoration, the home now has been restored to its original condition.

The huge range in the pre-sale estimate indicates that certain buyers might be willing to pay much more for a home with such a pedigree and shows the way that luxury retailing is making its way through every sector of the economy.  It also indicates that the preservation of classic architecture might be served well not only by public interest bodies but by private enthusiasts with the money to spend.

Is it connoisseurship when people overpay? Shouldn’t they know better? Or are they just putting their appreciation of the object they’re buying above all else?

I pose these questions after Sotheby’s and Christie’s held fine art auctions this week. Souren Melikian posits in yesterday’s IHT that the link between the price paid for items and the artistic achievement displayed was tenuous at best. Sure, these were one of a kind pieces from some of the masters—but if nothing else bidders were inconsistent. At Sotheby’s, a Cezanne watercolor went for an “unthinkable” $25.5 million, but was quickly followed by sketches that went for a “modest” $2.28 million and an “absurdly low” 1.27 million.

Melikian acknowledges that it is difficult to tell what the price of a very rare work of art should be, but two paintings that were certainly worthy, a “breathtaking masterpiece” by Maurice de Vlaminck and a “beautiful” painting by early Impressionist Eva Gonzales, found zero bids.

Of course the bidders were paying what they thought was a fair price for the art—but if the art lacked the quality and aesthetics expected for how much was paid (at least in the opinion of the IHT reporter)—can we consider the buyers to be connoisseurs? Maybe. Beauty remains in the eye of the beholder / holder of wealth.