Impressions of a new art market

Auction houses are adapting to online sales and the rise of the super-rich in Asia and the Middle East. Lucy Tobin reports

Half the country might be struggling to eke out their wage packet to cover heating bills, but somewhere out there, someone very rich is preparing to drop as much as £35m on a Picasso portrait.

The artist's 1932 Femme assise près d'une fenêtre painting of his "golden muse", Marie-Therese Walter, is expected to be the top lot at Sotheby's Impressionist, Modern and Surreal Evening Auction in London next month. But it's not the only record that could be broken: Sotheby's reckons it will sell paintings worth £103m to £149m on the night, well up on the £79m to £113m it expected to this time last year from the equivalent auction of 2012.

It's the same story at rival Christie's, whose Impressionist and Modern Art Evening Sale next month is led by Modigliani's Jeanne Hébuterne (au chapeau), with a £16m to £22m estimate. The auction house expects to net £98m to £147m from the whole sale, again considerably up on the forecast for a similar sale a year ago, when the takings estimate was £86m to £127m.

It's an important indication of investor sentiment in the art world. Last year was already a record: Christie's saw its global sales leap to £3.92bn, from £3.6bn in 2011. Mark Rothko's Orange, Red, Yellow went for £53.9m, setting a world record for an auction of contemporary art. Sotheby's, which is listed in New York, posted auction sales of $4.4bn (£2.8bn) in 2012.

But this year, a combination of the growth in online auctions and more bidders means the art world expects more. Christie's offered its first online auction in 2006; since then it has launched online-only auctions, holding six of these last year, with more than 30 already pencilled in for the next 12 months.

Going online also means the average art bidder is changing. Last year, a fifth of all bids placed with Christie's came from new clients. Now investment analysts believe next month's sales could hail the start of a bumper year for art as new galleries and museums opening across Asia and the Middle East fuel demand from the super-rich.

"We used to have a very narrow group of buyers in the UK and America who were established collectors," says Jussi Pylkkanen, president of Christie's in Europe, the Middle East, Russia and India. "Today they're still there, but bidders are now from every place and every walk of life, from the Ukraine, Kazakhstan, Egypt, China, Russia, and the Middle East – it's very difficult to come up with a single description of them, apart from the fact that they all share a passion to collect and to buy art. And the last three years have seen a very steady progress of results, particularly at the top end of the market."

Fresh interest in investing in art from emerging markets hasn't cropped up by chance. Art fairs in Hong Kong, Dubai, and Abu Dhabi have grown enormously: Hong Kong's access to 3 million high net worth individuals in Asia and 60 billionaires in mainland China has helped it to become the world's third-biggest art market by auction sales.

The major auction houses now regularly fly their wares over to Doha, Russia and Hong Kong. "It's a huge amount of work to move some of the world's most significant works of art to areas where those works are not familiar, but it's proved hugely successful," Mr Pylkkanen says. "Taking the Rembrandts and Warhols over helped engage new bidders in the art world, and they are now also buying classical furniture, art, and wine."

In part, the heightened interest in emerging markets has made British auction houses a victim of their success. Christie's auction sales of Asian art slumped last year – down by a quarter to £415m – in part due to competition from Chinese auctioneers.

But by contrast, the global recession – encouraging investors to lust after tangible and alternative assets – has helped art sales to grow. Equities are shaky, bond yields slim, but a Picasso appears to only increase in value.

Auctioneers, however, claim it's not just Picassos and other multimillion-pound paintings that are fuelling growth. Sales at Christie's South Kensington sales room, which sells art and antiques that cost £1,000 or less, rose by 20 per cent last year. Apparently even Joe Bloggs likes to dabble in art when recession depresses other markets.

Still, the art world isn't talking the economy down. "When the stock markets are strong and plenty of capital is generated, it will be spent on great works of art too," says Mr Pylkkanen. "I'd love to see the financial market strengthening – it will lead to more money being spent in art, and more works being offered."

Surreal prices? Most expensive works

Edvard Munch’s ‘The Scream’ was sold at Sotheby’s New York in May last year for $119,922,500

Pablo Picasso’s ‘Nude, Green Leaves and Bust’ was sold for £66m by Christie’s in New York in 2010

Albert Giacometti’s ‘L’Homme Qui Marche’ reached £65m when it was sold in 2010

Picasso’s ‘Boy With a Pipe’ raised £64m at auction in 2004

Gustav Klimt’s ‘Portrait of Adele Bloch-Bauer II’ went for £54m in 2006

The picture shown alongside 'Art's biggest fraud' (24 January) is Amadeo Modigliani’s Portrait of Jeanne Hebuterne, an internationally celebrated masterpiece and an unquestionably genuine work by the artist which will be offered at auction on 6 February 2013 at Christie’s, London. We are happy to reiterate the position for complete clarity.