LONDON Confidence has surged back into the art market faster than predicted, and although contemporary values were hit hard by the credit crunch, auctioneers are confident that this week's sales will cement the recovery.
A week after a new world auction record of $104.3 million was set for a Giacometti statue, rival powerhouses Christie's and Sotheby's hold post-war and contemporary sales in London which are expected to eclipse last year's disappointing levels.
But questions remain over the strength of the global economic recovery, and over whether post-war and contemporary works on offer have the same rarity factor as recent old master, modern and impressionist auctions.
In its latest survey of confidence in the U.S. and European contemporary sector, the ArtTactic research group said it had returned to levels last seen in the autumn of 2007.
"Both the primary and auction market confidence are now in positive territory, signaling that we could see a further uplift in the market from current levels," it said.
"However, uncertainty about the sustainability of the global economic recovery remains."
Christie's sold art worth just 8.4 million pounds at its equivalent auction in 2009, but estimates that it will bring in 26.3-38.3 million pounds ($41.1-59.9 million) Thursday.
Sotheby's fared better in early 2009, raising 17.9 million pounds at its evening sale in February. Wednesday, it expects to earn 32.3-45.2 million pounds.
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The sharply higher numbers are partly explained by contemporary sales in New York in November, where Christie's sold $74.2 million worth of art and Sotheby's $134.4 million.
Those results already suggested that the financial crisis, which knocked contemporary values and deterred sellers, was already over for wealthy collectors who view art as an investment opportunity or an aesthetic choice, or both.
Art experts believe that, frustrated at limited returns in some markets, millionaires and billionaires have been attracted to physical commodities ranging from gold to paintings.
With Chinese tycoons joining the recent Russian rush into art, added to private and institutional buying from the Middle East where major new museums are opening, confidence is returning to pre-crisis levels, they believe.
In December, Christie's sold the most expensive lot of 2009, a Raphael, for $47.9 million, a record for any work on paper.
And last week Sotheby's notched the overall auction record of $104.3 million for Giacometti's stick-thin statue "L'homme qui marche I" (Walking Man I), beating the previous top lot of $104.2 million for a Picasso painting set in New York in 2004.
And as prices rise, the supply of top-quality art tends to increase to match it.
"This is our first major auction of post-war and contemporary art in 2010, and we are encouraged to be able to match the strong demand with an increased level of supply as vendors continue to gain confidence," said Francis Outred, head of post-war and contemporary art at Christie's in Europe.
(Editing by Steve Addison)