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GLOBAL REPORT

Good year on auction block

Spending at Sotheby's is up 46% in 2007. But some expect to see a slowdown as sub-prime losses are felt.

January 07, 2008|Linda Sandler | Bloomberg News

Last year was the year Bill Gross said his stamps had outperformed his bond fund, Stanley Ho beat Damien Hirst in bidding for a truffle and Amazon.com Inc. paid 39 times estimates for a book of J.K. Rowling stories.

Among the mishaps in 2007, Marie Antoinette's pearls and a Van Gogh painting didn't sell.

Money poured into the sales rooms in New York, London and Hong Kong, swelling auction sales by 46% at Sotheby's, to $5.33 billion; Christie's International totals aren't in yet. Andy Warhol and Mark Rothko paintings fetched more than $70 million apiece in May, and Jeff Koons in November deposed Hirst as the priciest living artist.

Analysts are watching to see whether prices continue to rise in 2008. The biggest financial institutions have marked down more than $80 billion after a surge in sub-prime mortgage defaults prompted investors to shun higher-risk debt.

"The art market will soften, and an adjustment in values will take place, but it may not happen for six months to a year," billionaire Los Angeles collector Eli Broad said in August. "Many of the buyers of contemporary art have been hedge fund managers and other investors who obviously are having a difficult time and have lost lots of money."

The 2007 boom boosted values of all kinds of collectibles, including Chinese ceramics and antiquities, diamonds and stamps. Here are some high points and low points of the auction year:

* Billionaire fund manager Gross raised $9.1 million for charity in June by selling early British stamps -- mostly bought in 2000 -- that outperformed his Pacific Investment Management Co.'s bond fund, the world's largest.

"It's four times cost," Gross said after the sale in New York. "It's better than the stock market."

* Amazon, after selling more than 12 million Harry Potter books online, paid almost $4 million at Sotheby's for Rowling's "The Tales of Beedle the Bard." Amazon's website has summaries and reviews of the bestselling author's handwritten stories, which no one currently has permission to publish.

* Christie's sold Steve McQueen's 1963 Ferrari Lusso for $2.3 million, or twice the top estimate, at a California auction in August. Christie's soon after dismantled its car auction business, which has much lower commissions than art sales.

* Casino billionaire Ho paid $330,000 for a white Italian truffle at a charity auction, exceeding the previous record by about 50%. In September, Ho paid $8.9 million, the highest price ever for a Qing Dynasty bronze horse head, and gave it to the Chinese government, which is trying to recover its treasures.

* Banksy's "Di Faced Tenners," or 10-pound bank notes carrying Princess Diana's face instead of Queen Elizabeth II's, tripled their top estimate at a Bonhams sale in October, fetching 24,000 pounds ($48,000) as demand for the artist soared.

There were scattered signs the auction houses were entering more difficult markets in items that found no buyers after being featured in the media worldwide.

* A necklace made from the pearls of Marie Antoinette, who was guillotined in 1793, failed to sell Dec. 12 at Christie's, which valued it at as much as 400,000 pounds.

* The same day, Maria Callas' love letters to Giovanni Battista Meneghini, her former husband and mentor, failed to sell at a Milan auction. Sotheby's, which had priced the opera singer's letters at as much as 70,000 euros ($102,739), re-offered them successfully at a 50% discount.

* The year's big loser was Vincent Van Gogh's "The Fields (Wheat Fields)," estimated by Sotheby's at as much as $35 million. It received no bids at a Nov. 7 auction, and Sotheby's stock plunged 35% over three days as it took a $14.6-million loss on guaranteed impressionist works that sold below their estimates.

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