UK's Frieze fair puts art market recovery to test

When the art world hits London this week for the Frieze fair and accompanying merry-go-round of auctions, shows and parties, the contemporary market's tentative recovery from a savage slump in 2009 will be put to the test.

Key players, from dealers to collectors and "blue-chip" artists like Damien Hirst, may be hoping for a period of calm after contemporary prices soared from 2005 to 2008 before the financial crisis, when volumes shrank dramatically.

"It is a much more stable, steady business than it was, and hopefully that will be better for dealers and collectors," said Robert Read, fine art expert at specialist insurer Hiscox.

"I think the correction has been good. It's all very exciting having things soaring out of control, but it will always be shortlived."

Auction houses have seen the contemporary art market more than double in size year-on-year so far in 2010, but that is after it had shrunk to less than a quarter of its 2008 value.

Hundreds of millions of dollars should change hands at fairs, auction houses and in private rooms across London in the next few days -- Read predicts the Frieze Art Fair alone will display art worth $375 million -- but the risks are still there.

"Despite a strong start to 2010, the contemporary summer auctions in London were showing signs of fatigue with aggressive sellers, leading to over-confident estimates coupled with uncertainty around the spill-over effect of the sovereign debt crisis at the time," said ArtTactic analyst Anders Petterson.

But he described the atmosphere as "calmer" ahead of the autumn bonanza that Frieze week has become, and added:

"The overall art market is seeking safety in quality, rarity and excellent provenance. There are still a lot of buyers out there, but they have become much more selective."

One of the most closely watched lots on sale this week will be Hirst's "I am become death, shatterer of worlds", a five-metre wide butterfly painting expected to raise 2.5-3.5 million pounds ($4.0-5.6 million) at Christie's on Thursday.

It is the most important work by the artist to be offered at auction since his one-man sale at Sotheby's in 2008 that stunned the art world by raising 111 million pounds on the eve of the Lehman Brothers collapse.

Analysts said it was the final fling for a contemporary art market that had soared on speculative buying since 2006.

At Frieze Art Fair, held in a giant marquee in Regent's Park in central London every year, more than 170 galleries will be vying for the attention of collectors including super-wealthy tycoons and A-list celebrities.

The event, which runs from October 14-17, has rapidly become one of the key dates in the art market calendar, meaning that Christie's and Sotheby's hold major sales to coincide with it, museums stage key shows and galleries dust off their top works.

Christie's will offer works worth 23.1-32.7 million pounds at its contemporary art auctions, compared with 14.7 million pounds raised at the same time last year. It also has Italian art valued at 14.3-20.2 million pounds on sale.

Sotheby's expects to raise more than 10 million pounds at its main contemporary evening sale on Friday, and over 12 million pounds at its Italian art auction.

There are also fairs running parallel to Frieze, notably the Pavilion of Art & Design in upmarket Berkeley Square which offers works of art and design from the last 150 years.

This October 13-17 fair will feature paintings and drawings by Picasso estimated to be worth tens of millions of pounds.