Why This Landscape Should Make Penny-Pinchers Beam

Credit Christie's, at the least, with a sense of humor. Planning its big evening sale of contemporary art on Nov. 12, the auction house chose a genial landscape by Ed Ruscha for the final lot. The title, writ large across the canvas: Not a Bad World, Is It?

Not a bad commentary on the withered art market, either. Prices, volume, and the quality of works on offer have indeed sunk from their '80s heights, thanks to the global slowdown that's making even the affluent count their pennies. But in contrast to 1991's early months, when the Persian Gulf War stopped most buying cold, activity is up. Says New York dealer Andre Emmerich, president of the Art Dealers Association of America: "1985 and '86 were very happy years, and we're there now." During November's bellwether New York auctions of Impressionist, Modern, and contemporary works, Sotheby's and Christie's sold $137.5 million worth of art. That's up from the $105 million taken in at comparable sales last spring, though it lags way behind the $911 million total of November, 1989.

Look beyond those key sectors, which were most inflamed by the speculative fever of the '80s and are most depressed now, and the picture brightens a little more. In such categories as Old Master paintings and antiquities, prices have generally held firm or risen.

Overall, though, the art market has shrunk, and therein lies opportunity for long-term investors: Many dealers--loaded with inventory and needing cash--are willing to bargain. Sellers who are consigning works to the auctioneers are taking lower prices, too, or seeing their possessions languish on the block.

BIG DROP. Investors have a choice of how to play a market like this: conservatively, hewing to the slow, steady categories, or boldly, testing potential new trends in, say, international contemporary art. Either way, buyers should remember that investing in art isn't like purchasing stocks, bonds, or even real estate. Since tastes change, works by an artist sought after in one period may fall completely out of favor in another. And lack of liquidity, always a potential problem, worsens in downturns--especially for works that are less than top-notch. "Selectivity" is the art world's biggest byword these days. Says private dealer Stephen Mazoh: "The number of buyers for run-of-the-mill works has dropped off dramatically." So you're best off buying only what you wouldn't mind keeping and leaving to your heirs.

That said, 1992 presents several buying opportunities--even, with a few caveats, for Impressionist, Modern, and contemporary art. There, prices are at '87 levels, and some experts believe they'll fall further in 1992. And it may even be a plus that many speculators have fled the market: "It's a much more predictable situation than it was in the '80s," says art adviser Jeffrey Deitch. "The market will be more rational."

But buyers should take extra care with French Impressionist paintings, especially the "pretty" second- and third-tier works that were bid up to fantastic levels over the past half-decade by the Japanese. Many of those buyers are experiencing financial difficulties; some may now be forced to sell off their huge art troves, driving down prices.

To make matters worse, since last spring Japanese authorities have been investigating the improper use of art to dodge taxes, descending unannounced on galleries to scour their books. Many Japanese, fearing bad publicity, have stopped buying. Says Hideto Kobayashi, president of the well-known Kobayashi Gallery: "The atmosphere is pretty bad right now in Ginza," home to most of Japan's big dealers.

So investors who want to play it safe may be better off in other art sectors. Prices of Old Masters are ascending fairly steadily, and aren't necessarily expensive. You can find a Rembrandt drawing, for example, for less than $1,000.

HEAVY TRAFFIC. The outlook for American paintings--including such artists as Winslow Homer and Stuart Davis--may be soon start to improve. Prices are off by some 25% from the heights of 1988-89. New York dealer Warren Adelson, for example, recently sold a Maurice B. Prendergast painting for $550,000; in 1989, he would have priced the same work at $750,000. Adelson is offering another Prendergast--Holiday, the Picnic--at $275,000, and he says such lower prices are drawing new buyers. "There seems to be a sense of a floor, a level at which people are talking and buying," Adelson says. "The traffic is definitely there."

Antiquities, too, may be ripe. They've seen steady buying, with prices rising moderately. Lately, activity has quieted down a bit, and buyers can bargain for pieces that are underpriced compared with art sectors inflated by speculative money. Quality Greek and Roman pieces can be had for $10,000 or less. Or buyers can go much higher--Emmerich has a spectacular marble head of the Emperor Hadrian priced at $1 million.

What about the bold--where should they turn? Some experts suggest getting in on the globalization of the contemporary art world. More Latin Americans, Koreans, and Taiwanese are buying art these days, and collectors from all over the world are purchasing artwork from outside their home markets. "The '90s will be a period of internationalization," predicts Patrick Cooney of Citibank's Art Advisory Service.

The hottest area seems to be Latin American art. In November, Christie's and Sotheby's took in a total of $21.7 million for their Latin art sales, vs. $19.8 million a year ago. Although many lots did not sell, nearly 20 artists set new records. At Christie's, a stunning portrait of a flower vendor by Diego Rivera went for $2.97 million--an auction record for any Latin American artist--besting the mark set just the nightbefore at Sotheby's, where Jose MariaVelasco's Valle de Mexico fetched $2.4 million.

Most of the buyers came from South America, where humming economies are creating a new class of arrivistes eager to buy art. But the bidding on many works was international--from the U.S., Europe, even Japan. "Latin American art has found recognition here once and for all," declares Clara Diament Sujo, director of CDS Gallery in New York and a larger gallery in Venezuela.

But not so much recognition that the Latin American market has crested. "It's at a nice point--there's still plenty of works available for $2,000 to $20,000, but there are starting to be superb examples going for above $1 million. That's validating" to an emerging market, says Mary-Anne Martin, a New York dealer who once headed Sotheby's Latin American department.

UP-AND-COMERS. The key to buying is ferreting out artists who are gaining international reputations. Among those already well-known outside their own country are Rivera, Rufino Tamayo, and Frida Kahlo. Beyond them, look for artists represented by galleries in the U.S. and Europe and exhibited by museums.

Martin cites Mexican Olga Costa, one of whose paintings just sold at Christie's for $60,500, vs. a presale estimate of $10,000 to $12,000. And she notes that Mexico's Maria Izquierdo is being called the next Kahlo by some. One Izquierdo sold privately for $220,000 last fall. Martin is offering her Two Tehuana Women with Papaya for $85,000. Sujo adds Jacobo Borges, a Venezuelan whose oils range from $10,000 to $80,000, and German Gargano, an Argentine whose paintings sell for less than $10,000, to the up-and-comers' list.

Internationalism is evident elsewhere, too. There was plenty of American bidding on some prime German paintings at the November auctions. And Japanese contemporary artists are experiencing new support from both Japanese buyers and some Americans. Deitch, for example, calls Tatsuo Miyajima, whose paintings start around $20,000, a "really great international artist." Adds Deitch: "People are looking everywhere to find the most interesting material."

As always with art, getting a return could take a while--but the art world's bulls are sure the outlook is healthy. "The base of collectors is so much bigger than it was 10 years ago," notes Deitch. Sanford L. Smith, who has been operating art fairs for 26 years, is more venturesome: "I think you'll see an explosion in the art market in the spring of '93. There's a lot of pent-up desire to buy things, and when confidence builds after the Presidential election, it'll explode." Perhaps. But art investors should never count on a turnaround as quick as that.