The $120 million Edvard Munch’s “The Scream” fetched in New York Wednesday night set a new record for the art market, which has returned to growth after a bumpy few years post-credit crisis.
The sale of a stake in Damian Hirst’s diamond-encrusted skull — entitled “For the Love of God” — which valued the work at around 50 million pounds ($31 million) famously symbolized the bubble at the top of the modern art market before the collapse of Lehman Brothers.
So, does the hefty price paid by an anonymous bidder (rumored on Twitter to be billionaire Russian tycoon Roman Abramovitch) for “The Scream” indicate that the art market is again close to its peak?
“It’s one of the most recognizable and celebrated works of art in the world,” Nicholas Forrest, art market analyst, told CNBC.com. “Regardless of what the broader market is doing, it would have got good money.”
While the art market is not always directly correlated to the stock market, it is broadly indicative of economic turmoil and recovery.
Auction turnover dropped 81 percent between May 2008 and May 2009 as the credit crisis hit personal wealth and eroded confidence.
The art market tends to move in cycles of six to seven years, with two to three years towards its peak. It is due to peak late this year or during 2013, according to Forrest. There are a number of high-profile sales of works by artists including Claude Monet and Paul Cézanne due towards the end of the year which will help demonstrate the strength of the market.
“The market has improved significantly, especially in America,” Forrest said. “There are a lot more American buyers in the market and recent sales have been successful.”
The presence of buyers from rapidly growing economic powers in this cycle could prolong the peak further, he pointed out.
Chinese and Russian buyers have helped buoy the market in recent years, with Chinese buyers favoring Chinese art, and Russians modern works.
“We have got China and other new powers in the market, the likes of which have not been seen before,” Forrest said.