With the American economy smarting from a weak dollar and an erratic stock market, New York's chief auction houses are counting heavily on new collectors from Europe, Asia and the Middle East to sustain the art boom.

When the flagship New York fall auctions start Tuesday, American collectors are largely expected to watch from the sidelines while foreign buyers dominate the bidding for the priciest Impressionist, modern and contemporary art. The major auction houses -- Sotheby's, Christie's and Phillips de Pury & Co. -- predict this global buying will push their combined sales during the two weeks of auctions to as much as $2 billion, up from $1.3 billion last November and $764 million in November 2005.

See a slideshow of some of the major works that will be on the auction block next week.

Sale highlights at Sotheby's include a Gauguin view of a Tahitian woman estimated to go for up to $60 million, a late Van Gogh depiction of a wheat field for up to $35 million, and a Francis Bacon bullfighter for up to $45 million. Overall, Sotheby's expects its sales to bring in as much as $977 million. Christie's, meantime, is selling art it estimates could bring in up to $1.03 billion, including two Rothko abstracts that could fetch as much as $30 million each; a Warhol portrait of Elizabeth Taylor being sold by actor Hugh Grant estimated at up to $35 million; and a Cézanne watercolor of a gardener for up to $25 million. The rival houses also each feature a sculpture by Jeff Koons from the artist's 1994 series examining popular holidays. Each is estimated to fetch up to $20 million.

From Moscow to Mumbai

To ensure an international turnout, the auction houses are retooling their marketing efforts and sales offerings. Sotheby's broke a record for a Chinese contemporary artwork last month in London and now the auctioneer is adding million-dollar works by Chinese artists like Yue Minjun to its New York evening sale for the first time. By contrast, the sale is nearly devoid of local art stars like Barnaby Furnas who are lately coveted by U.S. collectors.

Christie's, meanwhile, has instructed its specialists to make more house calls to foreign buyers, including those benefiting from record petroleum prices, to show off art that could "plug holes" in their collections. The auctioneer even shipped a painting to Hong Kong so a prospective bidder could eye it up close, at home.

"We used to be thinking about hedge funds, but now we're looking for barrels of oil," says David Norman, Sotheby's world-wide co-chairman of Impressionist and modern art.

This attention shift also involves catering to an international set whose shopping styles don't necessarily match those of Americans, Mr. Norman says. American collectors tend to enjoy bidding themselves or through well-known surrogates. But Mr. Norman says he has come in as early as 8:30 a.m. and stayed after 7 p.m. to show art to foreign buyers who don't want to be seen at the auction house during the workday. On the other hand, the new clientele are so geographically diverse -- often bidding remotely -- that they are less insistent about being wined and dined at fancy dinners during the two weeks of sales, according to Tobias Meyer, Sotheby's world-wide chairman of contemporary art. (Only the hometown crowd is expected to attend a Sotheby's dinner honoring Ellsworth Kelly.)

It's a remarkable change for American collectors, who have for decades wielded the most purchasing power at these sales. But about a year ago they began being outbid consistently by newly minted millionaires from Moscow to Mumbai, many of whom made fortunes in the global commodities boom. In May, for example, not a single American vied for the Rothko that Sotheby's sold for $72.8 million, and the painting went to an anonymous telephone bidder.

America's role in the art market is still being tested: After the credit crisis hit Wall Street this summer, some dealers worried that Americans would slow their art buying and therefore cause the entire market to crash.

Dollar as 'Rebate'

Americans did wind up buying a smaller percentage of contemporary art at minor sales last month in London -- they accounted for 19% of buyers at Sotheby's Oct. 12 sale, down from a typical third -- but the London sales nevertheless were deemed a measured success.

"I'm not as worried about the art market as I was in London," says David Zwirner, a New York dealer. "The art market is just so broad and has infiltrated so many lifestyles that it's become part of our social fabric, and you can't easily strip that away."

But the stakes are higher in New York, where Americans traditionally hold sway. They still bought heavily earlier this fall at New York sales of wine, silver, folk art and photographs. But art experts are keeping a closer eye on how much they buy at the coming contemporary sales because American buyers often determine -- with their purchases -- which contemporary artists are most fashionable, like Richard Prince. "The postwar market cannot survive just on foreign buyers," says Amy Cappellazzo, Christie's international co-head of postwar and contemporary art.

Cracks in the overall market already have been spotted by Jianping Mei and Michael Moses, co-founders of Beautiful Asset Advisors and creators of the Mei Moses All Art Index. The index compares repeat sales at auction of roughly 12,000 objects from 1925 through this spring. As of July 1, the index's return was 13% for the year, compared to the 20.5% growth in the S&P 500 for the same period and the art index's 22% return in the first half of last year. "The froth seems to be coming off," Mr. Moses says.

U.S. collectors who are selling works now may benefit the most. Sotheby's says about eight works, or just under 10% of its evening sale of Impressionist art, comes via collectors affected by the financial turmoil in the U.S., including the credit crisis. But Mr. Norman says an even greater number of owners consigned works in hopes that the weak dollar will bring high prices from foreign buyers.

Tiqui Atencio Demirdjian, a major collector from London, says she and her European friends do plan to buy more at the November sales: "Every little bit of a rebate [from the weak dollar] feels nice, especially when you're overpaying for art."

The auction houses have a lot riding on the sales. All three have tied up a bundle of their own cash to win consignments. Sotheby's board permitted executives to stake up to $500 million to secure coveted pieces; as a result, it has signed guarantees for 62 lots at its two evening sales. Christie's has guaranteed 57 lots for its evening sales. With a guarantee, the auction house essentially pledges a price to a seller, and in return, gets a larger cut -- sometimes as much as 40% -- of any profit above its promised sale price.

Matthew Marks, a New York dealer, says the move could pay off: "It's still early days with all these international buyers, but some will undoubtedly build great collections. Having a lot of money sure helps.

The Wall Street Journal - November 2, 2007