The global art market, which for decades has enjoyed record-breaking prices and often frenzied buying, is facing a foggy future in 2009. In the final months of 2008, big autumn sales in London and New York saw totals dip from half to two-thirds of expectations. Sales also dropped at art fairs such as Art Basel Miami Beach and business at galleries also fell.

Sothebys and Christies, the big guns of the rarefied auction world, are feeling the effects as well. The auction houses have acknowledged prices are off some 30 % and that they are in a period of reassessment and reevaluation. Weve seen it in all the asset classes, that investors rushed to as recently as a year ago including oil, precious metals, real estate and fine art, said Baird Ryan, managing director, Art Capital Group, an art-related financial services firm.

In November a self portrait by Francis Bacon, whose paintings have seen some of the most stunning prices in recent years including $86 million last May, failed to draw any bids at $25 million despite a $40 million pre-sale estimate.

The auction houses averted disaster by encouraging sellers to lower their reserves, the undisclosed minimum price at which a work will sell, but paintings by famous artists like Andy Warhol and Roy Lichtenstein did not sell and both Sothebys and Christies are reviewing their strategic plans. Layoffs look inevitable, and guarantees promised minimums paid to consignors whether or not their work sells at auctionare history.

Reuters