Richter 80: The Art Impact Scale

February 9, 2012

Gerhard Richter turns 80 today.

The world’s 12th most valuable artist of all time and by far the most valuable living artist today, Gerhard Richter has 90 artworks included in Skate’s ranking of the Top 5000 most expensive works of art according to public auction prices (Skate’s Top 5000); their aggregate market value slightly exceeds $500 million.

The pulse of Richter’s market has been pounding ecstatically over the last several years (see Exhibit 1 below). Last year brought a new price record of $20.8 million for a single artwork by the master (Abstraktes Bild, pictured above), and the robust pipeline of February auctions suggests continued strong liquidity for the Richter market in 2012. Eighteen Richter works are being auctioned on February 14-17.

Exhibit 1—Richter Auction Sales (Skate’s Top 5000 eligible works)

Source: www.skatepress.com

Unlike many other contemporary artists, Gerhard Richter commands a strong market for almost all periods of his artistic career. The sole exception is his most recent works, which owners are wisely refusing to feed to the auction market for now. While the $20 million benchmark for the 1997 Abstraktes Bild mentioned above still looks like an outlier, from an investment point of view the big bet for the Richter market is whether his works from the late 1990s and 2000s will be priced on par or at a premium to those created in the 1980s. There is a considerable amount of capital locked into Richter’s works from the past decade (Richter has produced an average of more than 60 works per annum during this period), and many collectors around the world appear to be betting that Richter’s post-mortem market will be as strong as the post-mortem markets have been for works by Warhol and Basquiat.

Exhibit 2—Correlation of Auction Price and Year of Creation for Richter Works

Source: www.skatepress.com

While historical returns are no guarantee of future results, in the case of Richter they are nevertheless spectacular. His works essentially represent a well-groomed alternative investment product. Of the 90 Richter works in Skate’s Top 5000, 15 are repeat sales. In other words, one out of six Richter works sold at auction for more than $2 million has had a prior auction history. This strong liquidity is matched by spectacular returns; the weighted average effective rate of return (ERR) on Richter repeat sales is 29.48% per annum (before ownership costs and taxes), which far exceeds the weighted average ERR for repeat sales in general in Skate’s Top 5000 (approximately 4.72% per annum).

Credit goes not only to Richter but also to all the professionals who have worked to create the market for his works. His catalogues raisonné are a model of transparency and have been widely adopted as standard reference sources. His official website – http://www.gerhard-richter.com – is as good as the investor relations website of a transparent public company.

Gerhard Richter has accomplished for contemporary art what Charles Richter did for geology. Just as we use the Richter scale to measure earthquakes we should also use the Richter scale to measure the impact of contemporary art. Richter 80 is probably as far as one can go.

Happy Birthday, Mr. Richter!


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