If the recent art market boom had a poster child, it may have been the British painter Lucian Freud. Before the boom ended suddenly in summer 2008, Freud's paintings (like The Sparrowhawk, pictured here at a 2008 Christie's auction in London) fetched sky-high prices, buoyed by an auction scene that seemed intent on adding zeroes to integers. It was stunning that any work by a living artist could fetch more than $30 million -- but then the bottom fell out, the exuberance ended, and the market reeled from a year and a half of anguish.Now an art-market recovery could be in effect -- and that it should be led by a Freud self-portrait is nothing short of poetic. In London, contemporary auctions are coming to the three major houses -- Sotheby's (BID), Christie's (CRUPF) and Phillips de Pury -- and signs look positive. Along with Freud, coveted pieces by Peter Doig and Yves Klein will go on the block; the season's presale estimate is set at $104 million, up 68% from the same set of auctions held a year earlier.

$80 Million Paintings, Then Freefall

The market peaked in May 2008, with the $86 million sale of a Francis Bacon triptych: part of a $120 million shopping spree by Russian tycoon Roman Abramovich that included Freud's $33.6 million Benefits Supervisor Sleeping. High prices persisted into June, when Abramovich was outbid for Monet's $80 million Le Bassin aux Nympheas. That's when the celebration ended. The market was limping by September, when the global financial meltdown sent it into freefall.

In the journey of despair that followed, every aspect of the market has been challenged: guaranteed minimum pricing, auction inventory, auction house organization, sales strategy. Contemporary art prices fell more than 70%, auction house revenues suffered, and many lots failed to move. The art market lost most of its liquidity as collectors held their best pieces, understanding that they risked fetching low prices if they sent art to auction.

With lower-quality art on the block, buyers stayed away, and prices fell further. Throughout 2009, a self-reinforcing toxicity gripped the market. But by the end of last year, hints of a recovery took root. Buyers and sellers took risks, but the results were mixed. At a Christie's sale, an aggressive presale estimate for an Andy Warhol painting was not met, and the piece failed to sell. But a day later at Sotheby's, Warhol's 200 One Dollar Bills moved for a monstrous $43.8 million. The discrepancy exposes the market's recent unpredictability: Every nagging malaise seems paired with a glimmer of hope.

Appetite for Risk

The contemporary-art auction season opens with a vote on art-collector sentiment. Higher presale estimates and more exciting pieces suggest that auction houses stung throughout 2009 are again willing to take risks -- or, more likely, they don't see what they're doing this year as risky.

Last February, auctions held by Christie's, Sotheby's, and Phillips de Pury in London sold an aggregate £37.9 million ($53.5 million), a fraction compared to the heady days of the boom. This year, the three houses' aggregate estimate is $104 million, and Sotheby's alone has set a presale estimate of £32 million (about $53 million) for its contemporary collection. The Sotheby's auction will consist of 80 lots and will be littered with inventory designed to trigger bidders' excitement. Freud's Self-Portrait with Black Eye (painted after the artist's dispute with a London taxi driver) is the highest-priced piece, expected to bring in at least $5 million. Four other Freud paintings are also on the block.

Sotheby's notes that collectors are being drawn to high-caliber pieces by established artists. "That Warhol price helped a lot," said Cheyenne Westphal, Sotheby's European chairman of contemporary art," Sellers can see things are improving, and buyers are looking for the best. Pricing is still important, though."

New Bids on the Block

At Phillips de Pury, 44 lots going up on February 12 will include two pieces by Jean-Michel Basquiat with presale estimates of close to $1 million apiece. In November, Basquiat's Brother Sausage was offered by Peter Brant but failed to sell; a successful Basquiat sale would indicate a clear turn in the market.

On February 11, Christie's will offer 52 lots expected to generate revenues of more than $43 million. Pieces include Doig's 1993 Concrete Cabin West Side, with a presale estimate of $3.3 million to $5 million, and sent to auction by a British collector who bought it directly from Doig's studio. Francis Outred, Christie's European head of contemporary art, told Bloomberg News that the collector had considered selling it for about a year: "She was tipped over the edge by the $10.2 million paid for Doig's Reflection in New York in November. Klein and Kippenberger will also be represented at this auction...but some names will be noticeable for their absence."

No Jeff Koons pieces, a perennial favorite, will be on auction, and only two by Damien Hirst will be available, one at Christies (estimate: $495,000) and one at Sotheby's ($578,000). The art market is moving past the likes of Koons and Hirst and is returning to artists who have demonstrated more longevity.

The February contemporary art sales will be dominated by serious collectors making serious bids on serious artwork. And the boom-time speculators, responsible for running up prices in high-risk artists, have withdrawn, leaving the paddles to the serious players.

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