Cracks in art market as Koons egg sells for less than £4m target

An Easter egg sculpture by Jeff Koons failed to make its low estimate of £4 million when it sold for £3.6 million at Sotheby's in New York — demonstrating how prices for contemporary art are falling in the economic slump.

New York and London art dealer Larry Gagosian bought the American artist's seven-foot-wide Baroque Egg with Bow (Turquoise/Magenta) from hedge fund manager Daniel Loeb.

The sale was a far cry from the £12.9 million that Koons's Balloon Flower (Magenta) fetched at Christie's last year. Both works are from Koons's Celebration sculptures inspired by
childlike events and objects.

After seeing its swiftest rise in value — peaking in 2007 and last year — the market is experiencing a rapid fall. At its height buyers were paying $72 million for an Andy Warhol screenprint and $86 million for a Francis Bacon. By contrast, neither of the catalogues for the contemporary art sales being held by Sotheby's and Christie's in New York this week contains an estimate for a work of more than $10 million. Last May Christie's made $331 million from its contemporary art evening sales. This year it is aiming for $105 million. Sotheby's made $362 million last May and is aiming for a maximum $73 million this month.

The total value of artwork sold at last night's auction was £31 million, less than the pre-sale low estimate of £34 million. The measured response of the crowd at Sotheby's Upper East

Side salesroom, which included Hollywood star Owen Wilson, contrasted with proceedings last year when the auction house sold Francis Bacon's Triptych 1976 for £43 million to Roman Abramovich.

British success was achieved in the form of East London duo Gilbert and George whose 1978 self-portrait Moon sold for £590,000 above its high estimate of £523,000.

Auctioneer Tobias Meyer declared himself happy with the results. He said: "The contemporary art market is alive and well ... There hasn't been a pullback in the level of activity. There has been a general pullback in the level of prices but the participation of international dealers is very strong."