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GENEVA/ZURICH (Reuters Life!) - The world's wealthiest people were bidding timidly at Christie's and Sotheby's jewelry sales this week, in a sign the financial crisis has caused even the super-rich to hold back.
While one sapphire ring sold for a record $3.5 million, most of the eye candy languished on the auction block and items that did sell fetched prices 20 percent to 30 percent lower than similar things in previous sales.
"Everyone is suffering and even wealthy individuals are becoming more cautious and are not spending on things that are not 'must-haves'," said Mario Montagnani, a luxury goods analyst with the Zurich-based Chevreux.
"Exclusive items will continue to resist the slowdown well. But it's only very small volumes that are being sold," he said.
Rene Weber of the Swiss bank Vontobel said the unusually sober auctions showed economic jitters have begun to affect the spending and shopping patterns of the very rich.
"There is clearly a correlation between auctions and the luxury market as a whole," Weber said. "If it is a very special item then people are still prepared to pay. But there is a definite decline in demand for average products."
Most of the items sold in Geneva by Sotheby's on Wednesday and at Christie's on Thursday were consigned and valued prior to the onset of financial turmoil that has devastated markets and erased huge amounts of peoples' savings and investments.
The auction houses had urged clients to drop their reserve prices or "secret minimums" for top gems and historic pieces before the sales in light of the economic storm clouds.
After the sales, David Bennett, Sotheby's jewelry chairman for Europe and the Middle East, said price levels had returned to those seen in May 2005. "As in all markets in transition, potential buyers were reluctant to commit to purchase," he said.
Eric Valdieu, head of Christie's jewelry department in Geneva, said while prices were 20 percent to 30 percent lower than in the spring 2008 sales, "there was healthy bidding" this week.
"Good prices were paid for natural pearls and vintage jewelry by an international audience with a strong contingent of Indian, Russian, Middle Eastern and continental European buyers," he said.
Kepler Capital Markets analyst Jon Cox said business owners and entrepreneurs, who previously had plenty of cash to splash about, were clearly being more careful in how they spend money in the current financial climate.
"Would you spend a couple of million on a frivolous sparkler when you are probably trying to prevent the banks foreclosing on your loans? Not today that is for sure," he said.
"You are seeing demand in the high end decline dramatically as even the richest people in the world take stock of their net worth, which has been ravaged by an equity bear market, collapsing property prices as well as a slump in commodities and shipping."
Luxury goods experts said the success of Christie's star piece -- a Kashmir sapphire ring that set a new world record -- was a sign there will always be demand for the best of the best.
"If it is a very special item then people are still prepared to pay," Vontobel's Weber said.
Writing by Laura MacInnis; Editing by Paul Casciato