The Wall Stree Journal
The Rug Market Takes Flight

Some of the most coveted masterpieces now are the ones on the floor.
The Race for the world's top rug collection.

Henry VIII

The monarch owned hundreds of turkish rugs, including this 'Star' Ushak capture in a portrait by Hans Holbein.

$341, 625

The 'Eagle' Kazak (here, a detail) set an auction record for Causcasian rugs, at more than 13 times its high estimate.

A leaf-patterned blue rug from the courtly heyday of 17th-century Iran sold at Christie's this spring for $9.6 million, 20 times its asking price and the highest price ever paid for a rug. Several months earlier, Sotheby's sold a rug from the late 1500s for $4.3 million, the going rate for a top sculpture by Alexander Calder.

Oriental rugs, once the obsession of Ottoman sultans, European nobles and American robber barons, rarely topped $2 million a decade ago. Now, these centuries-old carpets from Turkey, Iran, and the Caucasus are commanding sums more often reserved for masterpiece paintings than floor coverings.

A patchwork of global collectors and institutions are fueling the rise. New museums across the Middle East and Europe are driving up prices as they build collections of Islamic art. Contemporary-art buyers from Singapore to the Silicon Valley are rolling out antique rugs to complement the abstract, geometric art works that hang on their walls. And everyone is on the lookout for the next little-noticed niche of the market that could see a spike in value.

As the global art market recovers, collectors are once again scouring the marketplace for new areas to exploit. Pastoral landscapes and gilded table clocks-antiques that once would have been too stuffy for high-spending art collectors-have emerged as some of the market's newest favorites. Buyers who bid up trendy contemporary art works during the boom only to see them plummet in value during the recession are seeking out more obscure pieces whose values could rise with an overall market upswing.

Rugs are typically classified by the circumstances in which they were made-hand-woven by tribal nomads, crafted in a village or city, or woven on looms in a royal workshop and prices tend to rise along the same lines, according to Jon Thompson, a British rug scholar. Those woven by tribes or in villages are on the lower end of the scale, commanding prices anywhere from $2,500 to $300,000. Persian court rugs made in royal workshops during the 15th and 16th centuries and featuring pastel, botanical designs, are particularly popular with collectors of Impressionist art, and their prices have been soaring into the millions.

The wealthy have collected Oriental rugs for centuries. Henry VIII owned several hundred Turkish rugs. Hans Holbein, Cornelius Vanderbilt and Sigmund Freud, who kept a rug draped over the couch where he conducted his psychoanalytic sessions, were Persianrug aficionados.

These days, top antique rugs are sold more like works of art than pieces of décor. Some high-end rug dealers even eschew the retail system of pricing by the square foot, because their collectors will pay higher prices for small prayer rugs and rare rug fragments than for palatial floor coverings. In recent months, sales have been slower for pieces that are frayed or of mediocre quality, but values have climbed sharply for the best surviving examples, according to appraisers and auction records.

Many buyers of modern art like television producer Douglas Cramer, a founder of the Los Angeles Museum of Contemporary Art, are turning to tribal rugs speckled with jeweltoned, geometric shapes. Chicago real-estate developer Ron Benach, who owns pieces by Willem de Kooning and Gerard Richter, is also a rug collector.