Global demand for gems and jewelry—especially precious stones—is strong, fueled by newly wealthy buyers looking for spectacular luxury objects. Art isn’t the only market being transformed by new players from such countries as China, India and Russia; the jewelry market has undergone a sea change as well, becoming both truly international and very competitive. To cultivate the more-global clientele, auction houses are looking beyond Europe and New York to, most notably, the Middle East, where demand for high-quality gemstones is growing. And from the totals—worldwide jewelry sales at auction rose 20 percent last year, to $750 million—it would seem that buyers hailing from Hong Kong to London to Manhattan are eager to indulge their taste for glittering luxury objects.

Christie’s, the market leader in the field since 1994, took in $395 million in 2007, its highest total ever; Sotheby’s gross grew 46 percent, to $292 million. Together, the two houses accounted for more than 90 percent of world jewelry sales at auction, with their nearest rival, Bonhams, contributing just 3.5 percent and Phillips de Pury & Company and smaller regional firms like Tajan and Artcurial in Paris making up the rest.

Christie’s and Sotheby’s show no sign of losing their dominance. But as more buyers from Eastern countries enter the market, its center of gravity is shifting, with Geneva losing ground to Hong Kong, New York and Dubai.

Not that the Swiss city can be counted out. As a low-vat oasis in the heart of Europe, it remains a key hub, particularly for Sotheby’s. Traditionally, Geneva has catered mainly to the trade, but Sotheby’s estimates that 70 percent of its recent sales there were to private buyers—the vast majority of them auction neophytes. “Geneva is a destination venue,” says David Bennett, Sotheby’s jewelry chairman for Europe and the Middle East. Last year was a banner one for the firm in Geneva: It outsold Christie’s there, $97 million to $90 million, for the first time since 2000, and last November it registered its best-ever session total, of SF64 million ($57 million).

This May 15, Sotheby’s Geneva will offer an emerald and diamond sautoir from the 1930s (est. SF175–260,000; $160–240,000) and a rare 19th-century natural-pearl and diamond brooch from a British noble family (est. SF450–670,000; 400–600,000). The Christie’s Geneva sale on May 14 features two fancy-color diamonds—a 13.38-carat intensely blue rectangular-cut stone ($6–8 million) and a 21.40-carat vivid yellow heart-shapedone ($2.5–3 million)—plus a 13.72-carat cushion-cut Burmese ruby ($1.6–2 million).

Phillips, striving to establish a significant presence in Geneva, has had two years of slumping jewelry sales there. In a bid to shore up its waning clout, the firm is staging a joint sale with the Paris auction house Pierre Bergé & Associés on May 13. Highlights will include a Belle Époque diamond brooch with three large, gray natural pearls (est. SF50–80,000; $49–79,000) and a 1960s Van Cleef & Arpels ruby and diamond necklace (est. SF25–50,000; $25–49,000).

Geneva remains a vital hub of the jewelry-auction business. But its preeminence is under threat. For Christie’s, New York is the most lucrative venue, with jewelry auctions at its branch there pulling in $320 million since 2005. New York’s prominence reflects the purchasing power of American private collectors as well as the dollar’s decline against the euro and other foreign currencies, which has brought more European buyers to the city. In addition to New York, Christie’s has continued to do well in London, where the firm outsold Sotheby’s three to one last year. Its sales in Hong Kong last year totaled $96 million. Meanwhile, Sotheby’s October auction there posted HK$317 million ($40.8 million), the firm’s highest for a jewelry sale there. “The überluxury markets remain vibrant and dynamic, and the immense wealth created in the region in the past few years has translated to great buying power among the Asian elite,” says Chin Yeow Quek, Sotheby’s head of jewelry in Asia.

Given the expanding nature of the global market, other sites could soon be challenging London, New York and Hong Kong for auction-house business. Christie’s is particularly keen on expanding into less-trodden territory. “We don’t like to have all our eggs in one basket,” says François Curiel, the firm’s global jewelry chief.

One of the places Curiel has his eye on is the billionaire’s haven of Dubai, where Christie’s began holding sales in January 2007. Its auction there last November brought in $16.5 million. In time, Curiel thinks Dubai could be the new Geneva. Like the Swiss city, it is a port franc and surrounded by countries and cities flush with wealth and bullish buyers—in Dubai’s case, Mumbai, India; Saudi Arabia; the emirates Qatar and Abu Dhabi; and, an unlikely but emerging source of buyers, Iran. But for the moment, despite the $1.55 million winning bid Curiel took for a diamond fringe necklace by Van Cleef & Arpels last November, the Dubai market remains embryonic. The diverse content of the Christie’s sales there—from items like the Van Cleef necklace to lower-priced watches not generally included in its auctions elsewhere—suggests that the aim is to attract a range of buyers.

Bonhams, too, sees potential in the Persian Gulf sheikhdom. It held its first sale of jewelry and watches there on March 4, taking in a little over $2 million.

Whatever the venue, a new crowd of bidders is evident at the auctions. Russians, for example, accounted for 8 percent of Christie’s jewelry sales last year, a proportion that rises to 20 percent when underbidders are included.

Their passion for diamonds and contemporary jewelry notwithstanding, these oligarchs are no match for their subcontinental counterparts in the pursuit of glittering prizes. “Indians have had jewelry in their blood longer than anyone else,” believes Sotheby’s Bennett, who also notes that they differ from European collectors both in the gems they most desire and in their approach to winning them: “The amount of time they spend looking at a pearl necklace is extraordinary.” At Christie’s Geneva in November 2005, aggressive underbidding by the Mumbai trade helped push the price of the famous diamond-mounted oval Perle Napoléon to SF3.27 million ($2.5 million).

The auction champions, though, are still white diamonds, as evidenced by the SF18.2 million ($16.2 million) that the Guess fashion company honcho Georges Marciano paid for an 84.37-carat gem at Sotheby’s Geneva last November. The Chloe, as Marciano named it after his daughter, became the second most expensive diamond ever sold at auction, just behind the pear-shaped Star of the Season, which brought $16.5 million in May 1995, also at Sotheby’s.

Worldwide demand for diamonds has burgeoned, driven in part by recent fluctuations in the financial markets, which make major gems more desirable, as an alternative investment. This has led to a rise in value for both set and loose stones. De Beers, the South Africa– based giant that controls the lion’s share of the diamond market, from mining through marketing, has hiked prices considerably. That, in turn, has squeezed the gem-cutters of Antwerp, the center of the diamond trade, who buy rough stones in dollars and then pay for labor and materials in euros (see “Rock Stars”).

The auction houses, however, are certainly profiting, thanks to what Curiel calls a “host of clients who are new in the market and do not know the old prices.” And colored diamonds have reached previously unseen price levels, with important blue or pink diamonds now commanding $1 million per carat. Last October at Sotheby’s Hong Kong, a 6.04-carat, vivid-blue diamond ring realized HK$61.9 million ($8 million), or about HK$10.25 million ($1.32 million) per carat. Yellow diamonds, the most common color, currently cost less than other hues and could well rise in price, says Curiel. Those with intense coloration are already through the roof: The two dazzling Donnersmarck Diamonds—an 82.48-carat pear shape and a 102.54-carat cushion cut that once belonged to a 19th-century Parisian courtesan—brought a combined SF9.67 million ($7.9 million) at Sotheby’s Geneva last May.

Another area where prices have risen sharply is designer jewelry. Opinion is divided as to whether this is due to collectors’ crossing over from contemporary art. Star designers in the field now command huge prices: Three pieces by Paris-based Joel Rosenthal, known as jar, have already posted $1 million prices at auction, led by the $1.81 million his 22.76-carat diamond oval-cut diamond Thread ring earned in the Christie’s New York 2006 sale of pieces from Ellen Barkin’s collection. A pair of jar diamond ear pendants brought $576,000 (est. $500–700,000) at Christie’s debut Dubai sale last year.

Curiel is confident there will be plenty of competition for what promises to be the highlight of the season: a 101.27-carat colorless diamond in the Christie’s Hong Kong sale on May 28. It is the largest such stone to appear at auction in nearly 20 years; only three weighing more than 100 carats have ever come on the block, all in Geneva. This one is expected to clear $6 million. “With Asia becoming such a vibrant market, it is fitting that this rarest gem should be offered to the collectors in the region,” says Curiel.

Will the world economic woes hurt prices? Sotheby’s David Bennett is optimistic. “The greatest years for jewelry were 1991 to 2000,” the period of the last downturn, he notes. “Jewelry doesn’t seem to be connected with financial markets.” But Curiel isn’t sure: “I can’t believe it will be business as usual—too many people have lost money.”

"Diamond Minded" originally appeared in the May 2008 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's May 2008 Table of Contents.