Can Frieze reheat the art market?

So this is it. The art world apocalypse. The Bonfire of the Galleries. As the cultural carnival that is Frieze week kicks off on Monday, the cool-as-cucumbers arterati – dealers, gallerists, curators, collectors and, of course, artists – are suffering from an advanced state of the jitters. They won't admit as much, naturally. When it comes to the buying and selling of art, a patina of confidence is key. This year, though, could be the year that the cracks start to show.

But first, back to 16 October 2008. Frieze Art Fair opened almost one month to the day after the collapse of Lehman Brothers, but the untrained eye would have been hard pushed to spot signs of meltdown. Sure, the champagne was a little sparse by the evening private view and you had to pay for your drinks in the so-called VIP section but London, or its art aristocracy at least, was still ostensibly riding high, buoyed by two resounding up-yours delivered to the financial crisis by its twin kings. First, Damien Hirst pulled off an outrageous coup with his Beautiful Inside My Head Forever sale at Sotheby's which raised a record-breaking £111m on the very day Lehman Brothers filed for bankruptcy. Three weeks later, Charles Saatchi, colossus of collecting, strode back on to the scene with the eagerly-awaited (and at a launch party hosted by Nigella, breathlessly oversubscribed) opening of his beautiful 70,000sq ft gallery in Chelsea, cramming the barracks chock-full of Chinese art.

Meanwhile at Frieze, Kapoors and Moores sold for one or two million plus. The VVIP (there are two tiers of Very Important People at Frieze – most of the Very Verys have been in, out and bought a masterpiece by the time the Verys arrive at 2pm on opening day) quota was high. Gwyneth Paltrow, Sofia Coppola, Keanu Reeves, George Michael, Lily Allen and Valentino rubbed designer shoulders with Larry Gagosian, Dasha Zhukova and Saatchi in the marquee corridors. This is, after all, an art fair which lists no less than six "VIP Consultants" on its official staff list of 23. There were even some artists there – Peter Doig, Anish Kapoor, Martin Creed and Steve McQueen – lurking moodily in darkened corners.

Haunch of Venison and White Cube hosted rival bashes on the same night, both equally drenched in champagne. The former gallery attracted Roman Abramovich and Zhukova, who danced the night away to a DJ set from the Mexican video artist Rafael Lozano-Hemmer, while at White Cube Kate Moss and her ex Jefferson Hack lounged about eating ironic pizza on double beds (not the same one) in an expensively distressed Georgian townhouse. Was there a sense of indulging in end-of-an-era decadence because there might not be another opportunity? Perhaps. But as the Fair wrapped up and the party-goers and collectors retreated to tend their hangovers and bank balances respectively, a press release arrived declaring that sales had "exceeded expectations". The general feeling was one of relief: Frieze 2008 had been, if not quite a boom-time bonanza, then at least a triumph of optimism and spirit over financial doom and gloom.

October 2009, though, is lining up to be a very different story. Now that the credit crunch has bedded in, the augurs are worrying. Even Saatchi says he "daren't look" when asked how much money he has lost in the recession. Frieze has only 135 galleries in the main fair as compared with 150 last year. With stands costing up to £28,000, galleries simply can't take the risk of pitching up and not selling. Thirteen American institutions are not making the return trip this year. Some of them – including Rivington Arms, a hip Lower Manhattan gallery which helped to launch the career of the late enfant terrible Dash Snow – no longer exist.

Zoo Art Fair, Frieze's younger sister, set up to showcase new and non-commercial galleries in 2004, has ceased to call itself an art fair, rebranding as Zoo 2009. "Last October the world changed radically. We started to re-examine whether we needed to be a fair in a shiny space in the West End," explains its director Soraya Rodriguez. "This year it's a bit more credit crunch in character." More bad news came last month with rumblings that glossy periodical Art World was to close for financial reasons.

More worrying are the numbers coming out of the auction houses, traditionally a bellwether for the art market, as open with their sales figures as Frieze is guarded. According to Bloomberg, the three major auction houses – Christie's, Sotheby's and Phillips de Pury – expect to make around £20.8m at their annual Frieze week contemporary art sales. The figure represents an 81 per cent decrease on last year. At the summer sales, the figures were similarly grim: Sotheby's brought in £25.5million as compared with £94.7m in June 2008, while Christie's was down to £19m from £86.2m the previous year.

So is anyone still buying art? And will 2009 be the year Frieze flops? According to Sarah Thornton, author of the compelling study Seven Days in the Art World, the bubble burst the day after Hirst's historic Sotheby's sale. "If that sale had taken place even a week later the result would have been much different. It hadn't really sunk in, the effect that Lehman Brothers would have. Come Frieze last year there was already a distinct softening of the market. Sales were slow and sticky."

It was a similar story at June's Art Basel, where business was satisfactory to good. It was still quite some way off its 2006 peak, a manic whirl of private jets, Prada and "hurry-hurry collectors". So feverish was the market back then that Philippe Ségalot, long-standing art consultant to billionaire businessman François Pinault (he of the $2bn art collection) reportedly hired a Hollywood make-up artist to disguise him as a balding shipper, allowing him to sneak in before anyone else.

The difference now is the move from a sellers' market to a buyers' market. Where once collectors had cravenly to sell themselves to dealers to prove their worth to own a work (a phenomenon Thornton has dubbed the "hard buy") and then decide in a matter of minutes to buy lest the next name on the waiting list win through, now they wield the power. "In 2006 and 2007, at the height of the bubble, collectors had to decide to spend a million dollars in 10 minutes," says Thornton. "In the past, one had always been able to sleep on it."

This year the buzz is not quite so deafening. "The people who are serious about art are more visible now because the extra part of the crowd who were less serious and who flew in are not flying in any more," says Thornton. "The Venice Biennale in 2007 was so frenzied – all the fashion press were there. In 2009, it was much less crowded. It was a more hardcore contingent." So while some may believe contemporary art has lost its lustre, "so last year" perhaps, might there be a glimmer of hope amid the doom and gloom? People are still buying, albeit at a slower (more considered?) pace and without the hype and hyperinflation, perhaps it's time to get excited about the art again. "Everyone can afford to be positive about Frieze," says Gregor Muir, formerly a curator at the Tate and now director of Hauser & Wirth gallery. "Any amount of nerves will be soaked up by the sheer amount of activity in London around the fair."

The fall-off in American galleries has made room for 21 first-timers in the main fair, including the Scottish Ingleby Gallery, where Turner Prize nominee Richard Wright recently exhibited, the Kukje Gallery from South Korea, The Third Line from Dubai, Polish gallery Raster and two new Japanese exhibitors, Hiromi Yoshii and Gallery Side 2. More exciting is the introduction of Frame, a section dedicated to solo artist presentations from 29 galleries from around the world, all under six years old. The organisers had planned to invite 15 up-and-comers but with extra space to fill and over 200 applications, Frame is now twice the size, giving collectors with an eye on the next big thing twice the chance of spotting it. Among those exhibiting are London galleries Limoncello and Seventeen, Project 88 from Mumbai, Melbourne's Neon Parc, Rome's Monitor and Rodeo from Istanbul.

For these smaller galleries, Frieze is an opportunity to have their name and their artists seen by up to 68,000 people (the number of visitors last year), not to mention the potential for being spotted by big-name dealers and curators or making up to 50 per cent of their annual turnover in just four days. "Whether there's the turnover or not, it's the exposure which is so important," says Thornton. "Frieze is a club not all galleries can get into. There's a quality control at work and it's a prestigious event. It might not result in a sale but it's a really important stepping stone in the artist's career and for the gallery."

If it's increasingly tricky these days to separate the art world from the art market, at Frieze, their symbiosis is writ large: here are, says Thornton, "siamese twins who don't necessarily get along but they're stuck to each other". Writing about Art Basel in his new book, Saatchi sums up the ambivalence that many in the art world feel towards fairs: "I've always believed it is important for artists never to be allowed near an art fair for fear the disillusionment with being part of a meat market would traumatise them into abandoning their brushes."

At Frieze, the relationship between the bottom line and artistic credibility is at least a little more complex. The fair is unique in having a curated programme running alongside the stands, drawing attention away from the more distasteful "meat market" elements. Last year, these included the mysterious Norma Jeane who erected transparent smoking booths for nicotine addicts with exhibitionist tendencies and Kling & Bang who recreated the now defunct Reyjavik arts hangout Sirkus brick by brick inside the marquee, while Cory Arcangel sent out chocolate bars to all of the unsuccessful applicants for a place at the fair, one of which contained a golden ticket with the prize of a stand (Studiò di Giovanna Simonetta from Milan were the winners). It's fair to say Frieze, while wearing its Deutsche Bank sponsorship with pride, does try very hard to make the business of buying and selling cool. When BBC producers asked if they could film the next crop of Apprentice contestants flogging art on a special stand at the fair, they were refused point-blank. Frieze prefers its hard selling to come with an air of studied insouciance.

This year's projects, curated for the third time by Neville Wakefield, have a distinctively subversive feel as they engage with boom and bust head on. Introducing them in the fair's yearbook, Wakefield has some choice words from William Blake: "The road of excess leads to the palace of wisdom ... for we never know what is enough until we know what is more than enough." So, with a nod to the jitters surrounding the market, Mike Bouchet will invite a motivational boardroom speaker to buck up the buyers and sellers, while Kim Coleman & Jenny Hogarth will engage the "unseen drama" of the fair filming the transactions, both personal and financial, of visitors and replaying them in a sideshow. Stephanie Syjuco has created a workshop where young artists will knock off bootlegs of works on sale at the fair while Ryan Gander is on hand to photograph visitors standing next to their favourites. In addition, Superflex have been commissioned to make a film for Channel 4. The Danish duo's last work – seen at the South London Gallery in January – was the apocalyptic Flooded McDonald's in which they built a ghostly replica of the fast-food restaurant and filmed it slowly filling with water. For Frieze they have filmed key figures from the worlds of finance and art talking about the recession while under hypnosis. There are talks, too from the artist John Baldessari, and nouvelle vague director Agnès Varda on Saturday evening.

Frieze is also the only art fair on the circuit for which the entire host city comes out to play with an exhilarating whirl of private views, champagne breakfasts, projects and parties. "London is a city which is very engaged in contemporary art. There seems to be an urgency about it here," says Muir. "Frieze is unlike any other fair in any other city, it's not just about the booths. London really does give good programme with a good balance of institutional and market-led activity. It's a city-wide effort to get behind the fair."

Next week, Tate Modern unveils its 10th Turbine Hall commission (from Miroslaw Balka) and a John Baldessari retrospective, the Hayward opens its Ed Ruscha blockbuster and the National Portrait Gallery has a sure-fire crowd-pleaser in Beatles to Bowie: The 60s Exposed. The three major auction houses have girded their Gurskys and dusted down their Doigs for their contemporary art sales on Friday and Saturday. Meanwhile, never one to shy away from the crowds, Damien Hirst unveils 25 new paintings in No Love Lost at the Wallace Collection. And the commercial galleries are rolling out their big hitters with Grayson Perry at Victoria Miro, Anish Kapoor at Lisson, Subodh Gupta at Hauser & Wirth and Anselm Kiefer at White Cube.

On the more experimental side, Zoo 2009 might have been shunted out of its swanky home behind the Royal Academy by Haunch of Venison but its new digs in a Victorian warehouse on Shoreditch High Street are arguably closer to its roots as a platform for young, non-commercial spaces. This year's version will include 21 traditional stands alongside curated exhibitions. Around the corner from Frieze, in a 10,000sq ft former dairy and recording studio in Primrose Hill, is the new Museum of Everything, a space for "art created outside mainstream art circles", with works nominated by a stellar cast of established figures from Annette Messager and Ed Ruscha to Jarvis Cocker and Nick Cave. In the West End, Paradise Row, between closing its East End gallery and opening its new space, has popped up in a Mayfair mansion with an exhibition of playful artworks from Duchamp to Carsten Höller and a brand new work by the Chapman Brothers inspired, apparently, by Mr Potato Head. A short walk away, Alex Dellal's 20 Hoxton Square Projects has its own pop-up show in 33 Portland Place, until 1998 the embassy for Sierra Leone where artists including Oliver Clegg and Hugo Wilson will present dystopia-themed work.

And that's just a fraction of the activity on offer as the annual art circus rolls into town. Credit crunch or not, it seems you still can't afford to miss out. "If you want a snapshot of what's going on in 21st-century art, then really nothing beats Frieze," says Thornton. "Those who continue to buy art are the real art lovers; they are not willing to relinquish that passion. I've just heard of someone who fired their chauffeur to continue funding an expensive art-buying habit." Well, desperate times do call for desperate measures.

15-18 October, Regent's Park, London (0871 230 7159; www.frieze.com)

Bright young things: ones to watch

Amanda Ross-Ho

This artist from Los Angeles is only three years out of grad school but has already exhibited at the Whitney Biennial. The 34-year old was also picked out for Saatchi's Abstract America show earlier this year where she showed her giant, black macramé and doily-inspired works. "We can't get enough, because there's too much," says the artist who specialises in overwhelming, cluttered juxtapositions of mixed media and found ephemera. "Seizure" is an ink jet print of snapshots of drug paraphernalia laid out on a table like police evidence, while "Restraining Order" is a balloon-adorned heap of detritus from her studio – all coffee cups and hot glue. Showing with Belgian gallery Hoet Bekaert.

Erin Shirreff

Shirreff may work in clay, but her approach to the age-old material is both elegant and refresh- ingly new. For "Book of Knives" she shoots prehistoric-looking tools and blades (which she has fashioned herself from clay), using a Mapplethorpe-esque monochrome palette and and eye for the phallic. The 34-year old Yale graduate is showing with New York's Lisa Cooley gallery.

Alan Kane

A long-time collaborator with the Turner Prize-winning artist Jeremy Deller, the London artist Alan Kane will come into his own this year with a solo show on Ancient & Modern's stand. There he will present his parents' art collection – which consists of snapshots, watercolours, ornaments of the Virgin Mary, individual knick-knacks and dried flowers – in a strictly not-for-sale installation which examines ideas around collecting and worth.

Cyprien Gaillard

The Parisian artist's desolate but compelling urban landscapes will appear with Laura Bartlett Gallery. Gaillard, 29, works across various media, from the new film about Cancun, Mexico he will show at Frieze, to a towering concrete duck he exhibited at the Berlin Biennial in 2008.

Ursula mayer

The Austria-born artist's recent eight-minute film "The Crystal Gaze" examined the portrayal of women in Hollywood and Modernist art with three actresses dressed in gorgeous Twenties ballgowns wandering through the Art Deco interior of Eltham Palace in South London. Showing with Athenian gallery Amp.

Ryan gander

The 33-year old has powerful backing in the shape of Lisson Gallery who have chosen the wry artist for their Frieze week show. Gander will also be taking part in Frieze Projects, taking instant photographs of people at the fair looking at their favourite work as "a way of collecting the demographic of visitors to the fair".

Mike Bouchet

The Californian artist has hired a motivational speaker to talk to gallerists about their "core values" and "passion to perform" as part of Frieze Projects. His eclectic work includes cardboard sculptures of Jacuzzis and, at this year's Venice Biennale, a floating replica of an American dream home which, having been towed down the canals, quickly sank. With Frankfurt's Galerie Parisa Kind.

Ida Ekblad

The 29-year-old Norwegian mines American culture for her witty work, which includes ink drawings of what appear to be scrawled birds but on closer inspection turn out to be the golden arches of McDonald's, and 'Political Song for Jessica Simpson', an image of the blonde popstrel with bubblegum stuck on her face. Her recent works include elegantly wrought sculptures and abstract oil paintings. Showing with Gaudel de Stampa.

Simon Fujiwara

Ethnography and eroticism combine with a little zoology in Fujiwara's work. At Frieze he's showing "The Museum of Incest", which presents a "lost history" of familial sexuality in the manner of a tourist attraction. Visitors to Neue Alte Brücke's booth can enjoy a guided tour from the artist at 3pm and 5pm daily. The 27-year-old splits his time between London and Berlin where he also plays keyboard in the band Asia Today, alongside fellow artist Ingar Dragset.

Jack Strange

Fresh out of the Slade, the enigmatic 25-year old has already wooed the influential collector Anita Zabludowicz and MOMA with his quirky, witty work. Showing with the London gallery Limoncello, he celebrates the seemingly banal, from a photograph of a tree stump which appears to have a face, to "g", a laptop with a ball of lead on the keyboard producing an endless line of text.

Win a four-day pass to Frieze Art Fair

We have two pairs of four-day passes (worth £120 each), guaranteeing fast-track entry to Frieze Art Fair from 15th–18th October to give away.

To win simply answer the question below at www.independent.co.uk/promo-competitions and enter the code FRIEZE

Q: Which renowned French filmmaker is taking part in Frieze Talks on Saturday 17 October?

Terms & Conditions: Entries must be received by 10 October. Winners will be picked at random and notified by telephone or email on 12 October. The Editor's decision is final. Only one entry per household ( www.independent.co.uk/legal)