As the bellinis went down at the Design Miami/Basel fair in Switzerland last month, the talk was of the hard euro, the smart money and the flush browsers. Among them were Roman Abramovich and Aditya Mittal (son of Lakshmi “Richest Man in Britain” Mittal) and assorted celebrocrats, all shopping for furniture, lighting and objects. The selection included a gold- lacquered fibreglass sofa by Zaha Hadid at £150,000, and two plastic chairs by Tom Dixon, the head of design at Habitat, which sold for £38,000 each. Meanwhile, Brad Pitt scored a white marble table by Jeroen Verhoeven, a fibreglass lamp by Atelier Van Lieshout and two Ron Arad chairs.

It sounds like a top-end department store populated by the denizens of Hello! magazine. In fact, Design Miami/Basel is in the vanguard of a new area in collecting that goes by the name of “design art” and is sweeping through an enthralled global circuit of design fairs, auction rooms and galleries. It’s the flavour of the moment with the fashionable cash.

So, what exactly is this strange hybrid? Well, design art is the elevation of design to collectable status, whereby chairs, lamps and loungers are marketed as precious one-off pieces or in limited editions. The idea has taken off, and over a few short years, design has seized control of the spaces that were once solely occupied by fine art. Now, rather than name-dropping Peter Doig and Doug Aitken, a new breed of collectors discuss designers such as Marcel Wanders, Max Lamb and Arad. In a nutshell, the minted classes are purchasing posh chairs.

Trendy art galleries have taken note and are shifting into design. Haunch of Venison in London shows the designer Stuart Haygarth. The Gagosian flogs Marc Newson, the Sydney designer who, when Sotheby’s sold his Lockheed Lounge for about £482,000 in 2006, broke the record for an item of furniture by a living designer. Timothy Taylor — aka Mr Helen Windsor — is showing Arad, head of design products at the Royal College of Art and one of the high priests of design art.

It’s a phenomenon that some think is caused by the clever money migrating from an overinflated, oligarch-pumped art market. “You can still buy great works of design for, comparatively, less money,” says the New York art and design dealer Barry Friedman, who thinks the market’s success is an acknowledgment of the “vibrancy” of design talent. And, yes, perhaps it is also fuelled by the decadent absurdities of contemporary art. After all, who wouldn’t want a real object, one that represents something tangible, such as a table or a lamp, rather than some antagonistic, obscure conceptual gag?

London now has its own design-art fair, called DesignArt London, now in its second year, which takes place in October. “The big design fairs are in Miami, Basel and Paris, and now London,” says the organiser and dealer, Patrick Perrin. “The importance of design within the field of modern and contemporary art is undisputed. Interest in collecting furniture pieces as luxury products continues to rise.” Perrin hopes to do for London design art what Frieze did for contemporary art — then he wants to take DesignArt and conquer New York.

There has long been a market for classic design. But design art concentrates on contemporary design by living designers — and adds a few zeros to the price. As Simon Andrews of Christie’s explains, furniture by the mid-century moderns (Eames, Jacobsen, Aalto) fetches £5,000 to £15,000: chump change in design-art land. “At our sale on September 8 in New York, the key piece is a Ron Arad D sofa, with a guide price of £100,000 to £150,000,” he says.

The arms dealers can keep their gilded Louis XV confections; for the design-art crowd, it has to be envelope-pushing contemporary stuff. “We find objects that speak of their moment and their era,” says Andrews. “And this era is fertile.”

Friedman agrees that the Noughties has been a remarkable time for design talent. “It’s like the early 20th century, when the great designers such as Gerrit Rietveld, Mies van der Rohe and Marcel Breuer emerged. Now we have designers Newson, Arad, Wanders and Wendell Castle. It’s exciting. Of course collectors are going to be interested.”

But is it about real design? Do collectors eat their dinner from design-art tables? The answer is: certainly not. “Design art is more akin to sculpture,” says Andrews. “Unlike the modernist design of the 1920s, it doesn’t tend to be about making a new world of mass taste. Breuer [the pre-war designer] was strictly egalitarian. He wasn’t designing for an elite.” But the design-art practitioners cater to the loaded; after all, who else could afford it?

This factor causes wobbles among critics, who think that design should be about social improvement, not the supply of baubles to the rich. Plus, as the money has ramped up, design art looks more and more like a greedy bandwagon. “You can see it increasingly at the Milan furniture fair,” says James Mair of the design store Viaduct. “Young designers are coming up with flashy things that aren’t that great, made in editions of 10. They’re aiming precisely at this market.”

Perhaps the biggest problem facing design art is that the people involved loathe the name. “I can’t stand it,” winces the gallery owner Libby Sellers. “It makes design look like a poor relative to art.” “I’ve never been a fan of the term,” admits Alasdhair Willis of Established & Sons, the agency for British design often lumped into the design-art bracket. “I’ve always felt that the word ‘art’ was a way of justifying an inflated price put for poor work. In the long term, this can only be negative for design.” The term was created by the auction world to create a market sector, says Willis. “But it is worth noting that the very same auction house that coined the term three years ago has reverted back to just ‘design’, thank God.”

At this point, we must turn to the alchemist credited with coming up with the term: Alexander Payne of Phillips de Pury & Company. Can we blame him for the name and, by extension, the genre? “For my sins, yes,” says Payne. “I was looking at the decorative arts and became fascinated by looking at design in a new way. I wanted to loosen the boundaries.” Payne came up with “design art”, and bingo, the rest is history.

Funnily enough, Payne dates the birth of design art earlier than most, to the winter of 2000-01, when a piece by the 20th-century Japanese-American designer Isamu Noguchi sold for £250,000.

“At the time, I thought, this is obviously what people want to collect now.” He held design sales, becoming increasingly aware that contemporary design has a fresh, flavoursome, accessible and non-pompous appeal.

“That was the point: there was a real energy in design,” he says. “The stuff coming out of design schools such as the Royal College of Art and the Design Academy Eindhoven is much more stimulating than in any other sphere, including the visual arts.”

Add the rising popular interest in architecture and interiors and the new young class of collector, and the conditions were right for a design boom. “Now there are several Saatchis of design art on the way to building important collections,” says Payne.

But it is time to drop the term, he says. “I thought of it as a way to stimulate and provoke. Now I think it has done that.” The point now is to find the new Newsons, Hadids and Arads while the tide is still high.

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