LONDON (REUTERS).- Walk into the giant marquee in Regent's Park, London, venue of this year's Frieze Art Fair, and enter a parallel universe.

Impeccably dressed men and women, and a healthy smattering of Bohemian types in garish trousers and expensive, thick-rimmed glasses, saunter down the aisles and between the stands of more than 170 exhibiting galleries.

There the "new aristocracy" browses the cutting edge of contemporary art, from a grotesque Madonna and Child by the Chapman Brothers to a golf bag full of cement and a section of wooden fence hanging on a wall.

Elle Macpherson and designer Valentino joined commercial gallery A-listers like Jay Jopling in assessing what was hot and what was not at a VIP preview this week.

The fair opened to the public on Thursday and runs until Sunday.

Prices range widely, but generally works on show go for between five and seven figures, the sort of money most people spend on their house, often by way of a 25-year mortgage.

Not so at Frieze, which has become a magnet for the world's biggest contemporary art collectors who think little of writing a check for a few hundred thousand dollars or more.

The disconnect with the world outside, where markets are jittery and volatile, people fret over their jobs and countries are weighed down by crippling debt, is striking.

Whether that disparity can last is the question on every gallery owner's lips.

While there will always be ultra-wealthy buyers snapping up the rarest and finest works, supporting the million-plus market, there are concerns that "lesser" art will fail to sell.

The contemporary art market contracted sharply in late 2008 and early 2009 in the wake of the Lehman Brothers collapse before recovering strongly in 2010 and 2011.

Market surveys suggest confidence in all but the top lots -- viewed as an alternative investment at a time when so many markets look risky -- is evaporating fast, raising the prospect of another correction.

MIXED SIGNALS
At Frieze, David Zwirner sold a Neo Rauch painting for $1.35 million, and the overall value of art on show is estimated at around $350 million, down from $375 million in 2010.

At the nearby Pavilion of Art & Design, an offshoot of Frieze featuring mainly older works, the Van de Weghe Fine Art gallery sold an Alexander Calder for $1.5 million and Sladmore Gallery raised 500,000 pounds for a cast bronze by Rodin.

But not all the signs are good.

While fairs do not publicize their revenues, and most dealers keep their business to themselves, auction houses also hold a series of sales during Frieze week which give some indication as to the strength of prices.

Sotheby's had its main auction on Thursday evening followed by Christie's on Friday, but Phillips de Pury held its big sale on Wednesday and the results were described by one specialist art website as "tepid."

The auction tally of 8.2 million pounds fell comfortably short of the pre-sale low estimate of 10.1 million (and high estimate of 14.6 million), and a third of the works on offer failed to sell.

Jeff Koons' "Seal Walrus Trashcans" fetched 2.1 million pounds, at the bottom end of expectations, and Damien Hirst and Richard Prince were among the familiar names featuring in the top 10.

"The sale showed there is still an appetite for good quality works from blue-chip artists," said Peter Sumner, head of contemporary sales, London Phillips de Pury & Company.

Of course, many artists dismiss talk of markets and prices. In most cases they stand to gain little even if their works sell for millions at auction, and money, they argue, is not the point.

Some, however, actively engage in the concept of art as a commodity.

The artistic partnership called Claire Fontaine has a work at Frieze which reads: "This neon sign was made by Vladimir Ustinov for the remuneration of one hundred and sixty-nine thousand rubles."

For those less confident in their economic future, artist Michael Landy may have the answer with his outlandish "Credit Card Destroying Machine."

(Editing by Steve Addison)