First published in Inside Wealth newsletter with Robert Frank, a weekly guide for HNWIs and high-end consumers. To get future editions delivered directly to your mailbox, sign up.
The top art sales at major auction houses in May are expected to be lower than last year as affluent purchasers and sellers take a break from the frenzy of price activity that occurred in 2021 and 2022.
ArtTactic predicts that over the next fortnight, art auctions at Christie’s, Sotheby’s and Philips will reach approximately $1.2bn – down by 18% on last year during the same period just about half of what it was in May 2022.
This extends the recent decline in the art market that started after its post-Covid peak with cheap money, inflating stock prices and fiscal stimulus packages leading to historic sales. According to ArtTactic data, global art auction volume fell by 27% compared with 2022. This was the first time since the outbreak of pandemic in 2020 when the size of art market decreased whereas its average price dropped by 32%, marking the largest fall over seven years.
According to ArtTactic, sales of contemporary and post-war categories—biggest earners for the world’s art market for several years now—dropped by almost half (48%) during Q1 this year.
They stated that buyer demand remained strong. The issue is supply; collectors prefer waiting until they can get better deals therefore avoiding low prices currently available on their trophies. It appears there are no major single-owner collections coming up for sale like we have seen previous years namely McCullough Collection or Paul Allen Collection whose disposal led to impressive numbers of products sold throughout spring.
“This season people seem like they might be thinking smaller,” said Brooke Lampley who is both Sotheby’s global chairman as well as global head fine arts department.“ Well, I mean if you look at the pudding I think they have. Now, buyers are here and pieces get sold. Prices will determine our current view of the art market.” “I expect strong results.”
price pressure
Price issues have stalled the art auction market with sellers unwilling to settle for prices lower than the 2021-2022 market peak while buyers insist on discounts due to increasing interest rates, election-year uncertainty and geopolitical uncertainty say dealers and art specialists.
“As sellers want prices to rise by 20% so do buyers want them to go down by 20%,” Philip Hoffman said, a consultant and chief executive officer of Fine Art Group that provides art finance services. “It’s a stalemate.”
According to dealers it is not like some two or three years ago when today’s buyers were confident: the spectre of inflation, rising interest rates, concerns about economic slowdown as well as upcoming elections plus geopolitical crises make many collectors pause buying.
“People are feeling hesitant,” Andrew Fabricant said, COO of Gagosian. “This year there’s an election going on; is The Fed going to cut rates? The cost of funds relative to a couple years ago is still relatively high.”
They added there was such lack of top-notch artwork at auctions that even cash-endowed purchasers willing to pay would still not buy.
“Our clients have loads of money,” Hoffman said.“The question they are asking themselves is ‘Should we be buying into the art market now?’”
Fewer Pieces
While usually in spring sales more than a dozen works sell for over $30 million each, this year just a few were available.
Francis Bacon painted Portrait of George Dyer Crouching, 1966 this is one of the most expensive works in the season that was done between 1966 and 1968 for Dyer It forms part of a series of ten well-known and huge portraits.
(LR) The “Italian Popeye’s Diet Without Pork” by Jean-Michel Basquiat, 1982, and Francis Bacon’s “George Dale Crouching” “Portrait”, 1966.
Sotheby’s also has four Joan Mitchell paintings including two that are expected to bring in over $15 million each.
Christie’s is going to exhibit Brice Marden’s “Event”, a large scale work which died last year with an estimate range from $30 million to $50 million and also it will have Jean-Michel Basquiat’s famous art work Italian Version of Popeye Has No Pork In His Diet created in 1982 which has been estimated at $30 million.
However, collectors and art advisors say there are very few “masterpieces” to get excited about this season.
“This time around they don’t have that marquis material,” said Fabricant. “Unless you really have something unique and special I don’t think you’re going to be as enthusiastic about sales like you were before.”
Meanwhile, art experts believe that long-term perspective on the art market means buyers can get deals on artworks now.
“I would definitely buy because if you can still get a good deal before pre-2022 prices people should buy now while the quality is still excellent,” said Hoffman. “I am seeing great investments for the next decade; it will be a good investment. Now is not the time to sell but rather buy.”
Consultants noted soft auction sales but robust private market and gallery activity. Sales of new works by galleries are less dependent on investment returns so less vulnerable to economic or stock market fluctuations. Auction houses also only saw a strong growth in private sales this year which facilitate transactions directly between buyers and sellers without the need of public auctioning.
Christie’s auction house sells painting by Mark Rothko The company was sold earlier this year to hedge fund billionaire Ken Griffin for over $100 million, according to previous reports. Collectors believe that selling a trophy piece privately is less risky than through an auction where the piece could lose value.
“In the private market, you can be very specific about who you approach and what types of buyers you approach,” said Drew Watson, head of art services at Bank of America. “You can be very specific about who you approach and what types of buyers you approach.” There’s a lot of discretion in determining what price you’re going to charge in the market, so you can go into the market and test the price and make adjustments based on the feedback you get.”
