The secondary market’s pivot to Asia and the Middle East has been cemented.
That is, at least at the top end of the spectrum. Evening sales these days shake out to be much more of a well-choreographed ballet of an auctioneer and his coworkers manning the telephone banks than bidding brawls in the room between major local collectors. This has been the case for several years but this season marked the most decisive shift in strategy from the major houses to cater to the world’s most newly minted billionaires.
Case in point: Christie’s “Looking Forward to the Past.” Coming off of a blockbuster $852 million postwar and contemporary art sale last November, pundits thought the house might shoot for a billion-dollar postwar and contemporary sale this spring. Instead, they focused on loading the market’s biggest names both from both the postwar and contemporary and Impressionist and modern set into one 35-lot sprint. This $705 million saunter down the art-world equivalent of Rodeo Drive brands—
, among them—saw bidders from 35 countries, most of whom have been actively collecting for well under a decade, according to the house’s post-sale report.
Based on the reps most busily answering phones, Asia and the Gulf are the clear loci of those new buyers, with Russian collectors also contributing to Christie’s success in what’s no doubt an effort to save funds from the moribund (though rebounding) ruble—and sanctions too. Rumor has it that the sale’s banner lot, Picasso’s Les Femmes D’Alger (Version ‘O’) (1955), is now the property of the art-hungry Qatar’s art-hungry Al Thani family (specifically former Prime Minister Hamad bin Jassim bin Jaber Al Thani). American collectors and dealers leaving the sale—some of whom had consigned pieces—suggested to reporters that, at least for their countrymen, this upper-market segment is one for sellers, not collectors. Turn back the clock to the early 20th century and you could doubtlessly have recorded Europeans saying the same thing of the American industrialists of the Gilded Age.
The Impressionist and modern market is out of the woods and into record growth.
That flow of cultural capital from the United States and Europe and into the hands of Asian tycoons and Middle Eastern oil barons has created a major shift in forecast for the market in Impressionist and modern art. In the frothy early aughts and immediately post-crash, contemporary art was the sector where records were to be broken and investments were to be made. (That’s still often the case.)
The Imp/mod sector saw steady but not headline-grabbing growth. But with the market’s geographic shift, trophy artworks like those of Christie’s headlining sale have become the currency of note for those shooting into the ranks of the ultra-high-net-worth-individual set. (Sotheby’s also logged its second most successful sale in the category this month, marking a 67% year-over-year increase for the Imp/mod Evening slot.)
Combined sales totals at Christie’s, Sotheby’s, and Phillips in New York this month for art created since 1945 eked out a $1 million increase in sales over its previous high, set last November. Impressionist and modern works, on the other hand, made a combined $1.16 billion, a remarkable 44% increase over the previous record set pre-crash, in 2006.
There is a major shakeup afoot among the auction world’s big three, due to differing strategies on guarantees.
In the series of big stories that have consumed the art-market press since the final gavel fell—World’s Most Expensive Painting!, Really, the World’s Most Expensive Artwork is Sign of Imminent Descent of the Art World into a Fiery Hell!—the most important chatter hasn’t been about canvases but rather among those parsing out the significance of Sotheby’s and Christie’s now solidly divergent strategies around guarantees. The practice sees either the auction houses themselves or a third party make an irrevocable pledge to purchase a given work at a certain price—usually around its low estimate—and has been a strategy used with ever-increasing frequency by Christie’s and Sotheby’s, and to a lesser extent Phillips in order to secure top-level consignments. It’s the backroom bidding war before the actual bidding begins, so to speak.
The lay observer might see the stacking of $1.7 billion made at Christie’s sales and $892.9 million at Sotheby’s, and $127.9 million at Phillips, as a definitive reorientation of the top two players who have long been neck and neck (and even once accused of colluding with one another) into a more vertical hierarchy. Where public-facing sales results are concerned, that’s possibly the case. But Christie’s and Sotheby’s actual balance sheets might reflect a different reality. (Christie’s being a privately held company, we can only guess.) Sotheby’s new CEO Tad Smith has made it very clear that his house will no longer be wagering shareholder money in order to gain consignments when at all possible. The house appears to now be focused on steady, maintainable growth in sales of works in the upper seven figures and low eight figures.
And, while Sotheby’s did employ guarantees to bolster some top lots across the sales, in the contemporary segment, they reportedly guaranteed just one quarter of the number of lots (16) that Christie’s guaranteed (64). (It’s worth noting that half of the “Looking Forward to the Past” sale was guaranteed as well.) Some have suggested that the aggressive nature of these guarantees is artificially inflating sale totals by setting prices above where they might naturally fall. So the logic goes, auction houses—and particularly Christie’s—are approaching collectors who are otherwise unmotivated to sell with more or less blank checkbooks, which creates a higher price compared to what the lots would fetch if the supply arrived at the auction block unsolicited or at least less aggressively solicited. It’s a risky business, the level of which a publicly traded company like Sotheby’s can’t, as Smith suggested, bear on its own. Whether Christie’s can handle it remains to be seen; though, their reliance on the tactic for two seasons in a row suggests it’s been a winning proposition. For as long as new collectors are poised to step up and play economic chicken with one another over artworks, it will also likely be the new normal in the industry.
Alexander Forbes is Artsy’s Consumer Marketplace Strategist. He was previously the Executive Editor of Artsy Editorial.