Kobel's Art Weekly

Kobel's Art Weekly 31 2023

The second year of war does not bode well not only for the people of Ukraine, but also for the global economy and the art market. In the first part of the three-part half-year review, the focus is on the auction industry. Here, many observers are pinning their hopes on Asia.

Young art buyers from Asia are becoming increasingly important for international auctioneers, Ursula Scheer writes in January in the FAZ: "Auction houses see growth potential on this continent, even though sales figures in this part of the world have weakened recently and America remains the largest market. But at Sotheby's, Asian collectors now spend more per person on average than collectors from other continents, according to the company, and the house achieved a stable $1.1 billion of its sales in Hong Kong, despite all the political and pandemic turmoil. Reason enough for Sotheby's to open a new branch there in the near future, while Tokyo and Seoul continue to catch up as art metropolises. Overall, the share of younger buyers under 40 is growing at Sotheby's; a trend that Christie's is also observing: Millennials are gaining weight within the buying public - and are changing the supply side with their tastes."

Nicole Scheyerer reports in the FAZ on transparency that is taken for granted elsewhere but unusual in Austria: "For the first time in a long time, the Vienna Dorotheum has revealed its annual turnover. The house has every reason to be proud: more than 200 million euros is the best result in its history. Online sales contributed to this as much as the international orientation. More than half of our lots come from abroad and go again to foreign bidders,' says Martin Böhm, Director of the Dorotheum. [...] Germany and Italy - with representative offices in Milan and Rome - are the core markets of the auction house. In addition to the successful Old Masters segment, classical modern and contemporaries have recently recorded the strongest growth."

In the USA, the big auction houses in early February have once again become the focus of the investigating authorities, Ava Benny-Morrison has learned for Bloomberg: "The US crackdown on trade-sanction violators is turning to the art world as authorities track down works bought or sold by ultra-rich Russian tycoons. Through a series of subpoenas, federal prosecutors in New York are demanding high-end auction houses in the US turn over years of records as they seek to determine if art was smuggled offshore or if proceeds from sales were transferred illegally, according to a person familiar with the investigation.

The private equity firm Epiris is said to have put Bonhams, the auction house it acquired five years ago, up for sale for a billion dollars, reports Eileen Kinsella at Artnet.

Scott Reyburn from London reports mixed auction results in early March for the New York Times: "Both totals were considerably lower than the $298 million and $297.2 million achieved by Christie's and Sotheby's at their equivalent sales last March. Experts are concerned that in the current geopolitical climate, this is a market with a softening middle, particularly for modern artworks. Because the global economy is not at its best time, many collectors reserve their works or make private sales,' said Weiyan Liu, a Shanghai-based art consultant, who was among a noticeably larger presence of Asian visitors in the London salesrooms now that China has lifted its coronavirus-related travel ban. I think the young artists are doing quite well," Liu said. 'But I am not sure it's the case for modern artworks, except the ones with great provenance.'"

Over the past four years, Sotheby's has seen the greatest growth in sales of lots above the $20 million mark, Karen K. Ho summarises the findings of the Sotheby's Insight Report (PDF) by ArtTactic for Artnews: "The $1 million benchmark is significant because while the financial figure for art works represents just 4% of lots sold, the report notes that this tier 'accounts for 74% of total sales by value in the collecting categories covered in this report'. While private sales of art at $1 million or greater fell to $1.05 billion in 2022, down from the peak of $1.41 billion in 2020, the report noted that is still 30.8% higher than that tier of sales in 2019 at $803.5 million. Two specific trends cited in the report are the rise of Asian collectors just before the COVID-19 pandemic and the growing number of bidders from Generation X and the Millennial generation."

In Sabine Spindler's portrait of her in the Handelsblatt, Grisebach serves up a taboo that has never been broken publicly en passant: "It is sometimes a poker game in which even an auction house has to make concessions. 'We sometimes waive the consignor's fee, but giving a percentage of the buyer's premium depends very much on the individual work and the individual competitive situation.'" At least the buyer's premium was previously considered sacrosanct by auction houses in Germany.

Auction house Phillips seems to be in trouble despite its expansion in Asia, Ben Quinn has found out for the Guardian on the basis of the trade register (document of 15 March): "A Russian-owned British auction house that has been the target of calls for a boycott has lost tens of millions of pounds in recent years and has been left in a parlous financial position, records show. Phillips is heavily reliant on guarantees provided by two founders of a Russian luxury retail group and has seen its debts mount up. Auditors said the ability of the Russians to provide support could not be guaranteed and a 'material uncertainty' may cast 'significant doubt' on the business's ability to continue." A German summary can be found in the FAZ by Ursula Scheer.

The French auction house Artcurial is expanding further with a stake in Beurret Bailly Widmer Auktionen in Basel, reports Bettina Wohlfarth in the FAZ: "The merger will enable Artcurial to gain a foothold in Switzerland and expand its European network outside the EU. The Basel auction house, which will retain its managing directors and organisation, should benefit from the integration into Artcurial's widely dispersed activities. Costs and shares of the transaction were not disclosed."

The rather sluggish course of the New York auction week summarises Barbara Kutscher in the Handelsblatt: "Bidders only grabbed important works fresh from the market and the very special. As Alex Rotter, Christie's head of the 20/21 department, stated on 11 May: "We are confronted with a more difficult market situation, economically, politically, in every respect". Low interest rates, which had long fuelled the market, are now at their highest level in 16 years. In Sotheby's subsequent 'Modern Evening' auction, 23 of 40 lots sold did not even reach the lower estimate. But that's always the one chance for collectors to buy a little cheaper."

The macroeconomic influences on the auction market are discussed by Zachary Small in the New York Times: "'Buyers in the postwar and contemporary art market were comfortable borrowing against their assets when they had access to capital at a cheap rate,' said Doug Woodham, an art adviser who was previously an executive at Christie's, explaining that rising interest rates might triple the margins for a collector. 'It is making people feel more hesitant to bid.' Brooke Lampley, Sotheby's chairman and worldwide head of global fine art sales, said that she had heard similar concerns from buyers. Money isn't free right now,' she said. 'That plays a role in how people are spending their money and thinking about allocating their assets.'"

The 500th auction of the Cologne auction house Van Ham in June was also its best, Susanne Schreiber reports in the Handelsblatt: "With this Picasso portrait, reduced in colour and form, Van Ham can not only record the highest hammer price in the history of the house. So far, the 4.9 million also represent the highest hammer price in this German auction season. On the first evening of the two-part auction series alone, Van Ham sold art for 13.9 million euros. More than ever before. On the second day, another 8.1 million were added. The anniversary auction went down in the annals with a total of 22 million euros. More than a dozen national and international artist records were set."

Ketterer Kunst in Munich promptly topped the result, report Sabine Spindler and Susanne Schreiber also in the Handelsblatt: "The hammer for the most expensive work of art fell at 5.3 million euros. Gross, that is 6.4 million euros. Such high hammer prices are rather rare in Germany. This makes Alexei Jawlensky's 'Girl with Pigtail' Germany's most expensive work of art in the first half of 2023. This Friday evening, Robert Ketterer, head of the auction house Ketterer Kunst in Munich, knocked down the museum's expressive painting after a long bidding battle between two financially strong telephone bidders. His wife Gudrun had the winning top bidder on her ear. The expensive, museum-quality key work by Jawlensky was by no means the only million-dollar surcharge on an evening in which the Munich-based artist, with a lot of patience and anecdotes, was able to bring in a number of very respectable knockdowns. In the first hour of the two-and-a-half-hour session alone, three gross prices exceeded one million euros."

Christie's disappointing strategy for London is explained by Anny Shaw of The Art Newspaper: Art advisor Hugo "Nathan suggests American buyers in particular are 'spent out' after the 'weight of the New York auctions' last month. He adds: 'Christie's put all their eggs in the New York basket, they had vast sales in New York. There's an argument that they could have held something back for London, but I think everyone wanted to hurry. He notes how the global rise in interest rates have caused a contraction in the market, particularly in the first six months of this year. The conservative defensive strategy is to put everything into the big marquee auctions in New York, and also to go with guarantees,' Nathan adds. 'The thing is, when guarantees land with the guarantors, there are a lot fewer guarantors available the next season, and without the third-party guarantors, the auction houses struggle to get the material.'"

The old masters market is showing stability - compared to contemporaries at a low level - Stephanie Dieckvoss observed at the London auctions for the Handelsblatt.

What Susanne Schreiber reports in the Handelsblatt is a bit more than a dent: "With a total turnover of 3.2 billion dollars, Christie's took in 23 per cent less in the first half of the year than in the same period last year. Hall and online auctions accounted for 2.7 billion dollars, private sales for 484 million dollars. Guillaume Cerutti, Christie's CEO, explains the decline with the changed macroeconomic environment: increased interest rates, inflation and decreasing liquidity. Cerutti puts the 'solid performance in the first half of 2023' in the context of the last five years, as 2022 and 2021 were exceptional years. Viewed in this way, the result is still above the five-year average. The Frenchman sees reason for optimism in the sales rate, which is 87 per cent across all auction formats. What is new is that in the meantime 80 per cent of all bids - even in the millions - are received online, whereas before the pandemic it was 45 per cent". Asia in particular is weakening, notes Angelica Villa at Artnews: "39 percent of Christie's buyers this year were based in the Americas, 35 percent in Europe, the Middle East, and Africa, and another 26 percent from Asia, according to the auction house. The number of Asian buyers was a sharp decrease from the first half of 2021, when Asia accounted for 39% of its clients."

Sotheby's and Phillips have already reacted to the downturn by laying off management staff, Shanti Escalante-De Mattei and Angelica Villa have researched for Artnews.

Bonhams, on the other hand, has achieved the best half-year results in its history, says Vivienne Chow of Artnet: "The auction house Bonhams achieved $552 million in sales during the first half of 2023, making it the best first-half year results in the company's history. The reported results reflect a 32 percent year-on-year increase in sales despite market correction observed at recent auctions around the world."