‘Confidence Is Starting to Build’ for Unusual, Heated Auction Season

(Bloomberg) -- Last week, Christie’s and Sotheby’s held a series of big-ticket auctions that mostly consisted of work from the 20th and 21st centuries.

There were a few standouts by dollar value, most notably a painting by Jean-Michel Basquiat from 1982 that sold for $41.9 million at Christie’s, a $20 million Picasso purchased by crypto investor Justin Sun, and a rare Van Gogh painting that, after some drama regarding a bidder who backed out, finally sold for $15.4 million at Sotheby’s. 

But the real action was in the lower tier of the market with artists who are not, strictly speaking, household names. 

“What was very interesting was to see this breadth of demand for top-quality examples of artists you don’t see so often,” says Helena Newman, Sotheby’s Europe chairman and worldwide head of impressionist and modern art. “For example, a work by Frantisek Kupka was, I think, supposed to make £1.5 million ($2 million) to £2.5 million, and it sold for £7.5 million.” 

There were similar standouts at Christie’s for both younger artists and for relatively niche 20th century names, including a work by the French artist Jean Fautrier that had a high estimate of £1.5 million and sold for £4.5 million. (Sotheby’s also sold two Fautriers, both for well above estimates.)

“Younger artists and artists who aren’t established auction players were the breakout prices,” says Alex Rotter, Christie’s chairman of 20th and 21st century art, “whereas the more traditional material performed, but performed in a more conservative manner. There weren’t breakout prices for Magritte or anything like that.”

The causes of this middle-market action, specialists and dealers say, are twofold.

First, since Covid began, many consignors have refused to sell their super expensive art publicly for fear that the current livestream-only format could harm results. What has sold at the $50 million-plus tier has usually been via private sales; so the only visible market action has been in the low and mid-tiers.

Second, rich collectors have gotten richer, giving them liquidity to push up prices for whatever does become publicly available.

These two factors don’t seem to be going away, at least not in the next month. As such, they could serve as indicators for the upcoming May evening sales in New York, a series of auctions that generally serve as a bellwether for the overall strength of the blue-chip art market.

“My prediction, based on what I know and see and feel, is that the May sales in New York will be strong, but I would be very surprised if you saw many $100 million paintings,” says Rotter. “The market is not where it was at with the super high-end. People are still holding back.”

Finding Supply

Auction houses are intermediaries, which means their next sale is only as good as their consignments.

As a result, specialists have to strike a balance between generating enough confidence in the market that people are willing to consign art while not overloading the market with expensive art. “I don’t want to be irresponsible with rebuilding a market and just flooding it with high-end items,” says Rotter.

For this very reason, during the Covid-19 pandemic, both auction houses and consignors have been relatively skittish about putting ultra-high-value works at auction. (There are notable exceptions, including a $92.2 million Botticelli.) 

“First of all, this is a constantly ebbing and flowing story in regards to supply,” says Newman. “Last year, a lot of high-value material went to private sales. We sold $1.6 billion [in private transactions], which was a record for us, with a lot of private transactions north of $50 million.”

And while Sotheby’s recently announced that it would be offering a Basquiat with a high estimate of $50 million in its May evening sale, Newman acknowledges that a series of major estates and private collections with ultra-expensive artworks will continue to sit things out for the time being. 

“Yes, it’s unlikely that a major estate will come with [lots of] $20 million pieces” between now and May, she says, “but it doesn’t mean that there can’t be single high-value lots.”

Bonnie Brennan, president of the Americas at Christie’s, echoes this sentiment. “We have some major collections and estates that are maybe being controlled by more conservative minds that are waiting for the fall,” she says. 

Her department has been trying to use this reticence as a sales tool to get consignments for May. “We say: ‘Sell now—get ahead of it while you know people are active—and you’ll have less competition,’” she says.

(This is not to say that everyone is holding back; in its March London sales alone, Christie’s sold two separate collections for more than $30 million each.) 

Generating Demand

The sales last week “felt very different than last year,” Newman says, referring to the initial panicked onset of the pandemic, when demand plummeted.

Collectors, she continues, have money to spend. “There’s certainly a lot of liquidity in the market, and buyers are very hungry. People are not spending money on other things. They’re more or less confined, and that has definitely helped create an energy in the market.”

Looking to May, then, the question is where that energy will be directed.

“Confidence is starting to build,” says Rotter. “It’s not at the level of what it was before, so the only way you can really encourage it is if you bring something new to market that people haven’t seen.”

And that, auction house specialists say, is the best indication for what will appear in the May auctions: artworks that feel novel or in some way unusual but will probably not grab headlines for record-breaking numbers. 

“This freshness,” says Rotter, “helps people to say, ‘OK, do I want to buy another average work by a color field painter, or am I more excited in something I haven’t seen before?’ ”  

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