Art sales at Christie’s reached $8.4 billion in 2014, up 12% from the previous year, according to the company’s annual report. At Sotheby’s, 2014 sales totaled $6 billion, up 18%.
All of the retail channels had increased sales last year, but the most significant jump was in e-commerce, which was up 54%, according to Christie’s, and accounted for more than 25% of new-customer purchases at Sotheby’s. According to Christie's breakdown, there was a moderate increase of 10% in total auction sales (in monetary terms), and private sales increased by 20%.
Despite the rising importance of online sales, which have made the venue far more open and democratic, the high-end auctions are still reserved for those present at the event (and those who phone in). Last November, the world wasblown away when Christie's contemporary art sales reached a record $853 million. Not only were the prices of the works extremely high, the sales volume approached a new, exciting threshold of a billion dollars in a single night.
“It is exciting every time,” Christie’s president of Europe and the Middle East Jussi Pylkkanen told “Globes” in an exclusive phone-interview following the publication of the company’s annual report. “I was the auctioneer at this event. I think that the fantastic energy in the world is contagious. The billion-dollar question is just a symbolic matter, or course, but there is no doubt that the large sums ignite competition and contribute to the rise in prices.”
Works of art starting at $200
Much as in athletic competitions and soccer games, auction participants are also affected by a competitive atmosphere and the sense of achievement, both of which add excitement to the purchase. This is further reinforced by the ever-widening circle of wealth, and the entry of new countries to the global trade scene.
More than 30% of Christie’s buyers are new to the company, and they come primarily from Asia, but also from the Middle East, Russia, and India. “The three sales centers in which the company saw the greatest increase in sales in the past year were Shanghai, Mumbai, and Dubai,” says Pylkkanen.
“When you focus on the record sums that make headlines, people tend to ignore the vast size of the market, the impact of which is far more significant than the top-tier buyers. The main phenomenon that characterizes the market is the size of the audience - the growth of the art market stems from a continuous rise in the number of new buyers in the low- and mid-range price brackets. We have works of art starting at $200.
“In the last five years, we have seen a steady rise of 20% a year in the number of customers - 25-35% in developing markets, and 20% in traditional markets, such as Paris. In Israel, just last year there was a 10% increase.”
Have market instability and the global financial crises made art a more sought after investment?
“I believe that art has always been an investment area. Picasso will always be Picasso, and Manet will always be Manet. People have always invested in art - and enjoyed art. The difference is that over the past few decades, more and more people have the ability to invest in art, and the market is growing.”
Pylkkanen says that the entry of many new players to the market impacts the variety of demand as well, and leads the market towards a broader variety of styles, and strengthens the field of contemporary art - the fastest-growing and best-selling area in the auctions.
“Today, demand for contemporary art is blossoming, across all demographics. The high-demand supports increased stylistic variety as well. I think that being an artist today is good career - I wish my children were artists.”
Online curiosity
Sotheby’s Israel managing director Sigal Mordechai also points to the broadening of the collectors’ community as a main reason for the growth of the market. Mordechai points out that this is the first year that the art market has exceeded its sales record from 2007, before the global financial crisis. “Many tend to think that we reached a new peak a long time ago, but that’s not accurate - the financial crisis was so deep that the market needed more time to recover. We have seen this gradually rising trend since 2010, and it was clear that we would break the record this year.”
In 2007, the global art market was estimated at $48 billion (total transactions, not just auctions). In 2009, after the financial crisis, the market reached a low of $31billion, and in 2014, for the first time, after a steady rise, it is expected to break the $50 billion threshold - according analyst projections based on the deals at the major art fairs, local auction houses, and leading galleries and dealers (Sotheby’s and the other auction houses have yet to publish full results).
Has the market become more selective since 2008?
“Not exactly. In the top-tier of the market, there was a rise in every category this year, but the leading category was contemporary art, which increased by 20% in one year.” Mordechai emphasizes that even within the contemporary art category, every measure was up: young artists, middle-generation artists who are considered leaders in their generation, and "classic-contemporary" - from the mid-20th century to the 1980s and 1990s.
“Still, the majority of the most expensive works are by artists who have died, like Warhol, whose works continue to break records, or Jean-Michel Basquiat, who, if he were alive today, would be younger than Jeff Koons. But the prices that Koons’ work, as well as works by Jeff Wall, Gerhard Richter, Damien Hirst and others, shatter the myth that an artist has to die for his works to be in high-enough demand to sell for millions of dollars.”
Also at Sotheby’s, roughly a third of buyers are new collectors, and they contributed roughly one fifth of the total revenue from global sales. “We are notably dominant in the Chinese and Asian market - more than a billion dollars come from this market. The concrete increase in the online sales brought in young collectors as well, and this is part of the explanation for the demand for contemporary art,” says Mordechai.
“There are 32 million millionaires in the world, and at least 600,000 of them are known art collectors in the middle- and high-range market segments. The most significant location is still the US, more specifically, New York. The biggest sales and the highest prices are still found there. The Americans are connected to art and art collection as part of their culture. China is the fastest-growing new market, but they still need to learn to value art as a cultural asset.”
What makes a contemporary artist a commercial success?
"The artists that lead the top-tier are those who always have museum exposure. Museums are still the primary market-makers and sources of authority. If we look at Koons (whose work has sold for a record auction price for a work by a living artist), at any given time he has a major exhibition at some major museum in the world. These artists are exhibited and represented by major galleries and the audience is extremely aware of them - these are incentives for investors.”
The museums that are meant to serve as sources of authority can no longer participate in the auctions at these high market prices.
Pylkkanen: “That’s not always true. In our latest auctions, the Getty Museum in Los Angeles bought important Impressionist works for $65 million, the foremost among them being Manet’s ‘Spring.’ The Rijksmuseum in Amsterdam bought a de Vries piece for $27 million. It is not always advertised immediately that they are the buyers, but museums definitely do participate in the auctions.”
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015