The fine art market on a macro-level has lost none of its momentum in 2013, as prices at the very top end in all market sectors continue to confound the naysayers. You need to look no further than the staggering results realised in Hong Kong last week when Sotheby’s recorded sales in excess of US$540 million.
Yet the most commonly quoted barometer art market analysts, pundits and journalists alike turn to – the Mei Moses All Art Index – would suggest differently. Despite the bullish results globally, the World All Art Index is down 2.8% year to date, with the Impressionist and Modern sector recording just a small increase of 1.3%, while the Contemporary sector is up 8.4%. The Old Masters sector has slid 21.8% and, up until last week, the Chinese sector was struggling to keep an even keel. These indices are likely to continue to show tepid results, despite the enormous prices being realised and strong clearance rates – why? More and more we are being presented with fresh works to market, particularly at the very top end. Christie’s will be offering up a major Francis Bacon triptych with estimates of US$70 to 80 million and an Andy Warhol Coca-Cola bottle, which is estimated to sell for US$50 million, neither of which will figure on the Mei Moses methodology.
The local market
One of the major criticisms of the Australian auction market in recent years has been the plague of a number of “top” end lots, which have been omnipresent over the past five years. However, 2013 to date has witnessed a significant change for the Australian market. A far more competitive auction scene is now unfolding with the re-emergence of Bonhams as a serious player, heralded by highly successful single vendor sales and the dedication of Sotheby’s Australia to unearth bigger ticket works, which are fresh to market. The result has seen Christie’s present a solid catalogue, which included the recent Glover ($2.9 million) and Menzies presenting an iconic Whiteley in their forthcoming sale with estimates of $3 to 4 million.
[1]The Australian market has recorded auction sales of $78.50 million so far this year, with 10 works exceeding the $1 million threshold – currently on par with the total for 2011 and 2008. There has also been far greater activity in the $250,000 to $750,000 market, with eight new artist auction records within this bracket, supplemented by a move in the mid-tier Whiteley’s in particular.
I believe the middle market is the key. As the fresh Williams, Nolans, Arthur Boyds, Whiteleys, Bracks and Glovers find longer-term accommodation, the competition between the auction houses will slip into this mid-market. The lower end of the market remains saturated – the sense of urgency and the fear of missing out, which the auction rooms feed off, is simply not apparent currently and is unlikely to return in the short term.
The investors
The DIY superannuant has been less active than we have seen in recent years, in part due to a healthy lack of understanding of the changes to legislation, which comes into effect in 2016. Unrealistic expectation of the Australian art market’s recovery, in the wake of the GFC, has also compounded issues the market faces at the lower end, as work is “dumped” onto the market.
The lack of international buyers in the Australian market has been a major factor and has arguably hindered the recovery in the auction rooms post-GFC. Despite the very varied reviews of the current “Australia” exhibition at the Royal Academy in London, and the mixed results from the Christie’s Australian Art Auction – this renewed exposure to Australian art will be key to invigorating the awareness and perception of the quality of work that Australia has already, and continues to, produce.
The Indigenous art market has shown glimpses of a recovery, although it is still a way of the halcyon days of pre-GFC. The best buying is still arguably going to be via the private treaty and reputable dealer market for the time being, despite a handful of notable sales over the last 12 months. Recovery in this sector was always going to be slow as it arguably fell the hardest, however, great Indigenous art is recognised as great art. It is a soft market and one that art investors and collectors would be foolish to ignore.
Finally, it is worth noting though that since 2005 the Australian auction record has blossomed from $2.09 million for McCubbin’s iconic Bush Idyll, set in 1998, to $5.48 million for Nolan’s First Class Marksman. In fact, the McCubbin no longer registers in the top 10 auction prices of all time for Australian art. Bush Idyll was one of the high profile lots, which passed in at Christie’s sale last month. It has since sold by private sale for an undisclosed sum to an Australian collector based overseas. The lesson for an investor? Well, the investment lies in the quality and recognizing the opportunity.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Also in the Switzer Super Report:
- Peter Switzer: Stop reading the AFR if you are scared! [2]
- Paul Rickard: Time to unwind 22.8% profit on bank shares [3]
- James Dunn: Freelancer.com – the next Apple? [4]
- Barrie Dunstan: Telstra – not Nine – best media buy [5]
- Penny Pryor: Bubble talk still “unrealistic” [6]
- Rudi Filapek-Vandyck: Buy, Sell, Hold – what the brokers say [7]