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Key art sales at major auction houses in May are expected to be lower than last year, as wealthy buyers and sellers take a breather from the crazy prices of 2021 and 2022.
According to ArtTactic, art auction sales at Christie's, Sotheby's and Phillips are expected to total $1.2 billion over the next two weeks, down 18% from a year ago and nearly half the total for sales in May 2022.
It extends the art market's recent decline from its post-Covid peak, when cheap money, a booming stock market and fiscal stimulus saw record sales. Last year, global fine art auctions fell 27% from 2022 – the first art market contraction since the pandemic began in 2020 – and the average price fell 32%, marking the biggest decline in seven years, according to ArtTactic means.
During the first quarter of this year, sales in the contemporary and post-war category – the big moneymaker and growth engine for the art market in recent years – fell by 48%, according to ArtTactic.
The auction houses say buyer demand remains strong. The problem, they say, is supply, as collectors are reluctant to sell their trophies for a better market environment. There are also no large single-owner collections for sale this spring, such as the Macklowe Collection or Paul Allen Collections that have driven sales in previous years.
“We are seeing what people consider to be a smaller supply this season,” said Brooke Lampley, Global Chairman and Head of Global Fine Art at Sotheby's. “The proof is in the pudding. It's the buyers who show up and what the work will sell for. That will determine our perception of the art market right now. And I expect the results to be strong.”
Price pressure
Dealers and art experts say the auction art market is stuck because of price, with sellers unwilling to get a lower price than they would have received at the peak of the market in 2021-2022. Buyers, meanwhile, are demanding discounts due to rising interest rates, an uncertain election year and geopolitical uncertainty.
“Sellers want 20% more, and buyers want 20% less,” says Philip Hoffman, CEO of the Fine Art Group, a consulting and art financing company. “There is a stalemate.”
CNBC's Robert Frank before a collaboration between Andy Warhol and Jean-Michel Basquiat at Sotheby's.
Crystal Lau | CNBC
Dealers say today's buyers don't have the confidence they had two or three years ago: Persistent inflation, higher interest rates, fears of a slowing economy, the upcoming election and geopolitical crises are all causing many collectors to pause their purchases .
“People are hesitant,” said Andrew Fabricant, head of operations at Gagosian, the mega-gallery and dealership. “It's an election year, there's the situation with the Fed, are they going to cut spending or not. The cost of money is relatively high compared to a few years ago.”
Even buyers who have the money and are willing to pay are not buying, as experts say there is a shortage of top-quality art being offered at auction.
“Our customers have a lot of cash,” Hoffman said. “The question they ask is: 'Should we buy from the art market now?'”
Fewer pieces
While spring sales typically offer more than a dozen works for more than $30 million each, this year there are just a few.
Among the most expensive works of this auction season are Francis Bacon's 'Portrait of George Dyer Crouching' from 1966, part of a series of ten famous and monumental portraits that Bacon made of Dyer between 1966 and 1968. It will sell at Sotheby's for an estimated $30 million to $50 million.
(L-R) Jean-Michel Basquiat's “The Italian Version of Popeye has no Pork in his Diet”, 1982, and Francis Bacon's “Portrait of George Dyer Crouching”, 1966.
Crystal Lau | CNBC
Sotheby's also has a collection of four paintings by Joan Mitchell, two of which are expected to fetch more than $15 million.
Christie's is showing a major work by Brice Marden, who died last year, called “Event,” estimated at $30 million to $50 million. It also includes an iconic 1982 work by Jean-Michel Basquiat called “The Italian Version of Popeye Has No Pork In His Diet,” estimated at $30 million.
Still, collectors and art consultants say there are few, if any, “masterpieces” to generate excitement this season.
“They just don't have the Marquis stuff this season,” Fabricant said. “Unless you have something really unique and special, I don't think you're going to have the same enthusiasm as you did with previous sales.”
At the same time, art experts say this is a good time to go bargain hunting, given the long-term outlook for the art market.
“I think if you can get deals at pre-2022 prices and if there's something of good quality, now is the time to buy,” Hoffman said. “My outlook for the art market over the next ten years is that it will be a fantastic investment. It's a good time to buy, not the best time to sell.”
While auction sales are weak, sales in private markets and galleries remain strong, consultants say. Sales of new works in galleries are less dependent on investment returns and therefore less sensitive to economic and stock market volatility. The auction houses are also seeing strong growth in their private sales, where they immediately conclude a deal between buyer and seller without a public auction.
Christie's sold a Mark Rothko painting to hedge fund billionaire Ken Griffin earlier this year for more than $100 million, CNBC previously reported. Collectors say selling a trophy work privately poses less risk of an auction failure, which can damage a work's value.
“With private markets, you can be very targeted in terms of who you approach and what type of buyer you approach,” says Drew Watston, head of art services at Bank of America. “You can be very targeted about the price you charge in the market. There is a lot of discretion, so you can go into the market and test and adjust a price depending on the feedback you get.”
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