I was very intrigued by one finding in Sotheby’s recent report, Peak Performance, compiled by ArtTactic, which recorded sales in the $1 million+ bracket over the 2018-22 period.
The report, using internal information from Sotheby’s private sales data, says contemporary art accounts for the largest share of the company’s private sales – nearly 60%!
I would have expected Impressionist and Modern art to be the biggest piece, and indeed, it accounted for just over half of sales by value in the $1 million+ category. However, as David Schrader, the company’s global head of private sales, explained to me: “The number of transactions is much higher in the contemporary field, and it’s a much more active market, which is why it is greater in volume.” For the record, his department generates between 1 and 1.5 billion dollars each year.
Going down, it was interesting to hear that the shortening of art market cycles is driving this trend. Schrader again: “The cycles compress, and the market for certain artists can change in six months. Sellers may not want to wait for a proper auction, they may want to sell immediately.
Nothing indicates more clearly the volatility of this market, especially for “wet painting” or “ultra-contemporary” works of art. Owners may want to grab their profit while they can. And given the current uncertain economic climate, with collapsing banks around our ears, the market is becoming increasingly risk averse. At the price levels contemporary art is reaching now – remember, the ratio is around $1m+ works – this flight to safety sees sellers thinking about selling contemporary works to buy more validated.
There’s an added benefit to private sales in the contemporary category: sellers may want to avoid the charge of flipping, something galleries heartily frown upon and which could lead to blacklisting. A far cry from the glamor of public auctions, a private sale means no one is notified when the artwork changes hands.
Also, the gallery you purchased it from may not want to take the work back. They’ll have fresh works by the artist to sell – and usually get 50% of the sale price – whereas taking something back to resell would likely only generate a much lower commission. A private sale may be the only solution.
Curious to know if his department is “overexposed” for certain artists, I asked Schrader: “Do you sometimes refuse works? “. Diplomatically, he replies that he can sometimes “direct a work towards a gallery”.
And then there’s the perennial problem of a huge gap between the seller’s expectations and the price Sotheby’s thinks the work is likely to fetch. “Nobody ever likes to hear that a job is worth less than they think,” Schrader said, but he concludes, “Giving honest advice is a good long-term business decision.”
