NY Auctions May 2023 Round-Up: the Market Re-adjusts

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"It felt real tonight" declared David Galperin, Sotheby’s Senior Vice President and Head of Contemporary Art, upon the conclusion of their Contemporary Evening Sale last week.  

Over the course of the marquee New York sales, similar conclusions were being drawn on the other side of Manhattan at the Rockefeller Center. Following the conclusion of the Gerald Fineberg Collection Sale, Christie’s Chief Executive Officer Guillaume Cerutti was keen to contextualise the disappointing performance: “Is there an impact of the macro environment on the art market? Yes, that’s the confirmation. We adjusted the reserves to make it work. Is the art market still alive? Yes.”

The bi-annual New York Sales are a key barometer of the art market and this year was no different. Across the sales at Christie’s, Sotheby’s, and Phillips, total sales exceeded $1.8 billion, a healthy total but ultimately one that betrayed a more hesitant market – across the nine evening sales, total hammer prices exceeded low estimates in only four.

Data courtesy of Artnet News Pro.

With the wider economic climate finally affecting the art market, what were the key takeaways from the New York sales?  

High interest rates = less appetite

The market had continued to surprise right up until the end of 2022, seemingly defying the global economic instability. May’s auction season saw the art market begin to reflect the wider financial markets. Earlier this month, the US central bank raised interest rates to the highest level in 16 years. As Josh Baer commented in the Baer Faxt, “High interest rates have definitely contributed to a cooler market—money is expensive and people are not speculating.”  

To put it simply, demand is dropping in the face of economic uncertainty as collectors and investors become more conservative with their finances.

The market is re-adjusting, gently

When auctioneer Michael Macaulay announced that the cover lot of Sotheby’s ultra-contemporary “The Now” sale, Yoshitomo Nara’s Haze Days (1998), had been withdrawn, a wave of murmurs (and even a few audible gasps) erupted from the crowd. The lot was one of 21 that were withdrawn across the evening sales, with low estimates totalling $59.6 million – an indication of falling demand.

Sell-through rates also betrayed the lack of competitive buyers. Whilst the S.I. Newhouse Collection sale at Christie’s sold entirely, the majority of the sales across the week had sell-through rates hovering around the 80% mark, even in the face of dropped reserves that saw a number of works sell at way below their estimates.

Data courtesy of Artnet News Pro.

Reflecting on the auction cycle, as well as sales at Frieze New York, Andrew Fabricant, Gagosian’s Chief Operating Officer, commented that, “there’s not been a wholesale correction, there have been subtle shifts in pricing. The art market is not immune from the vicissitudes of the real world, but the effects are delayed. It remains to be seen how this will play out.”

Estimates not being met very much a sign of the times

Christopher Wool, Untitled, 1993. Image courtesy of Christie's.

For the auction houses, balancing supply and demand is imperative: the right balance sees competitive bidding that gets the sellers the best price while maximising the houses’ fees.

This auction season saw several major lots finding buyers at well below their estimates, an indication that reserves were dropped prior to the sale. The Gerald Fineberg Collection suffered, seeing Christopher Wool’s Untitled word painting (illustrated) making just over $10 million against a low estimate of $15 million and Gerhard Richter’s Badende limping to $9.6 million also against a $15 million low estimate. Both prices include fees.

Estimates can be set as long as six months prior to auction, and tellingly, the swift lowering of reserves across the houses was an acknowledgement that the market isn’t as buoyant as it was a year, or even half-a-year ago.

Market uncertainty an opportunity for some

For some, the overall drop in buyer confidence represented an opportunity. The lack of competitive bidding at the highest prices saw a number of fabulous works transacting at what time might prove to be very reasonable prices.

As one major buyer was quoted in Artnet News, “It was an incredible opportunity. This is what smart people do. They buy when things are down and they sell when things are up.”

Stand-out amongst those opportunities was Cy Twombly’s Untitled canvas painted in 1962. One of the anchoring works from Sotheby’s sale of music mogul Mo Ostin’s private collection, it came to the auction block with an estimate of $14 to $18 million. It ultimately sold for $11.8 million, including fees.

Women artists continue to set records

One segment that continued to attract interest was women artists. Amongst those that saw new records were Jadé Fadojutimi ($952,000), whose recent representation by Gagosian has seen continued demand, Nicole Eisenman ($2.4 million), Howardena Pindell ($1.3 million), and Alma Thomas ($3.9 million).

The star was undoubtedly Louise Bourgeois monumental Spider sculpture, which set a new artist record when it sold for $32.8 million in Sotheby’s Contemporary Evening auction.

Middle market shows the greatest demand

Artelligence’s segmented analysis of auction performance according to price showed that the most consistent competitive bidding was at the middle and lower price points.

Data courtesy of Artelligence.

The ‘hammer ratio’, calculated by taking the aggregate hammer price divided by the aggregate estimate, is the leading indicator for competitive bidding and thus, demand; a hammer ratio of 1.0 would indicate all works within the segment hammered at the low estimate, a higher ratio shows there was bidding beyond the estimate, a lower ratio vice versa.

Major works still finding buyers at major prices

As the old adage goes, ‘quality always sells,’ and this continued to ring true. Henri Rousseau’s Les Flamants, billed by Christie’s as a ‘once in a lifetime’ opportunity to acquire a major work by the artist, smashed the artist record and its estimate of $20 million to sell for $43.5 million with fees.

Jean-Michel Basquiat was also back in the headlines as the first significant work to come to auction in several years, El Gran Espectaculo (The Nile), achieved $67.1 million against a $45 million estimate. Whilst a remarkable Self-Portrait by Francis Bacon from the Estate of S.I. Newhouse achieved $34.2 million against a low estimate of $22 million.

Even in the face of economic adversity, top works will find buyers at major prices.

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