Is it an exclusive for millionaires art market?
Updated: Feb 4, 2019
Jean Michel Basquiat, painting “ Untitled” was sold in auction for $ 19,000 in1984. The painting was sold in auction on May 2017 for $ 110,487,500.
Acrylic, spray paint, oil stick /canvas 72 1/8 x 68 1/8 in Price including buyer's premium: $ 110,487,500 Sotheby's, 18 May 2017
Provenance: Annina Nosei Gallery, New York. Phoebe Chason, New York (acquired in January 1982). Alexander F. Milliken, New York (acquired by June 1982). Christie’s, New York, May 8, 1984, Lot 77. Acquired by the present owner
Why are the super riches chasing Basquiat, Warhol, De Kooning, Picasso, Miro? Because the works of these artists became very rare to find. This chase results in a constant records breaking results for these exceptional masters.
It is known that the art market evolves in cycles with the stock markets. Comments by Sotheby’s expert Tad Smith showing that he thinks there is enough room for art prices to grow on its own and may be no longer be in a cyclical evolution. Sotheby's analyzed the wealth of today's billionaires and compared it to the most expensive works of art sold. To do this, Sotheby's used the 201st richest American on the Forbes 400 to get a median wealth level. In 2006, the 201st on the list would have had to spend 10 percent of their wealth to buy the most expensive piece of art sold that year. In 2016, that same number was only around 5 percent. In 2006, the 201st wealthiest person would have had to spend 70 percent of their fortune to buy all of the top 10 pieces of art sold at auction that year. In 2016, that same number was 40 percent. "In other words, the median member of the Forbes 400 would have seen his personal spending power to purchase art at auction grow 75 percent in the past decade alone," Smith said. ( text CNBC )
Not all billionaires collect fine art, and the most passionate collectors of fine art will not spend 10% of their fortune to buy paintings. These large fortunes are illiquid – which means that their $ are invested in their business.
There are today more than 2000 billionaires. This number has increased exponentially in compare with a couple years where most on the Forbes 4000 were millionaires. This shows that their fortunes have increased as the same time and could conduct to think that there is still a large room to break records in the coming years.
25 artists share the income for half of the sales in auction … this will lead to think also that extreme rich will make the most money with their art investments. The big winners are the riches, and these investors playing in the art economy are very few.
The art market doesn’t attract enough real buyers between the viewers, visitors of galleries, auction houses etc. Art experts agree that buying fine art requires taking risks. As we mentioned in another post about investment in arts, collecting art increases the taste, the general culture of the investor a long he studies a painting and his author. For big investors or small investors it is important to define a budget, and to stick at all times to this budget
Results for 2016 – most important sales in auction
CLAUDE MONET - CHRISTIE'S NEW YORK $ 81,447,500
DE KOONING - CHRISTIE'S NEW YORK $ 66,327,500
PABLO PICASSO - SOTHEBY'S LONDON $ 63,537,444
PETER PAUL - CHRISTIE'SLONDON $ 58,002,713
BASQUIAT - CHRISTIE'S NEW YORK $ 57,285,000
MODIGLIANI -JEANNE - SOTHEBY'S LONDON $ 56,547,723
MUNCH -SOTHEBY'S -NEW YORK $ 54,487,500
REN RENFA -POLY INTERNATIONAL $ 44,117,647
CUI RUZHUO POLY AUCTION $ 39,564,634
CY TWOMBLY -SOTHEBY'S NEW YORK $ 36,650,000
FU BAOSHI - POLY INTERNATIONAL AUCTION $ 35,024,669 FRANCIS BACON -SOTHEBY'S NEW YORK $ 34,970,000 ZHANG DAQIAN -SOTHEBY'S HONG KONG $ 34,906,633 GERHARD RICHTER -SOTHEBY'S NEW YORK $ 33,987,500 HENRY MOORE -CHRISTIE'S LONDON $ 32,766,732 MARK ROTHKO - CHRISTIE'S NEW YORK $ 32,645,000 ZENG GONG -CHINA GUARDIAN AUCTIONS CO $ 31,686,745 ORAZIO GENTILESCHI - SOTHEBY'S NEW YORK $ 30,490,000 WU GUANZHONG -VILLAGE POLY AUCTION $ 30,434,334 RAJA RAVI - PUNDOLE'S $ 29,446,450
High-end artworks are selling through privately brokered sales to wealthy collectors, who are less willing to reveal their willingness to pay at auction openly. Privacy, financial opacity, and the ability to remain anonymous, appears more prevalent in the Western world. At a time where austerity has resulted in much cited global inequality, and revelations about the enormity of hidden financial wealth, buyers at the top-end of the market prefer privately brokered deals to the traditional auction setting of bidding by open outcry. With record numbers of guarantees being offered by auction houses, experts and the role of expertise are changing the landscape at auction houses. TEFAF report.
In conclusion, yes the millionaire market is a market exclusively for the riches.