The art auction market continued to grow at a healthy pace in 2014, with Contemporary art to the fore, according to a new report from artnet, the online resource to buy, sell and research art.
Its annual auction results report reveals that 2014 fine art auction sales increased 12 percent over 2013, with the current figures representing fully a fivefold increase over the last 14 years.
Over the past five years, Post-War and Contemporary works have contributed greatly to the overall fine art auction market, making up nearly 40% of the market by value and making headlines at auction worldwide.
“One specific example of both price appreciation and regional demand is Chinese artist Zhang Xiaogang,” says artnet’s CEO Jacob Pabst. “In early 2006, Zhang Xiaogang’s family portraits were being offered for prices under $100,000. In March of that year, his 1998 Bloodlines Series: Comrade No. 120 realized $979,200 at Sotheby’s. Since then, seven works by the artist have individually earned more than $5 million. Bloodline: Big Family No. 3 sold in April 2014 for over $12 million.”
He adds that overall, growth in value has been concentrated at the high end of the market among blue-chip artists, and may reflect economic trends, with vast wealth being created at the top of the income scale.
Against this backdrop, Pabst says the dominance of Contemporary art at auction, which began years ago, has continued to strengthen due to issues of supply and demand.
“Contemporary totals began surpassing those of Impressionist and Modern works around 2005, reflecting two primary trends,” he says. “One trend is the growth in the number of ultra-high-net-worth individuals around the globe (for example, China) who enjoy art and are looking for ways to diversify their investment portfolios.
“The other trend is the diminishing supply of Impression and Modern masterpieces, as many of them have found their way into institutions”.
New wealthy buyers from the so-called BRIC countries (Brazil, Russia, India, and China) are often cited as major contributors in the growth of the art market.
“Typically, we see that collectors from these markets first focus on their own regions: Chinese art enthusiasts buying Chinese Contemporary Art, for example; however, the longer they collect, the more international their tastes become. In fact, this has been behind some of the record prices we have seen at auction. For example, Chinese restauranteur Zhang Lan bid on both a Martin Kippenberger self-portrait and Warhol’s Little Electric Chair at Christie’s last May. Additionally, New York dealer Sean Kelly told us that he was impressed at the depth of collecting from Latin American countries during Art Basel Miami Beach.”
Asked whether the art market is a bubble soon to burst, Pabst points out that all markets go through cycles, and while it is impossible to predict the timing of the next correction, it is reasonable to expect that the art market will one day experience one again. However, he adds that he expects the market to continue apace for the time being.
“The economic horizon remains positive in the United States in particular, so it does not feel as if such a correction is imminent,” he says.
It is clear that online auctions will play an increasingly important role in the global art market. According to artnet, online auctions currently represent a relatively low percentage of all auctions (in the single digits), but they are estimated to be growing at over 20% per year.
Bolstering this growth are key advantages, including low transaction costs, enhanced market liquidity, fast turn-around, and lack of seasonality (when compared to the traditional calendar of brick-and-mortar houses).
Last year, the top 10 lots sold by artnet Auctions were six figures, and the average sold lot value increased nearly 37% versus 2013.
“As recently as two years ago, it still felt special when we would sell a painting for over $100,000. Yet, last year, we sold several lots in the $300,000 price range,” says Pabst.
“The total realized price for lots above $10,000 increased more than 30%. So the pace of change has been quite dramatic. We anticipate that this trend will only continue as collectors become increasingly aware of the advantages of online art transactions.”