As the world struggles to recover from the Covid-19 pandemic, the art auction industry flourishes due to a surge in both demand and supply for high-end artworks.
Both Sotheby’s and Christie’s saw record-breaking sales in 2021. Sotheby’s yielded a record-breaking $676 million in sales in the first part of the auction of the collection of real estate tycoon Harry Macklowe and his ex-wife.
Christie’s yielded $161 million combined with four works from Vincent Van Gogh, a collection previously held by the estate of Texas oilman Edwin Cox. In total, The Cox Collection was 100% sold with over $33 million in sales.
“As people, especially high net-worth individuals, had nowhere to spend their money during the pandemic, the return of the art auctions in-person would be the perfect place for the wealthy to splurge their money,” said Julen Esteban-Pretel, an economist professor at NYU Stern School of Business.
The wealthy actually flourished as a result of the pandemic. An additional 5.2 million people joined the ranks of the world’s 56.1 million millionaires for the first time in 2020, according to a recent Credit Suisse report.
Since people have more money to spend, many turned to the art market.
“A lot of people are looking at their walls, thinking about the art they want to add to their collection because they’re spending so much more time in their homes,” noted Emily Kaplan at Christie’s.
Auction houses also saw an expansion of their consumer base as millennials entered into the market. Christie’s noted in its H1 2021 Result that 31% of the clients were newly acquired. Among the newly acquired clients, 30% were millennials. The expansion of the consumer base that is increasingly younger than traditional collectors also contributed to the recovery of the art auction industry.
The global frenzy over NFTs is one of the reasons why millennials entered auction houses. As the leading auction house that brought NFTs into auctions, Christie’s has sold $92.3 million worth of NFTs.
In order to compete with Christie’s, Sotheby’s introduced cryptocurrency as the primary currency in its live auctions. In The Now Evening Auction, Sotheby’s auctioneer Oliver Barker took bids in Ethereum for some works from Banksy, one of the most popular street artists in the world.
“While people were unsure if they should sell their artworks during the pandemic, our sales record from earlier this year indicated a clear sign that the art market is stronger than ever,” said Emma Winder, VP of Global Business Development at Sotheby’s.
The increase in the supply of artworks set the stage for the success seen with the two major auction houses in its New York auction series. Rarely can people see auction houses selling every single object they have to offer, but Sotheby’s and Christie’s achieved that feat by providing diverse collections ranging from classic paintings to a rare edition of the U.S. Constitution.
Aside from New York, the art auction industry is blooming on a global level as the Asian segment continues to rise as one of the leading markets for Sotheby’s and Christie’s.
I found your blog post very informative and insightful. The analysis of why the art auction industry recovered quickly from the pandemic was particularly interesting. Your points about the shift to online auctions, pent-up demand, and the resilience of the art market shed light on the industry’s dynamics during challenging times. Great read!