Auctioneers Were Over-Optimistic

As we suspected in our previous Insight article, (Prices disconnected from market reality?), a number of the estimates for the masterpieces offered at the New York sales on 1 & 2 November were disconnected from the market reality. The current market -- which is clearly a buyers' market -- is highly selective, very cautious and more mature than the auctioneers had anticipated. Although buyers were clearly motivated and still liquid despite the crisis, they showed that they want nothing but the best at reasonable prices.

Now, just hours before the major Contemporary Art sales in New York, it is too late for Christie's or Sotheby's to revise their estimates, but they will have to be much more cautious in the coming months.

Summary of the Impressionist & Modern Art sales

Christie's only managed to sell 51 of the 82 works proposed at its Rockefeller Plaza sale last Tuesday (Nov. 1), corresponding to an alarming unsold rate of 38%. The following day, 18.6% of Sotheby's lots remained unsold. In 2010, these same sales generated particularly low unsold rates (between 20 and 26%) for the two leading auctioneers. At $122m, Christie's result was not only well below the total low estimate ($211m) but it was also $40m less than last year's result from the same sale 2010. Sotheby's fared much better, generating $174m against an estimated total of $167.5m - $229.8m (versus $180.45m last year). After the success of their sale which saw the Gustav KLIMT work, Litzlberg am Attersee, fetch $36m, Sotheby's share price rose slightly to $34.7 on 3 November versus $25.8 a month earlier. The last four similar Klimt works each fetched between $28m and $39m at auction. Litzlberg am Attersee has a sombre history as it was stolen after Germany's annexation of Austria in 1938 and then returned in early 2011 by the Salzbourg Museum of Modern art to Georges Jorisch, the grandson of Amalie Redlich who died after deportation. Pablo PICASSO's Aubade (1942) also contributed to the success of the Sotheby's sale, fetching $23m, and Gustave CAILLEBOTTE's Pont d'Argenteuil et la Seine sold for a new record of $18m. Max ERNST's The stolen Mirror, a major work by the artist, also fetched a new artist's record at $16.3m, very substantially exceeding the estimated pre-sale range of $4m-$6m.

The Aubade by Pablo Picasso, 1965

(WikiPaintings)

Among the unsold lots with heavy consequences for Christie's sales total, we had already noted the particularly high estimate for Edgar DEGAS' Petite danseuse de 14 ans. The bidding for this work stopped at $18,5m versus an estimated range of $25m - $35m. In effect, the last bid was a perfectly respectable price considering the $17m fetched by another 14 year-old dancer on 3 February 2009 at Sotheby's London. Besides the Degas work, of the eleven Picasso works offered at the two sales, Femme endormie and Tête de femme au chapeau mauve, each estimated at between $12m and $18m by Christie's, remained unsold.

Petite danseuse de 14 ans by Edgar Degas, 1881.

(WikiPaintings)

Contemporary Art sales

In November 2010, Christie's and Sotheby's Contemporary Art sales generated more revenue than their Impressionist & Modern sales (which were not lacking in masterpieces...).

This year the policy of high estimates has been carried over from the Impressionist & Modern to the Contemporary sales on 8 and 9 November 2011in New York. In the current context of volatility in the Contemporary art market, this looks like a dangerous policy to pursue, especially as the catalogues do not contain any major surprises (31% of lots proposed at Christie's and nearly 37% of the lots at Sotheby's have already been through auction rooms).

Both auctioneers are relying heavily on Andy WARHOL with six works at Christie's (including a Silver Liz announced at $16m - $19m) and eight at Sotheby's (including The Last Supper announced at $5.5m - $7.5). True, a Silver Liz fetched $16.3m on 11 May 2010 at Christie's, but it was a meter wider. A month after that result, a similar Silver Liz to the one that will be offered on 8 November was acquired for the equivalent of $9m and not for $16m. The estimate for the The Last Supper looks more coherent with recent results for works in the same series.

Silver Liz by Andy Warhol, 1963.

(WikiPaintings)

At the same sale, Christie's will be offering a superb Roy LICHTENSTEIN entitled I Can See the Whole Room! and There's Nobody in it! carrying an estimate of $35m - $45m... If it goes in this price range it might just beat Lichtenstein's current record of $38m for Ohhh...Alright... (10/11/2010, Christie's). A giant Easter Egg by Jeff KOONS also looks extravagantly estimated in these difficult times: the Baroque Egg with Bow (Orange/Magenta) is carrying a low estimate of $5.5m (at Christie's) whereas a blue version of the same work sold for $700,000 less on 12 May 2009 (at Sotheby's).

M-Maybe by Roy Lichtenstein, 1965.

(WikiPaintings)

Sotheby's also has some very optimistic estimates for several works by Clyfford E. STILL. The auctioneer is emphasizing the rarity of these works. In effect, the Sotheby's catalogue has three works by the artist compared with an annual transaction average of one a year. And for the best of the three, 1949, A No.1, the "rarity" price has been set at $25m - $35m. If successful in that range it would very substantially exceed the artist's $19m record for an abstract work entitled 1947-R-No.I (15 November 2006 at Christie's). There is also optimism for an early work by Jeff Koons – an appropriated advertisement for a brand of Cognac – that would, at $600,000, become the most expensive work of this series.

1957-D No. 1 by Clyfford Still, 1957.

(Wikipedia)

Last year buyers were highly selective leaving behind 42% of the Contemporary lots at Sotheby's (10 November) and more than 39% of the Christie's lots the following day. The high estimates this year could well generate equally elevated unsold rates...

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Photo credits: Wikipedia, WikiPaintings

— by Guest Author  |  November 29, 2011

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