Skate's Art Investment Review

The proud city of Krefeld, located in the heartland of German manufacturing, lost its last publicly traded company on March 16, 2009 when the locally headquartered industrial conglomerate Jagenberg AG decided to go private. Had the citizens of Krefeld been asked what industry would return them to the global map of listed companies, common answers would likely have focused on new technologies, high precision manufacturing, top quality steel, chemicals, new materials and other areas for which North Rhine-Westphalia is famous. Such suggestions would have been wrong, however, as the Krefeld based company that went public today is an art dealer.

Although unexpected for Krefeld, North Rhine-Westphalia is not necessarily a strange place to host a successful art dealer. “The old money” German land is rivaled only by Bavaria in terms of wealth concentration and significant art collections. Krefeld is a short 20-minute drive from Düsseldorf, a vibrant global city of culture. The area is certainly a fertile ground for building an art business, and Weng Fine Art AG has clearly seized a major opportunity.

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The traditional mismatch between Sotheby’s robust auction volumes and the firm’s third-quarter loss-making financials, which were released at the same time (this week, actually), causes us to pose a legitimate question: while the auction has clearly been the best art industry business model to date (eight of the 13 constituent companies in Skate’s Art Stock Index have art auctions contributing to at least part of their economics), one may wonder if there is a better way to make money in the art industry. Can a company do better than living from one peak season to another, losing money between auctions and staking a significant part of its fortune on a single week of trade several times a year?

Skate’s believes that yes, there is a better model out there. It is currently practiced in the low-key world of collectibles and has not yet migrated to fine art market. The fine art market would be better off if it did.

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Of all the contemporary sales that took place in London during the week of the Frieze Art Fair, Christie’s results most certainly place the auction house in the leading position. The results of Christie’s evening sale on October 14, which saw a total trading volume of $59,896,712, were double those of its closest follower Sotheby’s, which brought $28,028,014 in sales. Nearly half of Christie’s lots sold above their estimate ranges, with the most impressive result of the week achieved by German artist Gerhard Richter’s Kerze (Candle). With a record-setting final price of $16.5 mln, it sold well above its pre-auction high estimate of $14 mln. The previous record for a work by Richter was set by another Kerze (Candle), which sold at Sotheby’s in 2008 for $15.7 mln.

Along with contemporary sales, the two leading auction houses also held sales of Italian art. The Italian sale turned out to be more successful for Sotheby’s, and its results even exceeded those of its contemporary evening sale. Sotheby’s Italian sale totaled $34,085,892, slightly more than the $27,652,992 that was achieved at Christie’s. It is worth noting that many lots significantly exceeded their estimates and entered Skate’s Top 5000, which currently has a threshold price of $2 mln. Of the 14 total works that entered Skate’s Top 5000 in October, six were by Italian artists.

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Three of the World’s Ten Most Valuable Living Artists are Now Chinese

Scarcely two weeks after the death of Cy Twombly, another living artist—Lucian Freud—has passed away. Both artists saw an extraordinarily successful final auction season that relentlessly pushed their names up the value chain of the global art market’s premium segment. At the time of Twombly’s death, he was the world’s 6th most valuable living artist. Lucian Freud, who was 88 when he passed away, was the 3rdmost valuable living artist . Freud now ranks as the 30th most valuable artist based on nominal auction prices.

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