Richter 80: The Art Impact Scale

February 9, 2012

Gerhard Richter turns 80 today.

The world’s 12th most valuable artist of all time and by far the most valuable living artist today, Gerhard Richter has 90 artworks included in Skate’s ranking of the Top 5000 most expensive works of art according to public auction prices (Skate’s Top 5000); their aggregate market value slightly exceeds $500 million.

The pulse of Richter’s market has been pounding ecstatically over the last several years (see Exhibit 1 below). Last year brought a new price record of $20.8 million for a single artwork by the master (Abstraktes Bild, pictured above), and the robust pipeline of February auctions suggests continued strong liquidity for the Richter market in 2012. Eighteen Richter works are being auctioned on February 14-17.

Exhibit 1—Richter Auction Sales (Skate’s Top 5000 eligible works)

Source: www.skatepress.com

Unlike many other contemporary artists, Gerhard Richter commands a strong market for almost all periods of his artistic career. The sole exception is his most recent works, which owners are wisely refusing to feed to the auction market for now. While the $20 million benchmark for the 1997 Abstraktes Bild mentioned above still looks like an outlier, from an investment point of view the big bet for the Richter market is whether his works from the late 1990s and 2000s will be priced on par or at a premium to those created in the 1980s. There is a considerable amount of capital locked into Richter’s works from the past decade (Richter has produced an average of more than 60 works per annum during this period), and many collectors around the world appear to be betting that Richter’s post-mortem market will be as strong as the post-mortem markets have been for works by Warhol and Basquiat.

Exhibit 2—Correlation of Auction Price and Year of Creation for Richter Works

Source: www.skatepress.com

While historical returns are no guarantee of future results, in the case of Richter they are nevertheless spectacular. His works essentially represent a well-groomed alternative investment product. Of the 90 Richter works in Skate’s Top 5000, 15 are repeat sales. In other words, one out of six Richter works sold at auction for more than $2 million has had a prior auction history. This strong liquidity is matched by spectacular returns; the weighted average effective rate of return (ERR) on Richter repeat sales is 29.48% per annum (before ownership costs and taxes), which far exceeds the weighted average ERR for repeat sales in general in Skate’s Top 5000 (approximately 4.72% per annum).

Credit goes not only to Richter but also to all the professionals who have worked to create the market for his works. His catalogues raisonné are a model of transparency and have been widely adopted as standard reference sources. His official website – http://www.gerhard-richter.com – is as good as the investor relations website of a transparent public company.

Gerhard Richter has accomplished for contemporary art what Charles Richter did for geology. Just as we use the Richter scale to measure earthquakes we should also use the Richter scale to measure the impact of contemporary art. Richter 80 is probably as far as one can go.

Happy Birthday, Mr. Richter!

Leave a Comment » | Living Artists, Skate's Top 5000 | Permalink
Posted by skate's

Global Art Industry: Annual Report for 2011 and Outlook for 2012

December 30, 2011

Welcome to Skate’s Annual Art Investment Report — published by Skate’s Art Market Research since 2006, this report covers global art market trends and provides forecasts for the coming year. In the first part of the report, we have looked at art market as consumer good industry and ranked online art trading platforms operating around the world – Please click here to read Skate’s Annual Report Part 1.
In this second part we focus on the high end of global art market and global art industry companies performance in 2011:

  • Skate’s Top 5000 total value reached $30.5 billion, and the ranking’s threshold price broke the $2 million level.
  • Average annualized investment returns on the world’s masterpieces peaked at 4.82%, confirming the strong performance of exceptional artworks amidst global economic turmoil.
  • Skate’s Art Stock Index had its worst year since 2008, losing 15% in value in 2011. This performance came despite robust auction volumes, with the index’s flagship stock Sotheby’s shedding over one-third of its value in 2011, producing a -35.5% return for its shareholders for the year as of December 23, 2011.

Please click here to read the full article with data.

Leave a Comment » | Art Industry, Skate's Top 5000 | Permalink
Posted by skate's

New Art Industry Stock to be Listed in Germany; Mallett Continues to Bleed; Abbey Gets 38 New Investors in Art Fund; Some New Data about Mysterious Fotoeffect

December 13, 2011

New Art Industry Stock to be Listed in Germany

Polish Abbey House’s very successful IPO earlier this year (the firm’s share price is up 270% in PLN terms since May) was clearly an inspiration for many art industry entrepreneurs. Skate’s has learned that at least one such entrepreneur is about to follow with a listing shortly; Weng Fine Art AG, a well-established art dealer from Krefeld, Germany is set to be the first listing on the Frankfurt Stock Exchange in 2012 when its shares will be admitted to trading on January 3, 2012. Skate’s is currently reviewing Weng Fine Art’s application to Skate’s Art Stock Index. If granted the firm would become the 14th constituent company in the index and the second after artnet to come from Germany (another German firm, Berlin-based photography dealer and fund CameraWork, was excluded from the index earlier this year due to lack of trading).

Weng Fine Art is an international art dealer focused on B2B art trading and established and managed by former financier Rüdiger Weng, who owns 87% of the firm’s shares with the balance owned by individual shareholders. The listing on January 3, 2012 will provide liquidity to those shareholders; no new equity offering is scheduled to take place at that time, although a capital increase for Weng Fine Art is likely to take place later in 2012 and will be executed in a form of a public offering on the Frankfurt Stock Exchange.

Skate’s will publish its index decision together with a very detailed profile of Weng Fine Art AG on December 26, 2011.

Please click here to read the full article with data.

Leave a Comment » | Art Industry, Skate's Top 5000 | Permalink
Posted by skate's

For Return-­Focused Collectors, November Auctions Make a Strong Case for Blue Chip Living Artists

November 14, 2011

Following October’s strong auction results, sales in November brought still more record prices, reflecting the robust conditions on the global art market. Successful sales of Impressionist and Modern art, which turned out more favorably for Sotheby’s than for Christie’s this time, were followed by a vast offering of Contemporary art from both leading auction houses. Apart from the numerous new records that were set for individual artists’ markets and mediums during these sales, the auctions’ repeat sales results and the impressive investment return figures deserve special focus, as they reflect even better the health of the market.

During the first two days of November, Skate’s Top 5000 saw 43 new entries from Sotheby’s and Christie’s Impressionist and Modern art sales; the total trading volume of these works stood at $277.7 mln. Eleven of these entries were repeat sales, which saw an incredibly high average effective rate of return (ERR) of 10.16%. The weighted average ERR for Skate’s Top 5000 artworks now stands at 4.88% on an annualized basis, which is an all-time high….

Please click here to read the full article with data.

Leave a Comment » | Art Industry, Auctions, Skate's Top 5000 | Permalink
Posted by skate's

Auction Houses Aim to Sell Art at Significantly Higher Prices, Supporting Auction Activity with a Higher Proportion of Guaranteed Bids

October 31, 2011

Skate’s Market Notes

On November 1, 2011 Skate’s will release its monthly report for November, which will focus on the major auctions scheduled for this week. Below is a short preview of our key findings:

  1. Four auction sessions in total (two each at Sotheby’s and Christie’s: Impressionist & Modern and Contemporary art) scheduled for this week are valued at between $822.5 million (at the low estimate of all lots) and $1,164.7 million (high estimate). The estimated mid-point value of all lots to be offered at these four auctions is $993.6 million (N.B. all values are before the buyer’s premium).
  2. Given that the number of lots in the auction catalogues is roughly the same as it was at the same time last year, the increase in value of the artworks offered, or, rather, the increase in the suggested sell price of the world’s most valuable art brought to the market by auctioneers this year, is notable. On a like-for–like basis the auction catalogues aim to sell 17.6% higher at the low end of the estimate range, 15.9% higher at the high end and 16.6% higher at the mid-point.
  3. The more generous art pricing by auction houses is also confirmed by the very rich implied effective rate of return (ERR) during repeat sales, i.e., those artworks that are returning to auction rooms after previous auction sales. Skate’s November report will profile five such repeat sales and list an additional seven artworks with estimated ERR ranges. The mid-point expected ERR on repeat sales will, if realized, significantly increase Skate’s Top 5000 average of 4.6% per annum. Certain works by Shishkin, Leger and Derain are particularly richly priced, implying double-digit annualized ERRs for their sellers.
  4. This fall, auction houses will get the best of both worlds by combining their private dealing business model with the auction house format. In working with their best clients, auctioneers have managed to significantly increase the proportion of lots with guaranteed bids in their catalogues. They have done so without significantly increasing their own financial exposure, as they have largely relied on third-party bids. In the more risky Contemporary art auctions both Sotheby’s and Christie’s will begin their sales with more than a third of the offered volume covered by guaranteed bids at the low (or lower) estimate level. This is a remarkable change in comparison to the same auctions a year earlier—Sotheby’s share of lots with guaranteed bids (calculated at the low end of estimate range) jumped from 13.1% for November 2010 auctions to 35.2% for the same auctions in 2011; for Christie’s the figure rose from 13.5% for 2010 to 37.9% in 2011.
  5. Where the two auction houses diverge is in their strategy regarding the Impressionist & Modern art catalogues: Christie’s now has 11.1% of lots covered with guaranteed bids (10.3% last year) and Sotheby’s has none (8% last year). It will be interesting to see whether this strategy will produce materially better results for Christie’s Impressionist sale this week.

To read the full report, please click here.

Leave a Comment » | Auctions, Skate's Top 5000 | Permalink
Posted by skate's

artnet: Back to Red, Auction Volume Flat against Sotheby’s 27% Same Period Growth, Price Database Profitability Down by 40%

August 15, 2011

artnet has reported its six months’ financial results, and, unlike the Sotheby’s numbers that we commented on last week (see Sotheby’s report), its performance is disappointing. Revenue fell to the sum reported in the same period of last year, the firm returned to a net loss and its bet to grow on the back of its online auction offering is not (yet) working.

For more than three years, artnet has consistently said that while it faces declines in gallery membership and information sales, the firm’s growth should come from the online auction business unit that it launched a few years ago. Unfortunately for artnet, the timing for the online auction launch largely coincided with the global economic meltdown of 2008, and the company’s management asked for the benefit of the doubt on the question of whether its online art trading would prosper once economic recovery resumed.

To read the full article with data, please click here.

2 Comments | Art Industry, Skate's Top 5000 | Permalink
Posted by skate's

Sotheby’s Six Month Report: Strong Results Lead to Astonishing Cash Numbers with Private Sales Becoming the Fastest Growing Line of Business; Dutch Exit and China Acquisition; Strong Buy Rating from Skate’s

August 10, 2011

Since last year, Skate’s has argued that it would make considerable sense for Christie’s to go public in 2011 given the generous valuation multiples in the art industry. The momentum, at least for this year, has been lost for Christie’s, as recent global stock market turbulence coupled with a stream of IPO cancellations have made it clear that investors’ appetite for new deals has fallen significantly. Francois Pinault was apparently unable to jump on the IPO bandwagon last year given the previously planned departure of Edward Dolman, the CEO of Christie’s for over 10 years who announced his move to the Qatar Over the past several weeks, a rollercoaster ride on global equity markets has taken investors’ attention away from news on individual companies and resulted in a massive sell-off of shares across the board. Although the impact of S&P’s U.S. debt downgrade and continued European debt troubles have yet to be fully digested by the market, now is a good time to revisit the fundamentals and take a closer look at the financial results of the major companies that make up Skate’s Art Stocks Index.

In this issue of Skate’s Market Notes, we will profile Sotheby’s, which published its second quarter and first half results on August 3 (the full report can be found at Skate’s Art Stocks & Funds section at www.skatepress.com).

To read the full article with data, please click here.

Leave a Comment » | Art Industry, Auctions, China, Skate's Top 5000 | Permalink
Posted by skate's

Cy Twombly, the World’s 6th Most Valuable Living Artist, Passed Away Yesterday, July 5, 2011 in Rome, Italy

July 6, 2011

Cy Twombly, the world’s 6th most valuable living artist and 49th most valuable artist overall, has passed away yesterday at the age of 83, some 56 days after seeing an all-time record for his art set at Christie’s New York auction in May of this year.

With 28 artworks listed in Skate’s Top 5000 , Twombly has seen over US $200 million being paid for his art at auctions during his lifetime (his more valuable artworks eligible for Skate’s Top 5000 alone being worth $136 million at the day of Twombly’s death).

To read the full article with data, please click here.

Leave a Comment » | Art Industry, Auctions, Skate's Top 5000 | Permalink
Posted by skate's

Monthly Art Investment Ideas from Skate’s Art Market Research: July 2011

July 3, 2011

Welcome to the July issue of Skate’s Art Investment Review. As always, our coverage is focused on the universe of 665 global artists whose artworks are represented in Skate’s Top 5000 database, which is comprised of the world’s most valuable art according to auction prices. To learn more about Skate’s Top 5000 and the artworks and artists represented, please visit www.skatepress.com.

In this issue:

  • Skate’s Rating News in June, including Repeat Sales, Chinese Sales and Russian Sales
  • Old Masters, Overview of the Market
  • Top 3 Art Investment Ideas for July 2011
  • Skate’s Art Stocks Index

To download the full issue, please click here.

Leave a Comment » | Art Industry, Auctions, Skate's Art Stocks, Skate's Top 5000 | Permalink
Posted by skate's

Mallett Finally Falls Prey as Swedish Activist Investor Buys Up 23%, Stock Remains in Play

June 22, 2011

Skate’s has long expected that Mallett, a London-based antiques dealer and a constituent of Skate’s Art Stock Index, would either go private or be purchased by a third party. 2010 marked the third consecutive year of losses for Mallett (losses of GBP 1.27 million on revenue of GBP 13.26 million in 2010), and the firm’s market capitalization of slightly less than GBP 10 million pounds ($16 million) makes it the smallest among the 12 stocks included in Skate’s Art Stock Index. With its strong name, flagship London location and status as one of only a dozen publically traded art industry companies in the world, Mallett has been inviting an ownership change without a means to fight it. Mallett has no cash; in fact, its balance sheet shows a negative number for cash and its cash equivalent line suggests that the firm is in net debt on a cash basis!

A change in ownership finally seems to be taking place now. Based on a recent London Stock Exchange filing, 23% of the company is now owned by a new investor—Sweden’s Peter Gyllenhammar, an individual who purchased this block of shares through two companies in which he has 100% ownership, Bronsstädet AB and Union Discount Company of London plc.

Mr. Gyllenhammar, 54, has long been an activist investor who specializes on small cap companies listed in London. Already under his belt are board level fights at Leeds Group plc, Jarvis Porter plc and Renew Holding plc, to name a few. He had apparently been buying Mallett, a fairly illiquid stock, throughout the entire first half of the year and owned 20.7% of shares as of the AGM record date (April 13). He was presumably the buyer behind all or most of the stock trades since the AGM (Mr. Gyllenhammar owns 3,083,500 shares as of the date of the last regulatory filing).

To read the full article with data, please click here.

Leave a Comment » | Art Industry, Skate's Art Stocks, Skate's Top 5000 | Permalink
Posted by skate's

« Previous Entries
Follow

Get every new post delivered to your Inbox.

Join 244 other followers