Skate's Art Investment Review

Since the official announcement that Edvard Munch’s pastel painting The Scream would be presented for auction at Sotheby’s, it is difficult to imagine a time when there have been more expert predictions, social discussions and media coverage dedicated to a single work of art. The Scream obviously generated a great deal of interest on the part of top buyers from around the globe, as the Sotheby’s sale saw approximately seven collectors competing for ownership. As a result, the artwork’s final price nearly tripled the modest starting bid of $40 mln to bring $119.9 mln, the highest figure ever paid for a work of art at a public auction. While the buyer has yet to be announced, the money is stated to fund several Norwegian real estate projects.

Skate’s is particularly proud to announce that our preliminary estimate for the artwork provided to The Wall Street Journal proved to be correct. On April 26, we were quoted as forecasting a final sale price of $92.5–123.4 mln on the basis of an accurate peer group assigned to the work and the irrational premium that we calculated.

The full article can be found at the following link:

http://online.wsj.com/article/SB10001424052702303592404577364321881780342

With all of the excitement surrounding the sale that made history, it is easy to overlook the fact that several other significant sales that took place during the past couple of days at Christie’s and Sotheby’s, including six others that sold for prices exceeding $10 mln.

To read our full issue of Skate’s Market Notes, including data, please click here.

This issue of Skate’s Art Investment Review is dedicated to the market for sculpture and focuses on the major upcoming May auctions at Christie’s and Sotheby’s.

In this Issue:

• April Entries to Skate’s Top 5000
• Repeat Sales Forecast for May
• Premium Segment of the Sculpture Market: Cherry Picking Investments
• Top 5 Art Investment Ideas for May 2012
  • Constantin Brancusi, Prométhée
  • Alexander Calder, Un noir et en jaune
  • Auguste Rodin, Le baiser, 1ère reduction
  • Henry Moore, Reclining figure
  • Alberto Giacometti, Buste de Diego

To read the full report, please click here.

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.