Just as Yellen & Co. has finally decided that ‘Everything is Awesome’ and started raising interest rates (the timing of which we’re almost certain was in no way influenced by the conclusion of the recent election cycle), signs continue to mount that global economies are not as healthy as the Fed suddenly believes them to be. In fact, over just the past couple of days we’ve highlighted a litany of negative economic data points including crashing bank loan creation, surging auto loan delinquencies and continuous deterioration of the retail sector, just to name a few.
And while the mega wealthy folks of the world are typically somewhat immune from the economic cycle, even they are suddenly taking a breather from purchases of multi-million dollar works of fine art which have collapsed to levels not recorded since 2009. Per Bloomberg:
Sales of art and antiques dropped 11 percent to $56.6 billion, according to a report released on Wednesday by UBS Group AG and Art Basel. The decline, on top of a 7 percent slide in 2015, wipes out the gains seen in 2013 and 2014, when sales reached an all-time high of $68.2 billion.
“It was quite a challenging year for the art market,” Clare McAndrew, founder of Arts Economics that prepared the report, said in a telephone interview.
Her outlook for 2017 is cautious, with sellers holding back as economic and geopolitical uncertainty continues in many countries. Buyers, on the other hand, may view art and antiques as “a relative safe haven amidst volatility elsewhere,” increasing prices for the works that appear on the market, according to the report.
This follows a note we published a few weeks ago noting that Russian billionaire Dmitry Rybolovlev had taken a 74% bath on a Paul Gauguin piece he purchased in 2008 for $85 million.
Russian billionaire Dmitry Rybolovlev paid €54 million or $85 million for a landscape by Paul Gauguin in a private transaction in June 2008. Yesterday, he incurred a whopping 74% loss on his store of value “investment” as reported by Bloomberg:
Gauguin’s 1892 landscape “Te Fare (La Maison)” fetched 20.3 million pounds ($25 million), including commission, at Tuesday evening’s sale of Impressionist and modern art at Christie’s in London. Rybolovlev will net about $22 million based on the hammer price. The auction house had estimated the value at $15 million to $22.4 million. The buyer was a client of Rebecca Wei, president of Christie’s Asia.
The Gauguin was one of four Rybolovlev pieces offered for sale on Tuesday. Another work, a Mark Rothko painting, will be auctioned March 7.
Of course, not all fine art is created equal…here were the biggest losers of 2016:
- Auction sales declined 26 percent to $22.1 billion, according to the report, released to coincide with the opening of Art Basel Hong Kong.
- Sales of postwar and contemporary works at auction fell 18 percent to $5.6 billion; modern art was down 43 percent at $2.6 billion; the Impressionist category declined 31 percent to $1.3 billion.
- The high end of the auction market — where prices for artworks exceed $1 million — fell 34 percent. Trophies priced at more than $10 million saw the biggest decline, at 53 percent.
- Industry leaders Sotheby’s and Christie’s lost market share, together accounting for 38 percent of the auction sales, down from 42 percent in 2015.