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Hong Kong's Long Week Showcases Stuttering Art Market

Hong Kong's Long Week Showcases Stuttering Art Market
October 12, 2023
Dylan Dittrich

Photo: Sotheby's

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Provenance from China's best known art collectors, Liu Yiqian and his wife Wang Wei, could not reinvigorate a tepid art market last week.

At Sotheby's Hong Kong, the couple was selling works from The Long Museum, which they founded, and the reception sent clear signals about the current Chinese appetite for fine art. Sales from the somewhat unusual and surprising deaccession amounted to just $69.5 million, falling about $26 million short of the $95.5 million low estimate even with fees included. Gulp.

39 works were offered, with 10 failing to sell, delivering a discouraging sell-through rate of 74%. The marquee lot was Modigliani's Paulette Jourdain, which was estimated to fetch $45 million but ultimately settled for just $34.8 million. The event's hammer ratio of 0.76 (per Artelligence) to the aggregate low estimate flashes warning signs about the state of the market, with ratios near 1.0 a year ago seeming energetic by comparison.

Of course, this was just one event. The market can have an off night, right? Particularly under these odd circumstances of deaccession?

Unfortunately, the weakness carried over to Sotheby's multi-owner Contemporary Evening Sale, also in Hong Kong. Just 18 of 26 offered lots successfully sold, generating an even lower sell-through rate of 69%, while the event's hammer ratio also trailed the Long Museum event at 0.71. Even Yayoi Kusama, whose market has enjoyed great success in recent years, saw 2 of 4 offered works go unsold.

The Sotheby's events had their challenges, but Phillips delivered results closer to on par with recent seasons, selling 22 of 23 lots for 96% sell-through. However, four lots were withdrawn, perhaps in light of choppier results elsewhere, and though sell-through was strong, bidding still wasn't energetic overall in an event roughly half as large as the Sotheby's Contemporary Evening Sale.

Action in Hong Kong was not without its highlights, limited though they were. Several artists set record highs for sales in Asia, and Lucy Bull's Flash Chamber sold for 13,760,000 HKD against a low estimate of 4,000,000 HKD after spirited bidding, notching an overall record high for the artist. 8 of her top 10 sales have now come in Hong Kong.

Lackluster results in Hong Kong follow similarly uninspiring results at mid-season New York sales. The market - and, importantly, estimates -  continue to adjust to an environment where the post pandemic boom has well and truly ended and economic circumstances are less favorable to collecting. Estimates still appear trained on results from more prosperous times, setting a high bar for events to hurdle. A higher interest rate environment has forced collectors and investors to reconsider the opportunity cost of deploying capital in art. On a similar note, many high-end collectors avail themselves of collection-backed lending, which are typically floating rate facilities. To the extent they haven't hedged those exposures, liquidity realized by borrowing against their collections has become significantly more expensive.

This week, the art sale circuit makes its way to London, where observers will be hoping for more optimistic signs of bidding appetite. But if the fall's early sales are any indication, encouragement is not on the way.

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