Luxury Auction Market Analysis: 2021 vs. 2022

In our research effort for the one-pager collectible market briefings, Altan Insights dug into the data from the top three auction houses' luxury sales. We have broken down luxury into three sub-categories: Handbags and Miscellaneous, Watches, and Jewelry. The first is predominantly handbags, but there are a few other small items in these sales like apparel and other small items.

The three auction houses analyzed are Christie’s, Phillips, and Sotheby’s. All three operate mostly in the space of fine art sales, but in recent years they have delved deeper into collectible luxury assets. All three now have departments dedicated to the sale of these types of objects; said departments have begun selling across the globe, with cities like Dubai, Hong Kong, and Shanghai finding auction houses expanding their luxury departments within their borders.

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We can see above that Luxury assets had a relatively good year in 2022 compared to the year prior. The two largest houses, Christie’s and Sotheby’s, captured the majority of that growth; an impressive feat considering they already were working off of a much higher base. The two houses already were moving half a billion dollars in luxury property yearly, growing that into 2022 required a few things: a strong secondary market for luxury goods as well as the houses increasing the number of lots sold or relatively increasing the consignment of assets at the higher end of the value spectrum.

The chart above shows the way these three houses have pulled these levers throughout the last two years. Only Christie’s was able to increase the number of lots sold (y/y), mostly thanks to growth in volume of Handbags and Jewelry; the two categories sold 466 and 428 lots more than the year prior, respectively. Christie’s was also able to simultaneously increase their average lot price by 7.35% over the same period.

Christie’s performed this feat mainly through sourcing uber-high-end pieces in their jewelry department. In 2022, the house sold ‘The Fortune Pink Sensational Coloured Diamond and Diamond Ring’, going for a sum of $28.9 million. The year prior? The most expensive lot the house sold was half the price, $14.1 million. This skew from high ticket value jewelry lots happens to pull the average way up, if we were to remove the top 5 lots the average price would fall from $113,000 to $71,000 and the median would not budge an inch.

Phillips had much more mixed experiences with pulling (or not pulling) these levers. The house increased their number of lots sold by 712 across watches and jewelry, yet they could only increase total sales by 1.78% through selling less desirable lots. Average prices at Phillips fell 30% (y/y), mostly due to their jewelry lots averaging half the prices of 2021. The average price of a watch at Phillips only dropped by -17%; the department is the house’s saving grace as of late, more on that further down.

Sotheby’s was able to grow their foothold in the luxury space by dropping their number of lots, but more than making up for it with an average 24% increase in lot value across all three departments. Average pricing in watches and jewelry increased 51% and 23% respectively, while handbags bucked the house trend, with a 591 lot uptick but an average price decline of 30%.

It is hard to say whether or not these levers were pulled with intention or if they are more reliant on extraneous market variables more so than auction house decision-makers. Was it due to operational excellence that Sotheby’s was able to grow their top-line without growing the number of lots? Or was it simply a function of their clients' will?

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This chart really tells the story of where the bread is being buttered in the luxury space. The jewelry departments of these houses are accounting for nearly 60% of the dollars in the space. And not only is the category by far the largest, it is also the fastest growing, up 14.5%, while watches and handbags only experienced sales volume increases of 11% and 5.8% respectively.

Even with sales growth across the board for each category, jewelry’s unmatched upward momentum grew its share of sales in the luxury asset space by nearly 1%.

Phillips' lack of participation in handbags, and nigh non-participation in jewelry, explains their luxury strategy entirely. As a smaller house with far less resources and far lower brand recognition, they need to do what they can to separate themselves from the pack. In pursuit of this, they have positioned themselves as the place to buy and sell high-end watches. Christie’s and Sotheby’s have them beat in basically every other department they operate, but when it comes to time-pieces they are the house to beat. And not only as a facilitator of watch sales in the capital of watches, Geneva, but all over the world as well. The house’s watch sales have grown in both Hong Kong and Dubai over the years as Asian and Middle Eastern buyers continue to increase their spend on luxury items.

The houses will always have fluctuating market shares due to all manner of happenings in each of the markets they operate in; client needs, unique objects coming to the block, and market forces determine these just as much as the skills and strategies of each house. 

Over 2021 and 2022, Phillips saw its share shrink, likely due to their unwillingness to capture any significant percentage of the massive and growing jewelry pie. Sotheby’s found itself at an even 44% after taking share through the sales growth found in every luxury category, most importantly jewelry. The Sotheby’s-Christie’s art market duopoly seems to have easily stretched into luxury. It makes sense as they are catering to a similarly well moneyed clientele as is found in the fine art world. 

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Although this is only a slice of the pie that is luxury asset sales globally, seeing how the big houses are performing in the space offers insight into the market for luxury assets at large. We will just have to see if the space’s momentum can carry into 2023!

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