The Chinese Art Market Is Losing Steam and Three Other Trends From Hong Kong's Fall Auction Season
The 2011 auction year closed in Hong Kong last week with Christie’s announcing record sales for the house in the harbour city, totting up HK$7.04 billion ($904 million) for the year, up 25 percent over 2010. But, as it turned out, even this jaw-dropping result was not enough to best Sotheby’s Hong Kong’s performance. Taking in HK$7.8 billion ($1.026 billion) this year, Sotheby’s set a new record for Hong Kong, turning the tables on Christie’s, which had dominated the market last year.
But these record-making figures could not disguise the main lesson from last week’s action in Hong Kong — the China market is slowing. This trajectory, already evident at Sotheby’s in October and at the auction houses in Beijing last month, is now confirmed: as the auction houses go into 2012, the ebullient mood of this year's spring season will seem like a long time ago.
Months of global economic turmoil have had their effect, along with a credit squeeze in China that after 18 months of tightening has finally exacted its toll on its intended target — the nation’s runaway real-estate market. Suddenly, art buyers here are in no mood for speculation either, and cooler heads still in the game are picking vetted targets in a manner that reflects the sombre, newly mature mood. This is not to say there weren’t some exciting moments in the fall season: Southeast Asian art continues its bull run, while top-flight luxuries — diamonds anyone? — also found favor. Here, ARTINFO China brings you the four trends to watch from fall season in Hong Kong.
THE CHINESE MARKET HAS GROWN UP FAST
Auction results around the world last year — and some pretty energetic bidding this year, too — had led many to assume that the market would only keep going up. But as was also evident at Sotheby’s in October, it’s clear that in a slowing market mainlanders know how to discriminate. Where a piece was exceptional — like the vase that set a new record for Ming porcelain in October — competition was stiff, but lesser pieces were marked down. At Christie’s sale of Chinese porcelain and works of art last week it was clear that the house had sniffed the wind. A number of lots sold under their low estimates to a room that seemed glad for a less fevered atmosphere. After the sale, Pola Antebi, head of Chinese ceramics and works of art at Christie’s Hong Kong, confirmed that the house had seen the writing on the wall and advised vendors to set their reserves 10-20 percent below the published low estimates. The strategy paid off. There was an immediate buzz in the room when the first high-profile lot — a superb Kangxi-era Qing Dynast “mallet”-shaped vase — was hammered at HK$10 million ($1.3 million) against a low estimate of HK$15 million. A bidding war erupted on the next high-value lot, a Qianlong imperial-era meiping, and the price bounded away, finally topping out at HK$46.58 million ($5.98 million) against a high estimate of HK$30 million. The tussle had drawn in bidders from Taiwan, Hong Kong, the West, and mainland China, but the last two standing — the buyer and under-bidder — were both from the mainland.
Despite this excitement and Christie's strategic approach to pricing, there were still disappointments, with a raft of high-value lots bought in.
PROVENANCE MAKES A BIG DIFFERENCE
It’s no surprise to anyone that provenance is important to sales results, but Sotheby’s certainly drove the point home this fall in Hong Kong. In 2011 they secured major consignments from two remarkable sources — the Meiyintang collection of Chinese porcelain and the Ullens collection of Chinese contemporary art. The first tranches from each of these were sold in the favorable environment of the spring season and, particularly in the case of the Ullens collection, secured stellar results. When the house brought the second tranches to the more difficult fall market, the power of provenance proved even more decisive. Sotheby’s secured a record $21.6 million for Ming porcelain with a vase from the Meiyintang collection, while Ullens works were well supported in what was even then a softening market for Chinese contemporary.
Christie’s suffered by comparison this fall — especially in Chinese contemporary art. Their headline “Faces of New China” sale flopped in the face of aggressive estimates and the ennui of having seen many of the lots too recently in the sale room. Six of the 14 lots in this single-owner sale were bought in, and although at least one found a buyer later it certainly knocked the shine off a sector that has been fairly resilient over the last few years.
CHATEAU LAFITE IS JUST ANOTHER FINE WINE AFTER ALL
Chateau Lafite has enjoyed an almost mythic status in the Chinese wine market — until this season. In October Sotheby’s international wine department head, Serena Sutcliffe, had the unfamiliar experience of seeing some Lafite bought in, and last week Christie's head of wine sales, Charles Curtis, shared her pain. "I did really expect it to go better,” he told Reuters. “I knew that Lafite was soft and that it had struggled in my competitor's auctions in recent months but I didn't realize the depth of the problem.”
As the Chinese economy has cooled, the flow of hot money into salerooms has eased. The more discriminating Chinese buyers who remain know that Lafite is just another commodity, and an over-priced one at that. This season they have turned to hitherto less trendy, but still prestigious Burgundies. Speciality wine auctioneer Acker Merrall & Condit scored the highest total for a single wine auction in the world this year with a sale headlined by a collection of fine Burgundy taking HK$112,740,200 ($14.5 million) over two days last month in Hong Kong.
DIAMONDS ARE AN AUCTIONEER'S BEST FRIEND (AND WATCHES AREN'T BAD, EITHER)
Both Sotheby’s and Christie’s enjoyed good results in the luxury sectors this season, indicating yet again that the finer things in life can be surprisingly resilient in a difficult market. Both houses claimed new world records for diamonds. In October Sotheby's snared the highest price ever per carat for a Fancy Vivid Blue Diamond and a Fancy Vivid Orange, and last week Christie's sold a pair of perfect round diamonds weighing in at 71.38 cts for $16.4million — a world record for colorless diamonds. Meanwhile, Christie’s watch sale last Wednesday clocked up a remarkable HK$140.9 million ($18.132 million), making it the most successful watch auction in Asia this year. It took the house worldwide to a tally of more than $100 million dollars in watch sales in advance of their New York auction next week.
Caught for a brief chat by ARTINFO China as the record-making watch sale was playing out in one room while Chinese porcelain and works of art proceeded at a more stately pace in another, Christie's Asia president François Curiel was happy to confirm the importance of such luxury sectors in underpinning results in a difficult season. Soon to preside over the auction of Elizabeth Taylor’s jewels in New York — the Hong Kong preview of which drew an avalanche of excited locals last week — Curiel seemed confident that even in a slowing market such star-kissed treasures would find buyers.