Hong Kong show good resistance [10/11/2011]

Of course, art market participants are being cautious, fearing contagion of the nervousness surrounding the global economy to the art market. Nevertheless, the results of the major Hong Kong sales kicking off the new season don’t seem to reflect any particular anxiety.

The 23% unsold rate at Sotheby’s Contemporary art sale on 3 October 2011 in Hong Kong was a perfectly respectable figure. Looking back, in October 2008, art prices fell 14.5% vs. January of that year while the global unsold rate rose to 54%, more than doubling in one year. Although the specter of a market contraction is undoubtedly haunting the major (and the minor) auctioneers in this period of financial instability, the results of the recent October 2011 sales cannot be interpreted as the starting point of a meltdown.

New record for Zao Wou-ki
On the contrary; the results are generally reassuring and the market’s “safe investments” held up well: on 3 October, Sotheby's organised three sales in Hong Kong and the most successful was in fact the most classical of the three, 20th Chinese art, with a record sales revenue for that segment: (HK$281m) ($36m) and a new record for ZAO Wou-ki the French artist (born in Beijing in 1921) whose abstract landscape (10.1.68), painted in 1968, doubled its estimate reaching HK$ 61m (US$ 7.8m). His previous record had been $2.6m for a 1956 work entitled Hommage a Tou-Fou (30 November 2008, Christie's Hong Kong).

Second Ullens sale
Similarly, the revenue generated by the second sale of the Baron Guy Ullens de Schooten collection was good, showing that demand remains very strong for the major works in these times of crisis. The exceptional results from the first Ullens sale on 3 April 2011 should not be allowed to taint the reading of the less spectacular (but still good) results from the second sale on 2 October. With total revenue of €32m versus a high estimate of €13.2m and only one work remaining unsold, the first Ullens sale gave Sotheby's its best ever Hong Kong season!
Nevertheless, the second sale also beat expectations with a revenue total of $14 million. In total, the two Ullens sales generated $60m, a record for a Contemporary collection in China.

Sotheby's has confirmed its leader position among the auctioneers operating in Hong Kong. For the July 2010 - June 2011 period, it posted total Fine Art revenue of €339m of which nearly a third came from Contemporary art sales. In second position, Christie's posted €323.5m (€79.5m from Contemporary art sales) for the same period.

While the alarm bells have not yet started to ring, buyers need to remain vigilant over the coming months, particularly in the segment of works acquired for less than $100,000, the market’s densest segment (95% of Fine art lots sold in the world) and the first to suffer in a downturn.

The upcoming Contemporary art fairs – Frieze in London (13-16 October) and the FIAC in Paris (October 20-23) and the major Post-War & Contemporary art sales in London in mid-October – will test the resilience of the European market compared with the Asian market.