Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season?

Detail of Alice Baber, Wind Divided Mist the Darker (1972)

Sold for $550,000 at Sotheby’s Contemporary Curated sale in September 2023


Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

The third quarter of the auction sales calendar typically accounts for only 4-5% of the total annual sales value. However, after a more challenging first half this year (auction sales by Christie’s, Sotheby’s and Phillips were down 18.2%), we have taken a closer look at Q3 to see if there were any interesting emerging trends and what they might tell us about the season ahead.


Confidence returning as auction sales rise 8% in Q3 2023: Christie’s, Sotheby’s and Phillips generated $642 million in total auction sales (incl. buyer’s premium) in Q3 this year, up 8% from $595 million in Q3 in 2022. This is the highest Q3 sales figure since 2020, when the majority of Q2 sales were moved into Q3. The number of lots also saw a 9% year-on-year increase in sales in the last quarter. The downward slide in Q1 and Q2 seems to have halted, and a majority of collecting segments are either up or have consolidated around last year’s level. Two notable exceptions were Watches and Jewellery (a 30% fall in auction sales Q3) and Design and Decorative Arts & Furniture (down 47%).


Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

Old Masters market drove sales growth: After robust auction sales growth in 2022 (+14%), the Old Masters market continued to grow in Q3, with sales ending up at $140m, more than double that of Q3 in 2022 ($64 million).  If the trend continues, the Old Masters market is on track to exceed last year’s sales result. Notable top lots from this season were the unpublished and previously unknown painting by Michael Sweerts, The Artist’s Studio with a Seamstress, which achieved a hammer price of £10.7 million surpassing the pre-sale estimate of £2 million to £3 million, as well as the guaranteed painting Pentecost by the Master of the Baroncelli Portraits, which sold for £7 million.


Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

Post-war and Contemporary sales unchanged from 2022: The overall sales of Post-War and Contemporary art came in at $142 million in Q3 2023, the same level as in 2022. However, we have seen a 11% decline in sales at the lower end of the contemporary market based on Phillips New Now, Sotheby’s Contemporary Curated and Christie’s First Open sales. This could signal that buyers are gravitating towards blue-chip artists in the higher price segments.  


Growth across all the three auction houses: Sotheby’s gained the largest market share in Q3 2023, with $331 million in auction sales (+13% from Q3 2022), followed by Christie’s with 46% market share and $277 million in sales (+1.3% from Q3 2022). Phillips accounted for 5% of total sales, and registered a 19% increase from the same period last year.


Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

London sales bounces back: Auction sales in London jumped 40% in Q3 2023 compared to the same period last year. Total sales ended up $294 million, up from $210 million in 2022. The results were driven by strong Old Masters sales in July and Sotheby’s Freddie Mercury: A World of His Own auctions in September that generated $39 million (well above its high estimate of $11.3 million). The renewed energy in the London market bodes well for the upcoming October auctions during Frieze week.


Christie’s 10th anniversary auction in Shanghai: Between 23 -28th September, Christie’s celebrated its 10thyear in Shanghai with four auction sales (3 evening sales and 1 online sale) that raised $181 million (incl. buyer’s premium), and came in at the higher end of the estimate range. The results are a sign that demand among Chinese mainland buyers remains robust and could signal that confidence is returning ahead of Hong Kong season starting this week. Hong Kong auction sales saw a 12% year-on-year decline in first half of this year.


Top 10 Auction Sales in Q3 2023


Sale Auction House Date Premium Total
Old Masters Part I Christie’s London 6 July 2023 $68,604,053
Old Master & 19th Century Paintings Evening Auction Sotheby’s London 5 July 2023 $49,598,600
Post-War to Present Christie’s New York 29 September 2023 $28,244,412
Contemporary Curated Sotheby’s New York 28 September 2023 $25,060,769
10th Shanghai Auction Anniversary: 20th/21st Century Art Evening Sale Christie’s Shanghai 23 September 2023 $17,049,305
Freddie Mercury: A World of His Own | The Evening Sale Sotheby’s London 6 September 2023 $15,214,984
The Exceptional Sale Christie’s London 6 July 2023 $14,262,845
Important Chinese Art Sotheby’s New York 19 September 2023 $14,062,205
Latin American Art Christie’s New York 28 September 2023 $13,200,030
Important Jewels Sotheby’s New York 12 September 2023 $13,131,800

ArtTactic Review – Henry Little “Commercial Galleries; Bricks Clicks and The Digital Future”

White Cube New York.


The latest addition to Hot Topics in the Art World, Henry Little’s Commercial Galleries is taut, punchy, and full of insider knowledge. Each chapter could have its own review and analysis, raising wide ranging questions on the way the current gallery eco-system emerged, and how it can continue.


For the ArtTactic audience the most striking feature of Commercial Galleries is one of Little’s central themes –a lack of hard data. Almost everything is hearsay, estimated, best guesses. Little frequently returns to this distinction between auction houses and galleries – auction houses are based on open data, a willing buyer and a willing seller making a transaction. Galleries, on the other hand, though they are (rarefied and highly specialist) shops, are shrouded in mystery and opacity. Even in the midst of the digital revolution in the art market, there is rarely openly available pricing; simply having the money and wanting to buy a piece will not even admit you to the waiting list to be told the pricing, and there is a real sense of gatekeeping ownership and ability to build a collection. While the narrow range of artists reaching auction at the top houses obscures data on the art market, so too does this intentional withholding of financial information from galleries.


This bolsters the second distinction Little highlights between galleries on the one hand, and auction houses and the luxury industry on the other – barriers to entry. While access to the funds to participate in any of these commercial arenas is an obvious barrier, if we assume that potential buyers do have this access, the gallery eco-system is not necessarily open to them. Little describes how known collectors get better prices – thus allowing them to solidify their reputation, and preventing new comers from doing so. While the move toward Online Viewing Rooms, pioneered in large part by David Zwirner, appears to rectify this, in fact galleries largely use this tool to gather data on their clients, what’s hot, and who is selling – pressing ‘enquire now’ in an OVR simply enters you into the tangled web of galleries deciding who is allowed to be told the price of the work, let alone who is allowed to actually purchase it.


It’s a shame that an overview so focused on how the business commercial galleries work, and the barriers to entry to the eco-system for buyers, did not speak at all about those who staff these galleries outside of their big-name dealer owners. Living in commutable distance to any of these galleries is an expensive endeavour, especially compared to the actual pay those who do the work of the galleries will earn – before even considering the other barriers to entry prospective arts professionals face.


Commercial Galleries is illuminating and provocative, even if it can only shine a light on the opaque nature of the galley eco system – an excellent addition to an excellent series.

Five Takeaways from the Hiscox Online Art Trade Report 2023

Detail of Celeste Rapone, Interior with Egyptian Curtain and Kale (after Matisse) (2021)


The 10th edition of the Hiscox Online Art Trade Report provides new insights into current online art buyer behaviour, and explores some of the new trends emerging. Here are five key trends that could shape the market over the coming 12 months…


Trend #1 – Industry consolidation on the cards as online sales slow down:

Significant investments were made during 2020 and 2021 to meet the increasing online demand for art and collectibles, and this has left online art marketplaces with an enlarged cost base in what now looks to be a slowing market. With limited access to financing options going forward and investors wanting to liquidate their assets, one could expect an increasing level of M&A activity this year. 71% of the online platforms surveyed said they anticipated more consolidation taking place in the next 12 months, compared to 64% who said the same in 2021.


Trend #2 – The economy starts to bite

Whilst the $1m+ market continues to see strong demand among the ultra-wealthy, art buyers at the lower end of the market, are likely to scale down their buying activity this year. Slower growth, rising inflation and higher interest rates are likely to have an impact on online buying this year. With 30% of art buyers saying they will buy less, as they have less disposable income to spend on art. This was higher among younger art buyers (32%) and new art buyers (35%).


Trend #3 – Climate concerns are likely to affect buying behaviour in the future:

Although, the majority (54%) of art buyers express little or no concern regarding the environmental impact of buying art online, the remaining 44% said that they were likely to change their future online art buying behaviour as a result of the environmental impact. The younger generation worries predominantly about shipping, with 64% saying that air freight was their main concern followed by 60% mentioning packaging as a key issue. Half (51%) of online art buyers said they would change their online art buying behaviour due to environmental impact, with a third of young buyers saying they would buy art locally, and another third said they would only buy art online, if sea-freight was being used or zero-emmission vehicles. Almost a third (32%) of all art buyers said they would be prepared to pay more for a more sustainable option of buying art online (and even higher share (35%) of young buyers said the same.


Trend #4 – Fractional ownership attracts interest

Over the last 12 months, fractional ownership in art has gained popularity.  So far the adoption in the art world has been low, but could this change this year? Although, only 9% of the art buyers surveyed said they had invested in a fractional ownership in art or collectible over the last 12 months, 61% of art buyers said they were likely to invest in fractional ownership in artworks in the coming 12 months (78%, of younger art buyers said the same). This suggest that the perception of fractional ownership as a viable ownership and investment model is on the increase, and we could anticipate more demand and wider adoption this year. With the global economic outlook remaining uncertain, investors are increasingly looking for portfolio diversification, and 86% of those art buyers that are considering investing in fractional ownership over the next 12 months, are looking at their investment from this perspective. Despite its promises, almost three quarters (74%) of potential investors in fractional ownership of art said that lack of liquidity was the main challenge, followed by 41% who said lack of transparency and prohibitively high costs were key risks in this market.


Trend #5 – NFT collectibles lose their shine, but have paved the way for wider adoption

A year ago, many had still large hopes about the potential of NFTs. However, only 12% of art buyers surveyed said they are likely to buy an NFT in the coming 12 months (down from 27% in January 2022), with both younger and older buyers showing similar level of caution about this year’s outlook. Whilst the value potential was still the highest ranked motivation (66%, but down from 82% in 2022) among NFT art buyers in 2023, the expectations seem to have become more muted, as NFT prices and sales have dropped significantly. Motivations linked to social impact and patronage have increased from 39% in 2022 to 54% this year. More people are also seeing the community benefits as a strong motivator, with 44% saying that the network and being part of a community of like-minded people was a key reason for buying NFTs, up from 38% in 2022. The art market is starting to take a more mature look at the technology, and rather than looking at NFTs as collectibles and speculative investments, is now pursuing strategies for how the technology can develop new models and help build a better infrastructure for its stakeholders.

Enthusiasm Abounds as Post-Pandemic Crowds Flock to Frieze LA Robustly Embracing NextGen Artists

Narsiso Martinez “Sin Bandana” (2022)


At Frieze LA the message was clear: buyers were scooping up pieces by NextGen artists particularly those whose art reflects thought and an authentic connection to the artist who created it. From preview day, entire offerings were sold out, and in some cases that very morning.


Many of these artists are either based in LA, or have a significant LA/Mexico connection, and their work reflects the artistic aesthetic of the sophistication and cultural awareness emblematic of the West Coast. Robust sales left little doubt: these artists resonated deeply with the LA buyers. Maysha Mohamedi, an LA-based artist affiliated with Pace Gallery is one such artist whose abstract, patterned artworks sold out on preview day. Amelia Redgrift the Chief Communications and Marketing Officer at Pace Gallery told ArtTactic that Mohamedi’s small canvases cost around $50,000 and prices rise from there.  She noted that some of Mohamedi’s most enthusiastic collectors are other artists themselves, and that Mohamedi was generating museum interest. Her work is already in the collection of The Metropolitan Museum of Art in New York. Finally, Redgrift pointed out that her following has grown to include international collectors drawn to Mohamedi’s precise, abstract work informed in some ways by her previous career as a scientist.  “Even though Mohamedi’s works are abstract there is a real precision and pattern behind them which makes them so unique,” explained Redgrift.


Buyer enthusiasm crossed all oeuvres whether abstraction in the case of Mohamedi, the figurative paintings of Hilda Palafox, the migrant field workers depicted by Narsiso Martinez, or a combination of abstraction and figurative representation shown by next generation artist Doron Langberg. Will Davis, Director of Sales at the Victoria Miro Gallery in Los Angeles noted that Langberg is known for large, expressive paintings that have captured the world around him. The gallery sold eighteen of Langberg’s paintings at prices ranging between $18,000 and $80,000. Davis noted museum interest was high. Langberg is currently having a solo exhibition at the Rubell Museum in Miami until November 2023.


Moving more squarely into the figurative space were two artists of Mexican descent. Hilda Palafox who is affiliated exclusively with Proyectos Monclova, a Mexico City art gallery, generated incredible enthusiasm from collectors for her muralist style of paintings reminiscent of artwork by the great Diego Rivera, and yet unique to her and her identity. These paintings tell a story that, according to Isabella Aballi, the Director of Sales for Proyectos Monclova, is “extremely feminist focused where you can see that in her work, she always references the female body as the vessel of emotion and the female psyche.” Both Think Space and Hashimoto in Los Angeles have both exhibited her work, Thinkspace in 2021, and Hashimoto in 2020. According to Aballi, Palafox’s smaller works cost around $5,000, going as high as $15,000. She asserted that museums are interested in Palafox’s paintings and plans to show her work at Art Basel Miami. Palafox will also undertake a residency in Japan this summer, and her murals, which tend to lend themselves to a larger scale format, can be found in various locations in Mexico and the United States.


Serious art collectors offered insight into what constitutes sound collecting strategy. One high-profile collector who chose to remain anonymous asserted that the primary market for these NextGen artists is robust whereas the secondary market is more neutral: “This is excellent for the artists,” he pointed out, explaining that this market dampens temptation for flipping contemporary artwork, and indicates emotional engagement by the collectors into what they are purchasing. With less certainty surrounding resale value, he opined that a primary market purchase should be less about financial investment, and more based on what a buyer likes.


According to ArtTactic’s recent Art Market Outlook 2023, auction market sales for young artists increased by 3.1% to $346 million in 2022, setting a new record for this market segment. However, the rate of growth seems to be cooling as collectors shift their attention to more established collecting segments. The slowdown of the NextGen art market in 2022, raised concerns among experts surveyed by ArtTactic in January 2023, where 45% see further downside in the auction market in 2023 (up from 11% who said the same in 2022). However, the majority of respondents continue to take a positive-to-neutral view (30% are positive and 25% are neutral), which could signal that the interest in younger generations of artists will continue, albeit at a less frenzied pace seen over the last years.


In terms of selecting which artists to collect, Nicole Reber, a native Los Angeleno and avid collector, shared with me that she collects work by artists whose passion for making art isn’t transient: “I want to know that when I collect works by an artist, they are going to have a long, healthy career, and that they are going to continue to want to work. I don’t want somebody that decides in three years that they don’t want to make art anymore.” Reber pointed out an artist she really enjoys collecting is New York-based Anthony Cudahy, who is represented by GRIMM in collaboration with Hales Gallery and Semiose Gallery. Cudahy’s figurative paintings and drawings weaves imagery taken from photo archives, art history, film stills, hagiographic icons and personal photographs to explore themes around queer identity. His work can be found in both private and public collections, such as The Hort Family Collection, Institute of Contemporary Art, Miami, Kunstmuseum, The Hague; Les Arts au Mur Artothèque de Pessac, Pessac (FR); and Xiao Museum of Contemporary Art, Rizhao.


Another NextGen artist to watch out for is Narsiso Martinez, who spoke with ArtTactic about his figurative works of migrant field workers and his juxtaposition of their lives as portrayed in simple charcoal against gold on commercial produce boxes.  Listen to the interview here.


These artworks depict the dichotomy of life of the worker versus the agricultural companies that sell the fruits of their labor. Martinez himself comes from Oaxaca, Mexico, descended from a family of farm laborers, of which he was one himself.  Martinez won the coveted Frieze Impact Prize, and his gallery Charlie James confirmed that all of his art sold out on the first day of Frieze LA, and there is now a lengthy wait list for his art. Prices ranged from $8,000 to up to $40,000 for a large series of individual migrant workers each depicted on the inside of a produce box and displayed all together as one artwork. His museum exhibition history is already building and his work has most recently been exhibited at the Smithsonian’s Donald W. Reynolds Center for American Art and Portraiture, National Portrait Gallery in an exhibit entitled “The Outwin 2022: American Portraiture.” Other museum exhibits and collections include the permanent collections of the Hammer Museum, Amon Carter Museum of American Art, University of Arizona Museum of Art, Long Beach Museum of Art, Crocker Art Museum, Jordan Schnitzer Museum of Art at the University of Oregon, Orange County Museum of Art, and the Santa Barbara Museum of Art.


In short, Frieze LA demonstrated that art collectors are engaged and continue to buy art by next generation artists. Recent auctions at Sotheby’s, Christie’s, and Phillips (see our auction analysis) in London of NextGen artists confirm this trend: sales continue to be strong and signify ongoing interest in young talent.

Has the NextGen Artist boom come to an end? Not yet…

Detail of Emily Mae Smith, Paint While Screaming (2017), Oil on Linen.


In 2018 we launched the inaugural NextGen Artists Global Report in partnership with JLT (now Marsh & McLennan). The report took a closer look at the career trajectories of more than 1,300 young contemporary artists (aged 40 and below). Since then, we have a followed this market closely and published a series of NextGen Artist Monitor reports that cover the market for these young artists.

Over the last three years, we have seen a significant jump in demand for artworks by younger artists. Auction sales in 2021, generated a record $396 million, up from $131 million during the 2020 pandemic and $195 million in 2019. However, auction sales of NextGen artists declined by 23% last year, and many are questioning whether this is the end of the market’s fascination with young artists.


To try answer this question, I have outlined five trends that I think are relevant to what might be in store for 2023:


Trend #1 – Economic uncertainty hurting global sales in 2nd half of 2022, but not unique to the young artist market.


Higher inflation and slower economic growth is likely to have impacted sales in the 2nd half of last year. Auction sales by younger artists fell 58% in 2nd half in 2022, compared to the first six months of the year. However, this trend was not unique to the young artist segment, as the overall contemporary art market was also down 24% from first half. This suggests that the performance of the young artist market was far from an outlier last year, and was instead tied closely to the more established end of the Contemporary market.


Despite a more sombre economic outlook for this year, the market is yet to turn overly pessimistic about the young artist market, and almost half (47%) of experts surveyed by ArtTactic in December 2022, stated they believed that the prices for NextGen contemporary artists were likely to rise over the next 12-months. Only 24% expressed a negative outlook for prices, whilst 29% said they believed the market and prices would plateau in the coming year.


Has the NextGen Artist boom come to an end? Not yet… ArtTactic


Trend #2 – Asian buying has been cooling, but could it bounce back this year as Covid restrictions are lifted?


Over the last three years, Hong Kong became an important hub for younger artists, and a significant portion, (37%), of auction sales between 2019 and 2021 was generated in Hong Kong, on the back of strong demand from Asian buyers. A number of top prices by young artists were set in Hong Kong during these years (9 out of top 25 prices), with artists such as KAWS, Adrien Ghenie and Dana Schutz seeing strong demand among Asian buyers.


However, last year, the Hong Kong auction market took a sharp turn for the worse. Auction sales of young artists were down 55% from 2021, however, the number of artworks offered in Hong Kong auction rose from 380 lots in 2021 to 430 lots in 2022. Overall contemporary sales in Hong Kong fell 66% in terms of sales in 2022 and 24% of lots sold. Severe Covid restrictions in Hong Kong and China’s zero-Covid policy is likely to have weighed in on consumer and buyer confidence during 2022. However, Beijing’s recent U-turn away from of its draconian zero-COVID policy, could reignite the market this year.


Has the NextGen Artist boom come to an end? Not yet… ArtTactic



Trend #3 – More young artists are using the auction market as a natural part of their career development.


Although, last year’s auction sales fell year-on-year, the market still saw an all-time high of 670 NextGen artists featuring in auctions across Christie’s, Sotheby’s and Phillips, up from 476 in 2022. The auction market has become an important tastemaker and influencer in its own right, and artists and their galleries are working more pro-actively with the auction houses in developing a healthy auction market in parallel to the primary market for these artists. We expect the blurring of the lines between the gallery market and auction market to continue, as the two historically separated markets are finding new ways of working more closely together. An example of this  was Sotheby’s hiring of Noah Horowitz in 2021 as head of gallery and private dealer services (he has since become the director of Art Basel).


Has the NextGen Artist boom come to an end? Not yet… ArtTactic


Trend #4 –  A young generation of women artists will continue to drive demand


The Young Contemporary generation of women artists have seen auction sales rising steadily in the years from 2015 to 2020, but experienced a jump from $27 million to $112 million between 2020 and 2021 according to a report published by ArtTactic in September. Last year’s auction sales came in 15% higher than 2021 at a record $129 million. This represented 42% of total sales for this generation of artists (compared to 58% by male artists).


The representation of Young Contemporary women artists  in the auction market has been rising since 2015. So far 2022 has been a record year for the number of Young Contemporary women artists sold at auction, with 218 featuring in sales this year, up from 153 in 2021 and 108 in 2020. We believe the success of this young generation of women artists will continue to drive demand among collectors worldwide, particularly as many are looking to address the lack of women artist in their collections.

Has the NextGen Artist boom come to an end? Not yet… ArtTactic



Trend #5 – Young artists bring in young collectors


Although we have seen many young, promising artists coming and going in the auction market over the last two decades, the young artist category is here to stay as it plays a strategic role for the auction houses. Auction sales such as New Now (Phillips), Contemporary Curated (Sotheby’s) and First Open (Christie’s) have  provided young artists with a dedicated channel into the global auction market, with unique access to a global collector base. Although these auction ‘incubator’ sales only account for about 10% of the overall contemporary auction market at Christie’s, Sotheby’s and Phillips last year, they do play a strategic role in engaging and cultivating younger buyers, an important objective for most auction houses, as generational wealth is being passed on from baby boomers to millennials and Gen Z.

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

Fractional Ownership of Art


Could economic uncertainty fuel further interest in art investment this year? Or are we reaching the tail-end of the post-covid art sales boom?


With inflation in many developed countries running the risk of entering into double digits, and with the post-Covid economic recovery stalling, turbulence has been felt in financial markets in recent months. S&P 500 is down 23% from the beginning of the year, and the more tech-heavy NASDAQ index has dropped 32% in the same period. Even the crypto market has failed to provide a safe haven for investors in recent months, as Bitcoin prices have dropped from more than $61,000 from its peak in October 2021 to around $20,000 today, a fall of 67%. The Economist reported last week that the overall crypto market had plummeted from its peak of $3.2 trillion in November 2021 to less than $1 trillion today.


So how has the art market reacted to the bad news this year? Surprisingly well so far. Q1 public auction figures from Christie’s, Sotheby’s and Phillips were up 32% year-on-year from 2021, and Q2 is also set to come in above last year (with sales figures up 28.3% so far, not counting London’s Marquee auction week later this month). But can the art market withstand the reality of the deteriorating economic situation, and if so for how long?


Fractional Ownership of Art ArtTactic

Source: ArtTactic


Why fractional ownership in art?

New models of regulated investments in art are emerging, with the concept of ‘democratising’ art investment becoming increasingly popular over the last two years.


Access has always been a big hurdle in the art market. Firstly, the price inflation in the art market over the last 20 years has moved investment-grade art out of reach for most collectors and investors alike. Secondly, unless you are an insider and well-connected in the art world, the art market can often feel impenetrable and intimidating to those on the outside. Asymmetric information and lack of transparency are frequently mentioned as key challenges. Thirdly, the unregulated nature of the art market also scares many potential investors, and although the recent introduction of anti-money laundering regulations in the EU and US are likely to help professionalize and modernize parts of the art market in coming years, there is still a long way to go.


In this editorial on Fractional Ownership of Art, I will explore this phenomenon in more details, and hopefully shed some light on the past, present and future of this evolving investment practice.


Fractional Ownership — An old idea whose time has come?


The concept of investing in art for purely financial purposes isn’t new. The early generation of art investment funds, from the British Rail Pension Fund in 1974 to the Fine Art Fund in 2001, have attracted interest among investors looking for higher yields and diversification benefits from alternative assets such as art and collectables. The fractional ownership model we see today is simply an extension of the same desire to democratise access to the art market, and the opportunity for the art market to tap into a new type of client base.


The term fractional ownership originally became popular for business jets. Richard Santulli of NetJets pioneered the concept in 1986, allowing businesses to purchase shares in a jet to reduce costs. This concept was later introduced to the property industry in the U.S in the early 1990s. These first fractional developments focused on real estate in the Rocky Mountains ski resorts, recognising that people did not want to buy whole homes, which they would use only for a few weeks a year.


Market Cycle #1


The emergence of fractional ownership in art started just after the financial crisis in 2008. Between 2009 and 2012, the rapidly growing Chinese art market, fuelled by government policies positioning the cultural industry as one of the key drivers for economic growth in China, created the ideal conditions for a new financial product built around the red-hot Chinese art market. These early fractional ownership models were known as Art and Cultural Exchanges and allowed investors to buy shares in artworks that could then be traded on these exchanges. Below is a table from Deloitte & ArtTactic Art & Finance Report 2011, which shows some of these exchanges that were active in the autumn of 2011. However, large price volatility and speculative behaviour led the Chinese authorities to impose restrictions on these exchanges in 2012, forcing most of these to close or transform themselves into something else.


Fractional Ownership of Art ArtTactic


However, similar fractional ownership platforms also emerged in Europe at the same time. With the entrepreneur Pierre Naquin setting up A&F Markets in Paris in 2011, and SplitArt announcing the same year that they were setting up an art exchange in Luxembourg, that would allow qualified investors to invest in shares of valuable artworks. For different reasons, both of these platforms failed to succeed.


Market Cycle #2


It would take another 6 years before the concept of fractional ownership in art started to re-emerge, this time on the back of the boom in crypto-currencies and ICOs (Initial Coin Offerings). The Singapore-based Maecenas raised $15.38m through an ICO in 2017 and the firm sold 31.5% of Warhol’s 14 Small Electric Chairs (1980) in 2018. A number of other platforms were set up around the same time – Feral Horses, ArtSquare, Malevich, and Look Lateral, but despite the excitement around fractional ownership as a concept,   the issue around regulation was always going to be a thorny issue.


In 2018, the regulatory issue finally seemed to have been resolved, when Masterworks launched its first SEC regulated fractional ownership product with Andy Warhol’s ‘1 Colored Marilyn (Reversal Series)’ from 1979. Although, it would take the company a further two years to gain traction, the company has now more than 120 artworks on their platform with an estimated value of more than $500 million, and is now the market leader in the fractional art investment space. The company raised a $110 million Series A round in October 2021, led by Left Lane Capital and joined by Galaxy Interactive and Tru Arrow Partners, valuing the company in excess of $1 billion.


The success so far has encouraged other companies to follow, and Mintus, a UK-based FCA regulated fractional ownership platform announced they were entering the market in April 2022. The company was founded by Tamer Ozmen, previously a senior executive at Microsoft, and is counting former Sotheby’s CEO Tad Smith and Brett Gorvy, Christie’s former Chairman and International Head of Post-War and Contemporary Art, on their advisory board.


Other regulated fractional ownership platforms have aimed to build their business on the back of the increasing interest in tokenization and the NFT market. Sygnum, a digital asset bank, and Artemundi, an art investment fund pioneer, partnered in July 2021 to tokenize Picasso’s ‘Fillette au béret’ painting. This marked the first time the ownership rights in a Picasso, or any artwork, were being registered onto the public blockchain by a regulated bank, enabling investors to purchase and trade shares in the artwork called Art Security Tokens (ASTs).


Fractionalization has also become increasingly popular in the NFT market as prices of many NFT collectables, such as Bored Ape Yacht Club and ArtBlocks have moved beyond the reach of most investors. Fractional.art is an example of one of these platforms.


Whilst Masterworks’ initial intention was to use blockchain-technology to record and track fractional ownership in artworks, in the end the company decided to go for a traditional off-chain approach, which was probably a good idea, as other companies that tried to introduce both blockchain and fractional ownership in physical art have not yet managed to achieve the same level of attention.


The Future


Based on a recent survey for the Deloitte & ArtTactic Art & Finance Report 2021, 21% of collectors said that they were interested in investing in art through a fractional ownership model, with a significantly higher, 43%, of collectors under 35 years old saying the same. The pandemic seems to have been a catalyst for changing attitudes towards art investment, and corresponds to the growth we have seen in both the art market and the fractional art investment industry over the last 18 months.


So will the boom in fractional art ownership continue?


As the emotional component of art ownership is largely stripped out when you invest in a share of an artwork, the investment behaviour is likely to mimic that of any traditional investment. Bull markets will attract more investors and bear markets will likely see investors running for the exit.


What does this mean for the fractional art investment market? The demand is likely to continue as long as the art market remains as robust as it is now. However, so far, the fractional ownership market has been in a honeymoon period, where the post-pandemic art market recovery has fuelled art sales and prices, and most fractional ownership investors are yet to experience the chill of a market downturn, where liquidity dries up and prices fall (yes, prices of art can go down!).


To make profit from art, the following ingredients are essential: expertise and knowledge, keeping costs to a minimum, good timing, access to inventory (preferably at below-market prices), access to buyers and the ability to take a long-term view and ride out any down-cycles. Those that were spooked by the financial crisis in 2008 and the pandemic in 2020, would have been better off sitting tight, as the art market showed strong resilience in both cases, and recovered within a 12–18 month period. Recent analysis by ArtTactic looking at artworks with repeat auction sales in recent New York Marquee auctions in May, shows a positive correlation between the amount of time the artwork was kept away from the public market and the return on the investment. Among the 50 lots kept away from the auction market between 10 and 30 years, 49 sold with a positive average annual return of 8.8% (not adjusted for inflation). However, artworks kept away from the market for less than 10 years showed a more volatile performance, with 5 out of 13 lots seeing a negative return (see graph below).


Fractional Ownership of Art ArtTactic

Source: ArtTactic



One of the main challenges for fractional investment platforms right now, is that they are acquiring art at price levels that are reaching a historic high, and if you add the transaction costs to this (i.e. buyer’s premium if bought at auction, fees for regulatory listings, management fees and share of profits, if any), art prices need to keep going up much further before investors can expect any profits. If this doesn’t happen, investors need to brace themselves for the long haul, and hope that history keeps repeating itself.

Quick profits from art investments? Forget it.

Banksy, This is Not a Photo Opportunity (2007) – annual return of 14.7% over 14 years (sold at Sotheby’s New York in May 2022)


Inflation figures are heading into double digits, and stock markets and crypto currencies have been in freefall since late March. However, the art market has shown strong resilience so far, and is gaining increasing attention from investors. Social media is currently flooded with art investment related ads, and fractional ownership platforms, like Masterworks and Mintus, are gaining in popularity among a new generation of art investors.


Last week we saw the end of the New York Marquee Auction Week, which raised a total of $2.06 billion in evening sales (see our latest ArtTactic auction report). Almost a third of the lots in these sales returned to the auction market for the second or third time. So what insights are these repeat sales giving us about the nature of art investment returns, and what could investors expect from the market ahead? We ran the figures in our latest Auction Resale Report, and here are a few takeaways…


Don’t buy at auction if you plan a quick resale:  Art buyers generally don’t like to see art works bought at auction appearing back on the auction block within a 5-year period. Our data suggests that the risk of a loss is significantly higher during this period.  So if you plan to flip the art back onto the market – you either need to source the work in the primary or private market and sell it in the auction market, or buy it in the auction market and hope to sell it for a higher price in the private market. However, this could prove difficult for many ‘trending’ artists, as auction prices are already inflated.


Quick profits from art investments? Forget it. ArtTactic



Art investment requires time: The average holding period for art resold during the New York Marquee auctions was 25.5 years, with 72% of the repeat sales having been away from the auction market for at least 15 years. Shorter holding periods shows mixed results, with 3 out of 7 lots held for less than 7 years selling below their original auction price. Among these was Adrian Ghenie’s The Trip (2016), which initially sold for $6.1 million in May 2021 in Hong Kong, and again for $4.6 million in May 2022 in New York, a loss of 22.4% in one year, despite no apparent weakness in his overall market.


Quick profits from art investments? Forget it. ArtTactic



Blue-chip art shows stable returns: 75% of the repeat sales we studied from the last round of auction sales were from the blue-chip segment of Impressionist, Modern and Post-War artists, with the remaining quarter linked to Contemporary artists. The average annual return for the Contemporary art repeat sales were 7.3% (holding period 12.2 years) compared to 5.3% for Impressionist art, 7.3% for Modern art and 9.5% for Post-War art, with an average holding period of 28 years for these three collecting categories.


Art vs Equity: The 82 repeat auction sales in New York generated an average annual return of 7.1% (not adjusted for inflation), with an average holding period of 25 years, whilst the S&P 500 returned 6.6% annually over the last 25 years. Art returns have so far this year given a healthy profit to their long-term owners, and is likely to continue to attract further interest among investors.


So if you are looking to invest, make sure you take a long-term view and enjoy the art in the meantime!


Health Warning: Studying repeat sales at auction has several flaws. It provides a restricted view of art returns based on a relatively small sample of artists. The data also has an inherent survivorship bias, meaning that the repeat sales we analyse are really based on the ‘strongest’ artists (and artworks) that continue to have an active market (i.e. survivors), and therefore doesn’t sufficiently address the risk of artists falling out of fashion or that lower quality art works are less likely to resell.       

Auction Houses, Friend or Foe of the Young Artist?

Jerry Saltz’s Instagram post from 23 November 2021.


Art critic Jerry Saltz took to Instagram to share his anger surrounding recent auction trends. In his post he marks auction houses as the enemy of young artists while galleries, undermined by auction houses, as a friend. This commentary seems shocking at first as auction houses can be a democratizing force in the ecosystem of the art world – allowing greater accessibility to buying art while also supporting more price transparency. The new buying trends at auction include a rise in young artists, female artists, and artists of color. While post pandemic changes can appear to be delivering on the calls for diversity in the art world, looking deeper, I question if these changing trends are really the benevolent forces that they appear to be.


During the pandemic, Art Basel’s 2021 Report found that the 2020 global art market was down 20% from 2019. The 2020 sales in London and New York fell 22% and 24% respectively. Lately, this downfall that took place in the height of the global pandemic is reversing itself. Auction houses are seeing great success following the pandemic. As collectors have had an increase of wealth, auction records are being broken at new rates. Blue chip artists are seeing new auction records and the contemporary art market is rising. In major marquee auctions, young and diverse artists are not only being increasingly featured, but experiencing skyrocketing prices.


The October evening sales in London — which brought in a total of £130.06 million, 27.1% more than October 2020 – were the first in person auctions in 18 months, an early indication to the success of the November sales in New York. Our research showed that total sales from Sotheby’s, Christie’s and Phillips New York Impressionist, Modern, Post-War and Contemporary Art Evening auctions raised an impressive $1.95 billion, with total auction sales just 4.3% short of the record May 2018 sales. Half of the eight New York Evening auctions were white glove, and across all of the sales, only 11 lots were bought in.


The ArtTactic report, Post War and Contemporary Evening Sales evaluated the October evening auctions in London and found a rising demand and price for the work of young artists. Here, young artists accounted for 23% of the total sales value, almost double the year prior. Nine of the Top 10 performing lots (hammer price to mid-estimate) were by this generation of artists and 9 of the 13 auction records were achieved by them as well. The recent Marquee auctions in New York exacerbated the trends set by the London October auctions, as seen in our Marquee Evening Sales report. Here, younger artist’s auctions were pushed to record levels and guarantees reached a record high. The total sale value for artists under 45 was more than $58 million and the average prices of these artists were 84.7% higher than the prices seen last autumn. Our recent NextGen Report explored this rising success of these emerging forces in depth. These young artists had an impressive 185.5% increase in auction sales in the first half of 2021 and are seeing their wet paint sales (artworks sold at auction within 3 years or less of the creation date), on average, doubling their mid presale estimates. Overall, there is rising success and desirability surrounding these artists.


The Deloitte Art and Finance Report evaluates this growing demand for a younger generation of artists at auction. The change in buying trends could be the result of the rise in millennial collectors, who represent the highest spenders on art in 2020 (Art Basel). Some experts believe that this growing attention on a younger generation of artists “will likely benefit more younger artists of color, as well as young female artists that have traditionally been under represented” in the auction market. ArtPrice’s recent findings positively reflects this speculation – they found that the top five young artists (born after 1980) in the first half of 2021 were Matthew Wong, Avery Singer, Salaman Toor, Ayoko Rokkaku, and Amoako Boafo. These young artists and their recent auction success exemplify the strong and diversifying shift in what collectors are buying. Of these five artists, four of them are people of color, the other, Avery Singer, is a female. These artists hail from America, Canada, Pakistan, Ghana, and Japan reflecting a more global representation and display of artists at auction.


It is reassuring to see the rising prominence of a larger and more inclusive group of artists and seems as if change is coming from these auction results. Yet, evaluating these recent sales, there is cause for concern. Are the changing trends at auction truly supporting a diversified market? Or, could this dramatic shift cause more harm than good for both young artists and the market overall?


To better understand the cause and effect of the shift in post pandemic auction results, we must explore the latticed structure of the art market. Blue-chip artists and artworks are known to hold and steadily rise in value, despite market fluctuation. This is because they have established careers, critical acclaim, gallery representation, and strong exhibition history. Because of this, blue chip artists are sought after at auction and retain high prices. Auction houses, which function in the secondary market, seek to sell this work as they are motivated by profit. The auction houses have a responsibility to both their buyers and sellers; they are trusted to sell quality work for the best possible price that will also appreciate in value. The artist is lacking from this model and rarely profits from auction sales. Meanwhile, galleries mainly function in the primary market. They work with artists to sell their art and place it in collections, museums, and exhibitions which will overall positively affect and help to grow an artists’ market. The ecosystem of the art world has its weight  distributed differently across each of its pillars, and young artists rely on galleries to uphold them.  Helping support and develop their artists careers is a contributing factor to the opaque practices galleries operate upon. By not publicizing prices, galleries will never have to lower the price of an artist – something that is damaging to the career trajectory of an artist. Remaining exclusive in who they sell to can not only help land an artist in the hands of an important collection or museum, but also help avoid buyers who intend to quickly resell the work for profit (also known as “flipping”).


The market of a blue-chip artist is well established, and selling at auction won’t likely cause a negative disruption in their sales. This is not the case for young artists, who have not yet had the time or space to reach this same level of establishment. Their markets are still fragile, and any type of auction results, good or bad, can have an overall lasting and possibly detrimental impact. A positive auction result can lead to a negative result for the artist: price inflation at galleries and an unsustainable and speculative market that the artist must try to feed. The term “red-chip”, coined by Art Newspaper writer Scott Reyburn, applies to the current auction market and how “buyers continue to be only interested in the latest thing”. Reyburn sees the prices rising for an “ever-changing” list of “fashionable new names” such as these young artists. Deloitte’s report speculates that a driving force for this obsession with youth could be “collectors and investors looking for the next big thing” which would push these artists’ “prices far beyond justified limits, given the stage of these artists’ careers” which ultimately negatively impacts the artist.


The recent auction success of young artist Flora Yukhnovich provides insight into my fear of these auction results. Recently, her Rococo inspired work “I’ll have What She’s Having” (2020) sold for £2.2 million, almost 40 times its £60,000 low estimate at Sotheby’s Contemporary Art Evening Auction. Looking at this October auction, Art Price questions if her desirability stems from her being relatively unknown and therefore not on the books of prestigious galleries. This means that auction houses can offer her and similar young artists’ work without any price reference. In less than two years “I’ll Have What She’s Having” has already been sold twice; initially sold by Parafin Gallery to a private collector, and then resold by Sotheby’s. This work was essentially flipped, a tactic where speculative buyers quickly resell artworks for profit, and a tactic that could crash a young artists market. As Saltz sums up, “[Auction houses] now circumvent galleries and place the work of younger artists at auction” forcing galleries to raise their prices to reflect the market.


While these recent sales are helping gain attraction and attention to marginalized artists’ careers, it is done in an unsustainable way that could negatively impact the artist. These sales don’t purely represent support for a diverse market, but capitalize off of the artists. The buying tactics follow what’s in vogue, and can lead to harmful long-term results for the artists’ and an overall speculative market. Of course, this is not all buyers’ intention, and real change and desire is one underlying driver of the shift in trends that others are trying to profit on. But, to find lasting impact from this momentum, we must be critical and dig deeper, evaluating why these trends could be surfacing and what they implicate. Contemporary art is not solely a profit producing asset but a cultural commodity. As we see a growing and changing pool of collectors buying contemporary art, an artist-centered approach to buying must be reinforced.  The shifting collector base must continue to seek out new, interesting, and diverse art without reducing it to “the next big thing”.

[Art] History Repeats Itself: A Warning on the Current NFT Market

Beeple’s HUMAN ONE, 2021. Kinetic video sculpture with corresponding dynamic NFT. Sold for $25 million (hammer price)  in the 21st Century Evening Sale on 9 November 2021 at Christie’s in New York.


Following the historic March 2021 sale of Everydays: The First 5,000 Days by Mike Winkelmann, commonly recognized as Beeple, NFTs quickly became the hot topic of the art world. It seemed as if everyone in the industry had an opinion on them — some raving about incorporating the crypto world into art, and many skeptical, seeing it as a way of reducing art to a purely financial asset. Established artists spoke out against NFTs, such as David Hockney, who called them “silly little things”, following the historical trend of the traditional art market initially rejecting technological innovation. April 2021 saw a 39% drop in sales compared to the previous month which, for a moment might have indicated NFT skeptics were correct. However, today’s market has proven otherwise. Sales are back up — August 2021 levels peaking at almost 6 times higher than previous highs seen in March 2021.


This recent momentum in the NFT art market has led to a rise in recognition and acceptance. The traditional pillars of the art world — auction houses, galleries, and museums — many of whom originally rejected and wrote off the digital tokens, are making moves to incorporate NFTs into their art businesses. As a result of this momentum, the traditional art world is beginning to play catch up, finding new ways into the NFT market and access to the expanded clientele the crypto world offers. Many established artists are adding NFTs to their oeuvre including Damien Hirst and Urs Fischer. PACE Gallery has established a platform solely dedicated to the showing and selling of NFTs, signifying blue-chip acceptance of the digital medium. Computerized images and crypto collectibles such as Crypto Punks and Bored Ape Yacht Club are gaining momentum as well, creating communities around themselves while new ways to view and purchase the tokens are being established.


It seems pointless to add my opinion on whether NFTs are “good” or “bad” or try to speculate what I think their future role and place in the market will be. What I can do is investigate their current place in the market, expanded upon in our second NFT Art Market Report, and offer a warning based on a comparison to the current trajectory of this emerging market and that of the traditional art market.


Although NFTs offer a new client base for the art world, this market and its interactions with the traditional market sectors deserves further investigation. Client strategy likely plays a large role in the acceptance of NFTs by artists, auction houses and galleries. Alex Rotter, Christie’s Chairman of Postwar and Contemporary Art in New York tells Fortune Magazine that for the sale of Everydays: the First 5,000 Days the auction house signed up more new clients than ever before, indicating that NFTs offer an “entirely new category of buyers”.  Looking at the press release following this groundbreaking Christie’s sale we can see that 91% of the bidders were new to Christie’s, becoming clients of the auction house for the sale of an NFT. This is important to understand as Art Basel’s 2020 Market Report shows that buyers between the age of 40 and 64 currently represent the biggest segment for dealers and account for 62% of buyers in 2019. The Art Basel report finds that the Contemporary art market has the largest share of young buyers, with only 21% of collectors categorized as Millennials. In comparison, 58% of the participants in the Beeple auction were Millennials, exemplifying the expanded client base that crypto art offers. Tapping into the Millennial pool will be a very important move for the art market as the Art Basel 2021 Report found that “Millennial HNW collectors were the highest spenders in 2020, with 30% having spent over $1 million versus 17% of Boomers”. In May, Sotheby’s became the first auction house to accept cryptocurrency, a move that Stefan Pepe, Sotheby’s Chief Technology Officer said will help the auction house find new “ways to expand our client base” by taking the necessary steps to accommodate their interests.


Auction houses aim to introduce new markets to their clients and cross market categories. This can be seen by Sotheby’s July 2020 cross-category evening sale ‘Rembrandt to Richter’ which included Old Masters, Impressionist, Modern, and Contemporary art in one auction, introducing lots to buyers who may have never previously sought them out. This tactic of crossing market categories has been incorporated by all the large auction houses, and is being used to tap into the market offered by NFTs. One example is Christie’s inclusion of the NFT crypto collectible “YUGO LABS” which is part of the Bored Ape Yacht Club NFT series in their recent evening sale in London. Further, twelve of the ninety-four lots sold at Sotheby’s recent Contemporary Art Day Auction accepted bids in cryptocurrency, offering a physical object to accompany the NFT. This strategy gave new bidders something tangible as to ease their way into the crypto-verse. The NFT market is fueled by a new generation of collectors and investors that the traditional art world is eager to retain.


It may seem like the new market of wealthy young collectors have the potential to diversify the art market and broaden the art buying clientele, but closer examination proves otherwise. The exciting space for growth offered by the crypto-sphere has led the art world to take steps to incorporate non-fungible tokens into their vocabulary but dissecting these sales further shows that these tactics have not led to a merge of markets. While the spaces for buying art may be moving to merge the traditional and NFT markets, the buying groups remain different creating a heterogeneous mix of fine art and crypto art buyers. An investigation by The New York Times dissects the market gap between “speculative buyers” who “flock to crypto art” and the traditional blue-chip collectors who hold back from this market. Surveying more than a dozen collectors, the New York Times finds that the majority of established dealers and their collectors have more reluctance about NFTs and what they can offer, keeping them away from the market. These art world personnel have “concerns about the quality, ownership and authenticity of NFTs”. Meanwhile, those who invest in NFTs traditionally belong to the crypto community and have historically made and/or spent their wealth on cryptocurrencies. For example, Chris Ciobanica, known as SilverSurfer to the community, has collected more than $10 million worth of NFTs. Despite his heavy involvement with the digital art community, Ciobanica says “I’d never collected traditional art” before his involvement with the digital tokens. Out of the top 10 most expensive NFTs sold, the owners who are not anonymous come from the crypto world rather than the art world.


Tina Rivers Ryan, a curator at the Albright-Knox Art Gallery in Buffalo says to the New York Times that “There is a sense that a parallel art market is emerging that comprises a new set of artists and a new set of collectors”.  The “parallel” market of NFTs which offers new artists and collectors eerily mimics the flaws of the established art market. Although they pull from two different client bases and sources of wealth, their demographics are the same. Without bringing attention to these shortcomings, the potential for this new and innovative space for art risks falling victim to the long tradition of race, gender, and geographic biases that the canon of art history presents.


The NFT art market, generating over $3.5 billion in just the first 9 months of 2021, addresses art world problems such as ownership of work, provenance, authenticity, and artist royalties. This model may be able to overcome some of the key issues found in the traditional art world, yet perpetuates its problematic foundation. Less than 16% of all NFT artists are female, which is less than the 39% of female artists represented by dealers working in the primary market in 2020 (according to Art Basel’s 2021 Market Report). Further, more than 73% of the creators are from England, America, or Canada. The majority of these artists live and create work from North America, mainly the United States which accounts for 91% of artists. Looking at the global distribution of NFT artists on the platform NiftyGateway the discrepancy in demographics is apparent. Of the NFT creators, less than 4% are from Africa and only 2.4% of the artists are from Latin America. Creators from the Near East are even more minimal, making up only 0.03% of the artists and contributing only 0.01% of the total sale value. Breaking up the global distribution by country, the top represented countries are all European or American, with Argentina breaking the trend generating the tenth highest total sales value on NiftyGateway.


The traditional art market has a history of overlooking players who fall out of the narrative of the West. It is rooted in a history that has only validated white males from Europe and America, and builds off of a canon that marginalizes those who challenge this norm, establishing a foundational bias for who could be considered an artist. There was no space or opportunity for those who fell outside of this norm which transitioned into artists today being “othered” and reduced to representations of their difference rather than creators in their own right.


Currently, artists and art institutions struggle to address the colonialist roots that lay the foundation of the art world. As a result, underrepresented groups continue to be neglected and marginalized. The NFT world has existed for seven years, but only became popular in the last two. In its short time the new creative sphere has begun to mirror art history’s exclusionary chronicle, but it has the opportunity to deviate from the foundations laid. We must stop and think if this is a history we really want to continue to follow, address the current state of the market, and ask what steps we can take to break from this trend. The digital world of NFTs offers more accessibility and amenities for art as well as a new place that has the potential to create an equitable ecosystem. To truly capitalize on this potential, we must bring attention to the current failures and avoid continuing along the path set out.

Guarantees and Burned Works: Takeaways from Changing Auction Trends

Detail of Andy Warhol, One Dollar Bills (Backs), silkscreen ink on linen.


As the weather starts to cool down, and the world continues to open up, the Autumn auction season begins in London. With the top houses – Sotheby’s, Christies, and Phillips – all holding prominent Contemporary Art day and evening auctions in mid-October. These parallel events have a variety of works to lure buyers and excite the market including Sotheby’s 3 extraordinary Gerhard Richters which have been in the Helga and Walther Lauffs Collection since their creation in 1985 as well as the notoriously shredded Banksy, now called Love is in the Bin. The energized re-emergence of an in-person art market coincides with Frieze week in London, all marking that the world of art is ready to function in person rather than virtually. Discussing the recent fair, Artsy noted that there was an “undeniable energy of the fair, driven by a high caliber of international collectors and the opportunity to reunite with colleagues from around the world” showing the excitement for the return to normalcy. With the recent shift of all aspects of the world, including the art world to fit these new remote models, and the recent move back, it is interesting to evaluate the current strengths and weaknesses of the art market, particularly auction houses as they transition back to live sales.


In an art market that has historically thrived off of the lack of  price transparency in an attempt to maintain exclusivity, the recent practices of auction houses have  functioned as a democratizing influence in the world of art. Price details are the driving force of these institutions — catalogues are published showing an estimated value of an artwork, providing a range of the expected high and low price threshold. Works put up for auction have a reserve price which reflects the agreed upon baseline for what an artwork will be sold for, and it is not uncommon for lots to largely surpass their expected value. When a work is put up for auction, many price databases and research firms take note, collecting information including hammer price and bidding interest, making price information accessible to the public. This access to information has increased art market transparency in many ways. However, it is also important to consider auction houses’ other practices when it comes to selling art – particularly when art fails to sell.


Unsold works at auction, typically referred to as being ‘burned’ or ‘bought-in’ are one aspect of the auction market often overlooked as evaluations on the market focus on the trends reflected by what sells. It’s a Pass Unsold Artworks at Contemporary and Post-War Auctions shows the value of taking an alternative look at the auction market and provides an in-depth analysis on the unsold works from evening auctions based on data collected from 2015 through the first half of 2021. From this report, we gather the rising strengths of the market, open questions into the growing market practice of auction guarantees, and explore the effect of guarantees on the overall auction market.


Unfortunately, we do not know what happens to the majority of unsold artworks after their failure to sell at auction as many will go on to sell privately or through other auction houses such as Bonhams or regional auctions (which our research does not cover). These works may end up with their guarantors, or remain off the market entirely. However, our research does evaluate unsold lots that were put back up for auction at Sotheby’s, Christie’s, and Phillips in day, evening, and incubator sales channels providing insight into resale trends at the top end of the secondary market.


The stats of burned works are not promising when they come up for resale at auction.  The majority of works that finally sell, do so at a lower value. Our research found that burned lots are often re-sold at a different auction house and in a different location. This could indicate the consigner losing trust in an auction house after failure to sell the first time, and/or attempting to press their luck in a new market. It’s a Pass found that the majority (64.7%) of lots that were originally bought-in at Christie’s were re-sold through a different auction house while Sotheby’s retained 64% of sales. The analysis also found that 42.9% of bought-in works were resold in a different location.


Waiting to re-auction a previously burned work could be the best option for a consigner considering our findings of a very small success rate for these previously bought in works. To increase the value when re –auctioning a lot, the data proves that longer wait times are more lucrative. Those who re-auctioned only 1-2 years after their work was burned on average lost 54.7% of the works value, while those who waited 3-5 years only saw a 26.8% drop in price. Out of the lots that were resold, 8.2% of consignors were lucky enough to re-sell their burned work at a higher value than the original mid-estimate.


The practice of guaranteeing artwork is becoming increasingly popular among auction houses and It’s a Pass illuminates why. Guarantees on artworks are correlated to a strengthening art market, which can be as enticing of a practice as it is controversial.  In the last 6 years, the amount of lots that go unsold has decreased from 15.3% in 2015 to only 6% in the 2021 reflecting an overall strengthening of the auction market. This recent rise in success has a large financial gain for both consigners and the auction houses as the estimated missed sales value (based on mid-estimate prices) of unsold works at Post-War and Contemporary evening auctions decreased from $244 million to $71 million. This decrease in burned lots is inversely proportional to the recent increase in guaranteed lots from 15.1% in 2015 to 23.5% in the first half of 2021. This data shows why guarantees have become increasingly popularized and utilized, but as Eileen Kinsella of Artsy sums, their use can “distort the art market” while offering “auction houses and consignors a useful tool to hedge their bets”.


On one side of the spectrum, auction guarantees reflect an overall strengthening of the auction market. A guarantee allows the auction house to reassure a consigner of their risk by ensuring the sale of the artwork before the auction has even begun; an attractive opportunity for the seller to retain a minimum price on a lot no matter the result of the auction. The promise of a guarantee can also help sway consigners to choose one auction house over another and help an auction house build a system of trust with their consigners, promising a minimum value to the artwork being placed on auction. Amanda Lee contributed her opinion on guarantees in Secrecies, Guarantees, and Securities in the World of Auction Houses for the Center for Art Law website that guarantees give the seller comfort since they will have the knowledge that their “work will sell no matter the outcome of the auction, and if the work sells for more than the guarantee, the seller might enjoy an additional percentage from the upside” exemplifying the attraction of a guarantee. The promise of a sale can help entice sellers to consign their works, and reflects a strengthening contemporary market.


Despite the strengthened trust between auction house and seller, their ability to help retain sales and decrease the rate of failed sales, and their role in strengthening the contemporary auction market, the practice of guarantees remains debated as they can be seen as a deceiving tactic that can provide a risk for the auction house, affect the market and create and air of mistrust. In 2018, Anna Brady in The Art Newspaper questioned the practice of auction guarantees and their role in the market. She compares guarantees to a combination of a risk hedge and speculative gamble, and find that many guarantors have a direct interest in the market. Auction houses do not provide information on who has financial interest in a lot – be it themselves or a 3rd party guarantor. If a 3rd party guarantor is involved, there are no rules in place stopping the guarantor from also bidding on the lot, which could either increase the final hammer price or stir excitement around the work and alleviate the guarantor of their purchase. If the guarantor does end up with the artwork, it is typically below the estimated market value and often with a financial fee from the auction house. The auction house therefore benefits, the consigner gets their agreed upon price, and the guarantor receives an investment they found worthwhile. If a 3rd party guarantor is involved, they are typically the top clients of an auction house, and as noted by senior market editor of Artsy, Eileen Kinsella, ”It is arguable that these client-guarantors are being offered preferential treatment by the auction house; they are giving them access to these ‘fee deals’, and the ability to pre-purchase a work, in advance of the sale”.


Alexander Forbes, Artsy’s consumer marketplace strategist, discusses the need for more buyers in the market and tension between the art market’s resistance to calls for greater transparency, stating “the argument for “price transparency” isn’t about buyers at all, but rather the threat of external regulation on art sales and an ethical obligation to greater openness in a market that caters to the global elite”. The practice of guarantees reflects this evaluation, as it reduces transparency in the market and continues to benefit a wealthy few. Along with their lack of openness, guarantees are also not all positive for those involved. If an auction house is left guaranteeing, rather than outsourcing to a 3rd party guarantor, the auction house falls responsible for the payout if the work does not meet the reserve. This famously happened in 2007 when Christie’s and Sotheby’s had to payout $63 million worth of guarantees.


While guarantees do help to regulate the market, and create a relationship of trust, they also leave many questions for those not directly involved in the practice, presenting regulatory gaps in art and auction practices. Guarantees support the strengthening auction market, provide a sense of assurance for the seller, and help an artwork to avoid the doom of being burned at auction which could negatively impact future sales and the artist’s overall market. They not only provide a possibly lucrative investment for the guarantor but also help auction houses to remain competitive and retain clients. These positives reflect the findings in It’s A Pass of decreasing unsold rates in Post-War and Contemporary evening sales. But there are still questions around this practice and what they could mean. Do 3rd party guarantees leave bidders in the dark, artificially enlarge the market, and create an insular network within auction houses while unfairly advantaging an elite few?  Or does the practice help to fight off the volatile and grim market that exists for previously bought in works which just may not have been able to sell at that particular place in time?