Thefts Analysis USA

Art market analysis: “Premium lots” damaging sales?

Some dealers blame the spectacular failures seen during Asia Week's sales to the premium lot system

A pair of "Huanghuali" yokeback armchairs (est $1.2m-$1.5m) were bought in at Sotheby's

The Asian art auctions in New York this autumn produced a number of predictable results. Once again, the Chinese works of art that appeal to Asian buyers and notably mainland ones, did best. As always, works from collections did well. Christie’s continued to outperform Sotheby’s, by a large margin. Other sectors, such as Japanese and South Asian art, remained patchy.

What also emerged, and is probably a worrying aspect for the auction houses, is the apparent failure of the “premium lots” system at Sotheby’s. Bidders on these high-priced lots (over $500,000 in the US, over $1m in Hong Kong) are only allowed to go for them after registering their interest in advance and paying a deposit. They can’t bid online. The reason? There have been a number of cases of Chinese buyers defaulting on auction purchases, and Sotheby’s inaugurated this system in Hong Kong in 2007—before the aborted sale of two bronze Zodiac heads at Christie’s Yves St Laurent sale in Paris in 2009.

This autumn, Sotheby’s New York’s auction of Chinese works of art on 14 September included five “premium lots”; four failed. Only a Northern Wei votive stele found a buyer at just over $1m (est $500,000-$800,000), going to Eskenazi. But the stars of the sale, two archaic bronzes (one estimated at $2.5m-$3m) and two pairs of 17th-century Huanghuali chairs (estimated at up to $1.5m) were bought in.

It looked like a rerun of April’s Meiyintang sale in Hong Kong, when Sotheby’s designated 22 of the 77 lots as “premium”, but half of them, including the two most important pieces, were bought in (both subsequently found the same private buyer).

Talking about the New York sales, London-based dealer Giuseppe Eskenazi says the premium lots system was at least partly responsible for the spectacular failures. This is rejected by Sotheby’s vice-chairman of Asian art in New York, Henry Howard-Sneyd, who blames “expectations of the vendors, which were a little high”. Dealers confirm that while the bronzes were marvellous, they were heftily estimated. Nevertheless, says Howard-Sneyd apropos the premium lots: “We are constantly reviewing our systems, which often need fine tuning.” Christie’s has a similar policy, and says that it “takes the necessary steps with potential buyers… to ensure that credit is checked thoroughly” and may ask for a deposit. “The policy is applied on a worldwide basis,” it says. The elephant in the room is, of course, that auction houses do not want to appear to apply the system only to Chinese buyers.

At the end of the week of Asian sales, Christie’s had totalled $75.8m, against Sotheby’s $31.4m (see chart), confirming its dominant position. The firms have different approaches in New York: Christie’s held six sales, as opposed to Sotheby’s three. Howard-Sneyd says that his firm favours higher value over higher volume sales. So lower value works, such as Japanese items, where the market is weak, are not offered in New York by Sotheby’s. Hugo Weihe, Christie’s international director of Asian art, says his firm’s policy is to cover all aspects of Asian art in New York—including Japanese and Korean art, which did not perform well this year. François Curiel, Christie’s head in Asia, says that the firm “spreads property around all its selling centres, which helps to raise our profile everywhere”. And Christie’s strength in New York also comes from its traditional dominance—“success breeds success” commented one observer—which enables it to attract major collections such as last year’s Anthony Hardy sale.

The greatest strength was seen in Chinese works of art which appeal to Chinese buyers: Sotheby’s inaugural sale of Chinese classical painting almost doubled pre-sale expectations. Christie’s sales of jade, including from the Xu Hanqing collection, and of Qing porcelain also performed well: the top lot in its ceramics sale was a Qianlong (1736-1820) moonflask that went for $2.7m, almost tripling its pre-sale estimate. These are the areas that have seen the greatest price rises, driven by Asian buyers. The problem now facing auction houses is how to reassure vendors that they can sell their material and get prompt payment, without alienating buyers by imposing conditions on them.

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