Auction houses will ride the boom in 2022

How long can the boom in the booming art market last? Pundits are ready to bet on at least another six months as asset appreciation, tech wealth creation and Covid-related stimuli continue through 2022. “The private equity and financial sectors Venture capitalists can pretty much print money to raise funds, “says Evan Beard, director of arts services at Bank of America,” and interest rates are still at levels near zero. It is rocket fuel for a non-interest bearing asset like s.

Admittedly, there doesn’t seem to be much going on for auction houses, which have had one of their best years to date, with Sotheby’s and Phillips recording record revenues. There are even reports that Sotheby’s owner Patrick Drahi is considering a return to the stock market – although he makes no comment.

Auction houses are to be commended for reshaping their business model, as well as capitalizing on the abundant liquidity in the market. They have developed an impressive mastery of the “hybrid” approach, which combines digital eyeballs from around the world with the excitement and energy possible through private views, pre-auction tours, and in-person sales.

“We have become ambidextrous, able to push with both hands, or one or the other, if necessary,” explains Charles Stewart, Managing Director of Sotheby’s. “There is no longer a need for an emergency plan.”

Meanwhile, the 2021 craze for art backed by non-fungible tokens isn’t going away anytime soon, although we can expect more application for them and for the crypto industry at large. . Two separate markets – one for the more unmarked, fully digital collectibles and the other for works that emanate from traditional corners – appear to be the shape of the 2022 art market.

A render of Phillips’ new exhibition space in the West Kowloon Cultural District in Hong Kong

The shift to Asia is not disappearing either, often thanks to younger, tech-savvy buyers, although Asia is subject to debate. Hong Kong is the heart of its financial hub and Phillips and Christie’s give the city a vote of confidence with a new headquarters in Asia-Pacific, but it is still fragile and other cities will vie for dominance. Seoul tops the list, with a new Frieze fair opening there in September, while Taipei, Singapore and Shanghai are on the rise.

Not that London or Europe at large can take comfort in the Hong Kong oscillation. “Our customers are more interested in selling in New York or Hong Kong at the moment,” explains Guillaume Cerutti, general manager of Christie’s. “The dollar is so strong and Asia is growing so fast.”

While this dynamic is a boon for the art market at large, it will not be smooth for all of its participants. Art fairs are still making contingency plans, despite some happy returns in 2021. The older and mixed category art market is currently the most vulnerable; the Brafa fair in Brussels postponed its planned release from January to June, while Tefaf Maastricht – the most prestigious event in this field – postponed its March event sine die. This is another blow to the event, which was cut short in 2020 and postponed, then canceled, in 2021.

A silver bowl reflecting the photographer's distorted way
A sculpture by Lee Ufan at the Tefaf art fair in 2020 – the 2022 edition has been postponed indefinitely © Getty Images

Art Basel in Hong Kong will likely take place in March, but again as a lean event – not many people expect to travel there. The willingness to support fairs and comply with ever-changing restrictions may have peaked at the end of 2021 – international travel has become hard work too.

This, of course, has an impact on galleries, many of which have returned straight to touring art fairs whenever they could, but still weigh their value. Some are trying a two-pronged approach – opening pop-ups around the world while exhibiting at fairs – but unless a gallery has unlimited funds, that’s not a long-term solution.

Others are already taking some of the lessons learned from the pandemic as a model for a less hectic future. “We had time to take a break and think about how being in the gallery and spending time with the artists should be balanced with the fairs so that the scales are rebalanced”, explains the merchant. Londoner Alison Jacques. “And, in our case, we want them to lean towards the gallery rather than the way they used to.” She also cites the carbon footprint of such events, something still on the minds of others in the market.

The second half of 2022 promises to be more shaky. “There will be some kind of economic correction because there is a lot of debt to be paid off,” said Ben Clark, managing director of consulting firm Gurr Johns. “The evening sale [top-priced] the level will not be affected, but collectors with some cash on hand now, who buy at the $ 250,000 level, will feel it.

Such a dynamic – again – would hit the gallery system much more than the auction houses. These bigger players also have the resources to diversify into new areas of activity, ranging from metaverse to art lending, another area that will be amplified until 2022 as art is increasingly dealt with. as an asset class. Sotheby’s Charles Stewart remains optimistic: “We question everything we’ve always done and want to go a little faster than everyone else, but not so fast that we crash. Hold on tight.

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