We’re thrilled to report that 2018 welcomed another upward trajectory for the art market with more record art sales, high performing art fairs and a widening playing field for female and minority artists. Here are four trends we saw unfold.
The Return of the Guarantee and the Rise of the Third Party Guarantor
The contemporary art market is in the midst of a boom with sky-high prices and record sales profits across 2018. Many suggest that the use of guarantees to secure the sale of valuable works of art is a big part of the equation. A guarantee acts as an insurance policy by securing the sale of a work at a minimum pre-negotiated price that helps entice apprehensive sellers to put their major works up for auction. It can be financed by two different entities: the auction house itself or a third party guarantor. If a work sells above the guarantee, the guarantor receives a portion of the upside. When the work comes up short of the guarantee, the guarantor takes home a work that they, supposedly, would have been happy to own at the pre-negotiated price.
Traditionally, it was the auction house that fronted the cash on a guarantee. However, in 2018, the art world has seen the wild growth of third-party guarantees as the norm. In May, according to an article published by Artsy, Sotheby’s, Christie’s and Philips sold $922 million worth of art from their post-war and contemporary collections. Of those sales, 50 percent were from lots that had been secured by a guarantor, with 95 percent of guaranteed sales being fronted by a third party guarantor. Just four years ago, third-party guarantors were a less-substantial player, by comparison, at 40 percent of secured sales.
The move to include a third-party guarantor makes sense for the auction houses—many have learned lessons from financial crises of the past. In 2001, Philips changed ownership when the auction house lost a purported $400 million in payouts related to guarantees. In 2008, Sotheby’s reported losses of $52 million. Shifting the risk to third-party guarantors decreases the pay-off to the auction house while still ensuring the piece will sell in the coming season. While this is an obvious plus for the auction house, the third party guarantors have been making incredible returns on their guaranteed pieces, making it a booming sector in 2018. However, critics raise questions about financial conflicts of interest: If third-party guarantors are privy to extra information (most importantly, the fixed sales price) and can also actively bid, does driving up the price at auction and taking home a larger payout count as a conflict of interest? Only time will tell.
Latin American Art Shatters Records in Mainstream Sales
Historically, Latin American artists were kept in their own category when brought up for auction. In 2018, we saw a big shift in important auction houses, with Latin American masters making their way into mainstream categories like Impressionist and Post-War sales. This strategy has been fruitful, as these pieces have performed very well.
While Christie’s is the last remaining auction house to have a dedicated Latin American art auction, this year Mexican master Diego Rivera became the most expensive Latin American artist when his painting sold for a thrilling sum at the dedicated Rockefeller Art of Americas collection sale in May. Rivera’s The Rivals fetched $9.76 million at Christie’s, exceeding not only the pre-sale estimate of $7 million, but significantly outpacing the artist’s previously held record at auction of $3.08 million. The purchase went above the highest price ever paid for a work by a Latin American artist at auction, which was, ironically, formerly held by Rivera’s partner Frida Kahlo, for a 1939 painting sold for $8 million in 2016 at Christie’s.
This record sale mirrored several other high-selling Latin American works offered in Spring 2018. At Sotheby’s, May auctions of Impressionist and Modern art, as well as Post-War and Contemporary art, included works by Latin American masters who led the pack with sales exceeding $20 million. Works sold high above conservative estimates from the likes of Rufino Tamayo, Joaquin Torres-Garcia, Jesus Rafael Soto, Fernando Botero, and Leonora Carrington, when placed in this global context.
Newfound interest in these artists is being led by important museum exhibitions placing a spotlight on Latin American art, most notably Paint the Revolution, a retrospective of Mexican art from 1910 to 1950 at the Philadelphia Museum of Art, as well as a collection of 100 Latin American works donated to the MoMA from powerhouse collectors Patricia Phelps de Cisneros and Gustavo A. Cisneros. The inaugural edition of Art Basel Cities in Buenos Aires, as well as the increasing importance of Art Basel Miami Beach, are also key factors in placing Latin American art on the global art market map and a trend that will certainly continue to grow.
Female Artists Get the Recognition They Deserve
Women artists represent 50% of contemporary art. Despite the even split, representation is hardly equal. A study released by Artprice suggests that this reality is slowly changing, with expectations for a more egalitarian playing field to come in future generations of creatives. The study showed that for artists born after 1980, women represented 31 percent of the top 500 contemporary artists in the world based on auction turnover. For contemporary female artists born prior to 1980, the figure is a tawdry 14 percent. It is, at least, an encouraging look into the future.
So are some major purchases of works by female artists. In October, British artist Jenny Saville became the most expensive living female artist when her 1992 painting Propped sold for $12.4 million at Sotheby’s in London, more than twice the works’ estimate. The sale broke the previous record held by American female sculptor Cady Noland, by nearly $3 million. Although the sale was dwarfed in comparison to the new heights achieved by a living male artist with David Hockney’s record-breaking $91 million sale in November 2018, Saville’s high selling work speaks to a changing (albeit slowly) reality for female artists. Our hope is that this uptick in sales for female artists does not remain merely a trend of 2018: We hope that women continue to close in on the gender pay gap, as their artworks continue to be as impressive and innovative as their male peers.
The Art Fair Ain’t Dead
The trend of female artists receiving wider recognition and better sales was seen across various art fairs around the world. For artist Joan Mitchell, it was a particularly good year. In the opening hours of Art Basel, her work Composition sold for $14 million—not far off from her $16.6 million auction record. Two other untitled works sold for $14 million and $7.5 million. Mitchell’s collection appeal continued at this week’s Art Basel Miami Beach in December.
A number of other sales over the million-dollar mark sold at Art Basel for artists like George Condo, Robert Rauschenberg, Robert Longo, and Louise Bourgeois. At Frieze London, four artists hit the million-dollar mark including Franz Kline, Arshile Gorky, Francois Morellet, and Canova, all in the Frieze masters section. The U.K. makes up 60 percent of the European art market, and mid-level galleries performed well with numerous sales in the six-figures.
Art Basel Miami is the final big art fair of the year. While there was political uncertainty following the G20 in Buenos Aires and a dive in the stock market, sales were, surprisingly, quite high. A number of eight-figure sales, including masterworks like Picasso and modern and contemporary artists like Mark Rothko, Lee Krasner, Mark Bradford, and Philip Guston, sold early on in the fair. Female artists like Paola Pivi, Mernet Larsen, Teresita Fernandez, Huma Bhabha, Lauren Halsey, and Mary Corse, amongst others, proved that the final note of the year was stronger female representation, a trend we expect to continue in the coming year.
Got a question about the art market as you’re looking forward to 2018? We’re happy to serve as a resource! You can get in touch here.