3/16/2011

Auction Middle Market

The Financial Times has a very interesting article on the strength of the auction house middle market. Although I dont buy into all of what is being reported in the article, there are some very interesting and relevant points made by the author. One is that as Sotheby's has long since moved away from the secondary sales level and Christie's has embraced many middle market sales, while Bonhams has done very well in certain sectors that both Sotheby's and Christie's have abandoned. A similar example of an auction house at this level here may be the US is the new Keno Auctions, meant to compete at level of the major houses or just below.

The article does not put a level on what is the middle market for a particular sector, but it does infer the upper market are the items in the major catalog sales of the large auction houses. 

The article references 2009 as a year of strong sales at Christie's second tier sales, compared to the decline in the major sales. As appraisers, we are all aware of the poor performance of major sales in 2009. We also know that a lot of property is coming into the auction markets from the middle market, so perhaps volume is up, but I think many sectors have a loss of value, which is not explained in the article.

All in all, a good article for appraisers to read and reference.

The Financial Times reports


While rival Christie’s has remained loyal to the lower end of its business in London’s South Kensington, it too has closed specialist departments and trimmed its sales calendar.

The results quickly became apparent. In January, Bonhams, the world’s third largest auction house, announced that it had taken the lion’s share of the UK market in such core collecting areas as antiquities, arms and armour, ceramics, clocks, glass, jewellery and watches (it has dominated the collector cars market for years). Vendors may prefer to consign to specialist sales, not least those run by renowned experts such as Bonhams’ ceramics director John Sandon. Bolstered by a defection of Sotheby’s specialists 18 months ago, this department is now the world leader.

It is not only Bonhams that is snapping at Christie’s heels and hoping to move into some recently vacated blue water. Arguably the most ambitious young blood in the UK’s – and, increasingly, the international – auction business is the anglicised German Stephan Ludwig, executive chairman and principal shareholder of the Fine Art Auction Group. This company embraces the whole gamut of the auction business, from lowly but highly profitable sales of “commercial assets” sold on behalf of the UK Customs & Revenue and the Metropolitan Police to the world-class books and manuscripts focus of Bloomsbury Books, which stages sales in London, New York and Rome. In the middle is the traditional valuation and auctioneering business of Dreweatts, founded in 1759, which now has salerooms in Newbury, Tonbridge Wells, Bristol and Godalming. Last year the group’s global turnover was £35m. Ludwig aims to make that £100m within five years.
To read the complete Financial Times article on the auction house middle market, click HERE.

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