3/02/2014

Finanical Returns on London Sales


Beautiful Asset Advisors has just published its report and analysis of the financial returns for the recent Post War, Contemporary, Impressionist and Modern sales. There were 12 sales over the two week period and sales of close to $1 billion, a record for the February London sales.  The Mei Moses database had over 370 repeat sales for offered lots.  The compound annual return for those repeat sales lots totaled 6.54%, which is down nearly 25% for the various collector categories. The evening sales outperformed the day sales.

BAA/Mei Moses reports on the sales
INSIGHTS ON ART MARKET TRUE RETURNS DURING MAJOR SALES IN LONDON DURING FEBRUARY 2014 BASED ON THE UPDATED MEI MOSES® REPEAT SALE DATABASE©
                           
                                     JIANPING MEI & MICHAEL MOSES

MIXED MESSAGE: RECORD SALES BUT WEAK RETURNS

FROM A TRUE RETURNS PERSPECTIVE BOTH POST WAR AND CONTEMPORARY AND IMPRESSIONIST AND MODERN EVENING SALES RESULTS WHERE BELOW HISTORICAL AVERAGES.  DAY SALES CONTINUED TO LANGUISH FOR BOTH COLLECTING CATEGORIES AT MAJOR FEBRUARY 2014 LONDON SALES

THE POST WAR AND CONTEMPORARY (PWC) EVENING SALES PRODUCED AVERAGE RESULTS WITH AVERAGE COMPOUND ANNUAL RETURN (CAR) OF 11% FOR THE 19 LOTS WITH PRIOR AUCTION PURCHASE PRICE DATA.  IN COMPARISON THE 48 IMPRESSIONIST AND MODERN (IMPMOD) EVENING LOTS WITH PURCHASE PRICE DATA PRODUCED A WELL BELOW AVERAGE CAR OF 5.6%.  THE DAY SALES FOR BOTH CATEGORIES PRODUCED WELL BELOW AVERAGE RESULTS.

IN ADDITION BOTH PWC AND IMPMOD WERE OUTPERFORMED BY EQUITIES.  THIS ASSUMES THE EQUITY RETURNS WERE BASED ON INVESTING SIMILAR SUMS IN THE S&P 500 TOTAL RETURN INDEX FOR THE SAME HOLDING PERIOD AS EACH ART OBJECT. ©    

SUMMARY

There were twelve day and evening post war and contemporary (PWC) and impressionist and modern (IMPMOD) sales held in London in February.  This is the high point of the winter auction season in London and the sales generated almost $1 billion dollars in sales, a record for February, at the two auction houses we cover in our analysis; Sotheby’s and Christie’s.  The sales have been reported in the press as having results for total sales or percent sold that ranged from spectacular to fair.  We found 374 lots that sold that had prior auction histories and purchase prices that we could find which allow us to compute a true return for each of these objects.  From a financial returns perspective of the holders of the art that sold the results were substantially below historical return results for these two collecting categories.  The average of the compound annual returns (CAR) of all of the 374 lots that sold from their earlier auction sale any place in the world was 6.5% which is about 25% lower than our historical values for these combined collecting categories. In addition on a combined basis these returns were well below the returns that would have been achieved if the value of the art purchases had been invested instead in the S&P 500 Total Return index (where dividends are reinvested tax free) for the identical holding periods as the art. The average CAR for the S&P investments would have been 8.9%.
Source: Beautiful Asset Advisors/Mei Moses Fine Art Index

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