The world’s top auction houses are looking to the ultra-rich to defy an economic slowdown in China and boost their Asian sales, as they open new headquarters and exhibition spaces in Hong Kong and unveil an amped-up sales schedule.
The 250-year-old auction house Christie’s will move its regional headquarters to a 50,000 sq ft site in Hong Kong’s new Henderson skyscraper in September. It hopes to increase the volume of items sold in Asia by hosting a year-round schedule of auctions there.
Rival Sotheby’s unveiled a new retail site in the heart of Hong Kong’s business district in July, and has moved to new offices in the city. Bonhams, another of the world’s top auction houses, will open its new Hong Kong headquarters in September, while Phillips occupied a new site last year.
The moves come despite a slowdown in the global art market, drastically weaker luxury spending in China and dented growth prospects in the country.
Sales of art at Hong Kong evening sales, which refer to the most prominent auctions, fell 40 per cent by value in the first six months of this year compared with a year earlier, hitting their lowest level since 2017, according to research group ArtTactic.
China’s economy eked out growth of 4.7 per cent in the second quarter of this year, below estimates, and has been struggling with persistently weak consumption, with some analysts cautioning this would affect the art and luxury industries.
Francis Belin, Christie’s president for Asia, disagrees. “[Overall] Luxury numbers are not great in China . . . but our aggregate numbers, I don’t think, reflect the macro,” he said, adding that clients in the region — 80 per cent of whom come from mainland China, Taiwan or Hong Kong — were concentrated at the ultra-high end, largely insulating them from any economic slowdown.
“To buy the objects that we sell, you don’t need just to have money, you need to have a lot of money . . . it’s a very small pool.”
Asians accounted for 41 per cent of buyers in the company’s luxury sales in the first half.
The rarer objects sold by the auction house were more likely to exhibit a “de-correlation” to negative macroeconomic events, he maintained.
“What happens in China, consumption is weak . . . [But] is a rare object a way for you to keep your money as opposed to real estate or bonds or stocks? . . . I think so.”
Nonetheless, Asian buyers’ contribution to Christie’s total auction sales fell from 39 per cent in mid-2021, when the company announced its plan to move to the new site, to 21 per cent in the first six months of this year.
The company’s recent sales for 21st century art in Hong Kong fell short of their low estimate, while sales of 20th century art were just in line.
But Belin said only about half of Asian clients’ spending at Christie’s typically occurred in Hong Kong, meaning that there was still untapped demand to bring more sales to the city.
“We have consistently seen Asian collectors be more active overseas . . . than they could be actually in Hong Kong,” he said.
Rival auction group Sotheby’s, which has also struggled with slowing global auction sales and job cuts in recent months, began a foray into Asian retail last month. The two-storey “maison” it opened in a mall in Hong Kong’s Central district will sell rare books, paintings and sculptures ranging from HK$5,000 (US$640) to HK$50mn.
“On the prospects of China ultra-high net worth, we see still at the very top end of the market . . . some very, very high ticket prices from Chinese collectors,” Nathan Drahi, managing director for Sotheby’s Asia, said at the opening, adding that more than a third of buyers at the company’s recent New York auctions came from Asia. “We believe in the long-term prospects . . . of that market.”
But Meg Maggio, a Hong Kong-based art adviser and global managing director of Pearl Lam Galleries, said that while she saw underlying strength in the arts and luxury sectors, the expansion came at a “skittish” time for the market given rising geopolitical uncertainty and “fierce” competition.
“The challenge is: are there going to be too many auctions and too many auction house activities in Hong Kong? Are they saturating the market?” she asked.