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The world’s top auction houses are turning to the ultra-rich to counter China’s economic slowdown and boost sales in Asia, opening new headquarters and showrooms in Hong Kong and unveiling an enhanced sales programme.
The 250-year-old auction house Christie’s will move its regional headquarters to a 50,000-square-foot 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 auction program there.
Rival Sotheby’s opened a new retail site in the heart of Hong Kong’s central business district in July and has moved into new offices in the city. Bonhams, another of the world’s leading auction houses, will open its new Hong Kong headquarters in September, while Phillips moved into a new site last year.
The measures were taken despite a slowdown in the global art market, a sharp reduction in spending on luxury goods in China and the country’s muted growth prospects.
According to research group ArtTactic, art sales at Hong Kong’s evening auctions, or major auctions, fell 40 percent in value in the first six months of this year from a year earlier, hitting their lowest level since 2017.
China’s economy grew 4.7 percent in the second quarter of this year, below estimates, and has struggled with persistently weak consumer spending, with some analysts warning that this would hit the arts and luxury goods sectors.
Francis Belin, Christie’s Asia chairman, disagrees.[Overall] The luxury numbers are not great in China… but our aggregate numbers, I don’t think, reflect the macro economy,” he said, adding that customers in the region, 80 percent of whom come from mainland China, Taiwan or Hong Kong, were concentrated in the ultra-high end, largely insulating them from any economic slowdown.
“To buy the items we sell, you don’t just need to have money, you need to have a lot of money… it’s a very small reserve.”
In the first half, Asian shoppers accounted for 41 percent of the company’s luxury sales.
Rarer items sold by the auction house were more likely to show a “de-correlation” with negative macroeconomic events, he argued.
“What is happening in China, consumption is weak…[But]Is a rare item a way to store your money instead of real estate, bonds, or stocks? . . . I think so.”
Nonetheless, the contribution of Asian buyers to Christie’s total auction sales has fallen from 39 percent in mid-2021, when the company announced its plan to move to its new headquarters, to 21 percent in the first six months of this year.
Recent sales of 21st-century art in Hong Kong have been below their low estimates, while sales of 20th-century art have been just in line.
But Belin said only about half of Asian client spending at Christie’s typically occurs in Hong Kong, meaning there is still untapped demand to boost sales in the city.
“We have consistently seen Asian collectors being more active overseas… than they might actually be in Hong Kong,” he said.
Rival auction group Sotheby’s, which has also struggled with slowing global auction sales and staff cuts in recent months, began a foray into Asian retail last month. The “house” has opened in a shopping mall in Hong Kong’s Central district and will sell rare books, paintings and sculptures ranging in price from HK$5,000 (US$640) to HK$50 million.
“In terms of the ultra-high net worth outlook in China, we still see at the high end of the market… very, very high ticket prices from Chinese collectors,” Nathan Drahi, managing director of Sotheby’s Asia, said at the opening, adding that more than a third of buyers at the company’s recent New York auctions were from Asia. “We believe in the long-term prospects… of that market.”
But Meg Maggio, a Hong Kong-based art consultant and global managing director of Pearl Lam Galleries, said that while she saw underlying strength in the art and luxury sectors, the expansion came at a “nervous” time for the market, given growing geopolitical uncertainty and “fierce” competition.
“The challenge is: will there be too many auctions and too many auction house activities in Hong Kong? Are they saturating the market?” he asked.
