Real Estate: Auction Houses Boomed in 2022
By December 27, 2022 0 716•
It was a good year to be an auction house.
They’re celebrating a banner year with the release of their 2022 year-end reports. Christie’s reported global sales at a whopping $8.4 billion (the highest annual total in art-market history). Fellow auction house Sotheby’s year-end report boasted $8 billion in sales, its highest ever.
But this is perhaps more a story about the business of auctions than the art market.
For example, Sotheby’s total includes $6.8 billion of fine art and luxury sales, a decline of seven percent from 2021. The $1.2 billion left was from car auctioneer RM Sotheby’s and Sotheby’s Concierge Auctions, a real estate auctioneer.
Christie’s had the best showing of all, selling $6.2 billion of 20th and 21st century art.
Back in 2020, auction houses hoped for a change due to transformational new technology. Their 18th century business model of fine art auction houses, combined with a 21st century reputation for high costs and low profits, yearned for a change through digital technology and luxury.
Patrick Drahi’s $3.7 billion acquisition of Sotheby’s confirmed what founder of analytics company Artprice Thierry Ehrmann said was “the art market’s entry into the digital era of the 21st century.” Ehrmann added that Sotheby’s purchase price (a 61 percent premium on the closing price of the company’s stock) showed Drahi’s confidence in Sotheby’s “capacity for exponential development via a digital mutation.”
Sotheby’s new chief executive Charles Stewart restructured the business, dividing it into two global divisions — Fine Arts and Luxury, Art and Objects. Stewart said luxury gives Sotheby’s an opportunity to continue to “develop new sales channels, including marketplaces, e-commerce and even retail, putting [them] on a path for future growth.”
It appears to have worked.
Another aspect of that potentially fueled auction house growth is the onset of younger, wealthy buyers entering the market. Auction records from 2021 reported a surge in global wealth during the pandemic as government stimulus, central bank easing, rising asset prices and a customer demand rebound all resulted in a huge wave of liquidity for wealthy buyers. Younger, wealthy buyers took full advantage of the boom in crypto and online stock trading too, buying classic cars, art, luxury goods, diamonds, wine and watches and more.
We’ll see what comes following the Crypto Winter.
Want to find out more about the auction business? Check out our auction block column here.