“A View from the Room” - A Review of The Auction World in 2024

 Jussi Pylkkänen, Art Pylkkänen, London, January 2025

2024 was a difficult year for the auction market. Statistically, not since 2009 have we witnessed such a challenging year. 2008-2009 was the period of the global ‘Credit Crunch’, of high-risk lending in the US housing markets and the year of the calamitous fall of several major financial institutions across the globe, including Lehman Brothers. This unfortunate sequence of events blew a cold wind across the art market, triggering a global drop in value of over 30% from $62 billion in 2008 to $39.5 billion in 2009.  According to end-of-year figures that were recently released by the ‘Big Three’ - Christie’s, Sotheby’s and Phillips - the auction market shrunk by 23.5% in 2024.

What are the drivers for this significant decline - and is this the worst year for the art world that we have seen in a generation? Not by any measure of the imagination. The most extreme annual drop that I have witnessed took place some 25 years ago, a fall so dramatic that it makes the 30% and 23.5% drops of 2009 and 2024 look trivial. After years of steady growth, the combined effects of the outbreak of war in the Persian Gulf and the crash of many financial markets (most notably in Japan) saw the art market fall by almost 60% in value from $27.2 billion in 1990 to $9.7 billion in 1991. It took a decade for many prices to recover, and in the years that followed many great works returned to the market to be sold for significant losses, mainly by collectors who had over-borrowed, filed for bankruptcy or needed capital to shore up faltering businesses.

Rather counter-intuitively, the greatest lesson for many collectors was that this was a great period to buy and to invest at very reasonable levels. In my opinion, some of the best long-term buys were made between 1991 and 1999 by collectors who knew that the market for works of significant cultural importance would quickly return. The world continued to turn and, as the sun rises in the East and sets in the West, the natural course of events, the ‘three Ds’ (Death, Debt and Divorce), brought many masterpieces to the market. The smart collectors went on a buying spree in the confident belief that rare art would hold its value beyond short-term economic challenges. Great works by Monet, Picasso, Cézanne, and even Van Gogh, were offered for sale and bought very reasonably and often with little competition. What is the simple learning ? That now is a great time to “buy smart” with advice from an experienced art advisor.

While the markets for certain artists will stay hot in 2025 others will cool and it is here that opportunities will arise. My current top ten “hot artists” amongst the top 50 by value would be Picasso, Monet, Magritte, Giacometti, Freud, Basquiat, Kusama, Hockney, Ruscha and Mitchell. Given levels of demand these artists are unlikely to drop in price. However I suspect that we will see more conservative estimates set for certain greats, such as Degas, Kirchner, Klee, Twombly, de Kooning, Dubuffet, Johns, Wool, Warhol and Richter, and it is here that opportunities will certainly arise.

As I see it, the current drop in the auction market is caused by a conflagration of events, each of which makes its own contribution to a lack of confidence amongst both the sellers and buyers of major artworks. Without question, the greatest suppressor of economic optimism, which ultimately drives a healthy art market, is continuing geopolitical unrest. Marked by the continuation and escalation of major armed conflicts in Ukraine and the Middle East, 2024 also witnessed over 60 disruptive governmental elections across the globe. Critically, this included the long, drawn-out, “too-close-to-call” presidential election in America. When there is uncertainty in America, as two-thirds of the world’s top collectors are based in the States, or buy in dollars, the art market is particularly vulnerable.

A further suppressor of art prices, which did not exist to the same degree in 1990 and 2008, stems from the fact that a significant proportion of the new entrants into the art market had been encouraged to consider art as a very reliable asset within their financial portfolios.These were investors used to the satisfaction of immediate, short-term returns, which are notoriously difficult to achieve in the “longer play” art market. Over the past three years, not seeing the instant growth they anticipated, such buyers, encouraged by rising interest rates and burgeoning stock markets, have returned to more conventional investment markets. This has led to a significant drain of fresh capital away from the auction world.

Whilst there may not be widespread discretionary selling from established collections in this climate, Death, Debt and Divorce will inevitably continue to bring fresh material into the art market. When this happens on the grand scale, as it did with the sale of the storied collection of Yves St Laurent and Pierre Bergé in 2009, the art market will be reinvigorated. Back then, the woes of 2008 were soon forgotten. Art collectors - and investors - quickly set short-term economic concerns aside in favour of the gladiatorial battle for masterpieces as the sale created record after record. Over recent years, we have witnessed the positive impact that stellar sales  can bring to levels of confidence across the whole of the art market. It can also be done by a sequence of individual record prices set in consecutive sales. We saw it happen many times with individual works brought to market by a strong Christie’s team a decade ago, between 2014 and 2015. Over a period of 20 months, new benchmarks were set for many of the greats: Picasso at $179 million, Giacometti ($141m.), Modigliani ($170m.), Manet ($65m.), Bacon (a single panel work at $80m.), Lichtenstein ($95m.), Ruscha ($30m.), Barnett Newman ($84m.), Doig ($25m.), Kippenberger ($22m.) and Cy Twombly ($69m.) to name a few. These ground-breaking prices laid the foundations for the spectacular $835 million auction of David Rockefeller’s collection in May 2018, when 7 world records were broken in a single night (including the prized records for Monet, Matisse and early Picasso). The sale attracted a historic number of major buyers at the top of the market, most of whom were also fully engaged in the sales of Macklowe at Sotheby's in 2021 and Paul Allen at Christie’s in 2022, where their participation drove prices to an all-time high, and a global record for a single collection of $1.6 billion.

The influence of these bidders, and these stellar price points, are too recent to be ignored and have been easily forgotten by current commentators. The truth is that a large number of the high-level buyers competing in these sales remain keen to chase great artworks. Many of these collectors have continued to buy significant artworks privately in 2024. For the general good of the art market, we must hope for some great estate sales in 2025 and brave decisions by the auction houses to offer guarantees for the many individual masterpieces by the top 50 artists still in private hands.

An injection of quality is required. The drop is very tangible and best described by the Artsy statistic that in 2022 the top 100 works at auction sold for $4.1 billion, in 2023 for only $2.4 billion and in 2024 this dropped to just shy of $1.8 billion. What we did have, which marked a re-assuring end to a difficult year, were two single-owner sales at Christie’s and Sotheby’s that drew a large amount of bidding and strong prices across the board. At Christie’s in November we witnessed a 100% sold rate for 19 works from the collection of Mica Ertegun, fetching a very positive $184 million, followed by an equally emphatic success at  Sotheby's for 25 works from The Sydell Miller Collection, which were 100% sold at $216 million. These are excellent figures. Certain works from these November evening sales are worth taking a closer look at as we try to predict what might happen in the market in 2025 and beyond. 

Unusually, only one work of art worth over $100 million was offered for sale in 2024. This was Réné Magritte’s L’empire des lumières from the Ertegun Collection,which sold at Christie's for $121 million. The good news is that, unlike many other works priced at above $30 million across the year, the painting sold with considerable competition, albeit against a firm third-party guarantee, indicating that there are still several collectors happy to compete at this heady level. This picture was unquestionably one of the greatest Magritte works still in private hands, and the price was thus entirely justified. Magritte has had a stellar rise in the art market over the past 5 years and I sense that his trend for strong prices will continue. It is no surprise that the highest price paid for a 20th-Century work in the first half of the year was also for a Magritte, his L’ami intime of 1958, which fetched $43 million at Christie’s in London in February. He is an artist who created great works in every medium, his gouaches are often as fine as his oils, and demand for his paintings is rich, deep and global. Like Picasso and Monet, he is now an artist who crosses all national and cultural boundaries.

A bright new star in terms of art market value was also established in 2024, namely Leonora Carrington. Sotheby’s brought to market two major pieces, which went on to establish a completely new price level for her greatest works. In May, after a thrilling battle among a large number of bidders, Carrington’s Les distractions de Dagobert of 1945 sold for a remarkable price in a packed New York saleroom full of active bidders. I was fortunate enough to be sitting only two seats away from the victorious buyer, Eduardo Constantini, whose daughter whooped with joy as Oliver Barker's gavel fell at $28.5 million to tumultuous applause. For me, this was the stand-out moment from last year’s auctions when all the art world witnessed that, even in difficult times, great quality can command great prices. I understand that the painting will shortly be put on show at the Museum of Latin American Art in Buenos Aires, of which Mr Constantini is the Chair. It is a sublime picture of the very greatest quality. Encouraged by this record result, Sotheby’s specialists went in pursuit of an important 1951 sculpture by Carrington entitled La Grande Dame, which they duly offered for sale in November. It was a good call, leading to another gladiatorial battle among  five bidders who drove the final price to $11.4 million, the most ever paid for a Carrington sculpture. Again, Mr Constantini outbid all comers to secure his second masterpiece.

David Hockney is another artist whose star is in the ascendancy. Whilst the Ertegun sale at Christie's seemed to all be about the Magritte, enthusiasts for great British modern painting were delighted to see excellent results for Hockney. Similar strong prices have been witnessed in London and Paris in 2024. Since the remarkable sale of his 1972 painting Portrait of an Artist (Pool with two Figures) in 2018 for $90.3 million, Hockney’s prices have vied with the two other British greats, Francis Bacon and Lucian Freud, and this will surely continue. It is worth noting that this was the highest price ever paid for a living artist. Sir Norman Rosenthal’s much-anticipated show of Hockney’s late works at the Fondation Louis Vuitton, opening in Paris in April 2025, will further enhance Hockney’s international reputation. I sense that this may be one of the “must-see” shows of 2025. Hockney’s market will deservedly go from strength to strength in the coming years. As an aside, there is also considerable room for growth in the value of Hockney’s very fine drawings, which appear at auction quite regularly.

In addition to these highlights, there are lessons to be learnt from the 2024 auctions. Firstly, a softer market, constrained as it has been by major geopolitical events, cannot sustain nor support overly ambitious estimates. Far too many works have been selling at or below their estimates in major sales across the year. Vendors would be best advised to set conservative estimates, which always lead to strong competition and, consequently, the highest prices. Secondly, Sotheby’s 2024 attempt to address the imbalances in commission structures was commendable but ignored the primary issue, that most buyers find buyer commissions too high, while most vendors (and their advisors) would be happy to pay a fair commission if the service, and the results, justify the extra expense. Thirdly, it is important that new buyers continue to be encouraged into all the markets. Are the major houses succeeding in converting entry-point buyers, at $10,000 to $50,000 levels, into collectors comfortable to consider works at higher price levels in the established markets? This is a time-consuming and expensive business but worth every cent. Alternatively, these new buyers could represent a key opportunity for the many dynamic young art advisors who have to date focused their attention on the Contemporary “wet paint” markets. Finally, it is tremendous to see that both Sotheby’s and Christie’s have set their sights on continuing to develop their markets in the Middle East and China in the coming years. Both, as well as Phillips, have invested heavily in new spaces in Hong Kong which they opened in 2024. The strength of Asian bidding in the November sales was there for all to see and there is huge room for this client base to broaden. In truth Asian and Middle Eastern bidding was pivotal in the growth and globalisation of the art market in 2014 and 2015 and their presence  has not been so strongly felt in recent years. Perhaps from 2025 onwards we will see this change.

As we  leave the constrained art market of 2024 and look for green shoots in 2025 we enter a fascinating, five-year period where fortune promises to favour the brave. Christie’s has announced Bonnie Brennan as their new CEO based in New York, Sotheby’s has a $1 billion injection of capital to play with from Abu Dhabi investors and Phillips now has a new CEO in the shape of ex-Christie’s lawyer, Martin Wilson. Stay tuned for updates on “A View from the Room” and enjoy every moment of the sales, wherever they might take place this New Year. Good luck to everyone involved in this complex but joyous marketplace!

Jussi

Art Pylkkänen

London

January 2025