It was the kind of drama an auction house dreams of. As part of its spring week auction in mid-May, Christie’s was selling a 1948 Jackson Pollock dip-and-splash painting, one of the largest held by a private owner. Bidding seemed to stall around $150 million until suddenly a bidding war among four prospective buyers broke out, lasting seven minutes and driving the price up to ultimately fetch $181 million, including fees.
In all, Christie’s auctions in New York during its Spring Auction series—its most important event of the year, which can generate between 10% and 20% of annual sales—brought in $1.45 billion. Including sales outside the U.S., Christie’s took in to $2 billion that week, 50% more than the previous year. Blockbuster sales included highly coveted pieces such as a Mark Rothko painting and a Brancusi sculpture, which each fetched astronomical prices.
The stellar week illustrated how the fine arts market has continued to rebound after a few slow years. Last November, Sotheby’s sold a Klimt from the collection of the late cosmetics heir Leonard Lauder for $236.3 million, a new record for a piece of modern art sold at auction.
But experts are confident this robust art market is likely to be helped for years by a factor presaged by the strong sales in May at Christie’s and other auction houses: the so-called Great Wealth Transfer. That refers to the huge handoff of assets over the next two decades from the Silent Generation and Baby Boomers. Those assets have appreciated enormously in recent years from the strong stock market and high real estate values. The value of these assets is estimated at around $84 trillion by 2045 or as much as $124 trillion by 2048. Heirs who don’t want to hang on to inherited art or need to liquidate their assets may turn to the auction markets—and some will likely become art-buyers themselves.
Indeed, a great number of pieces in the recent blockbuster Christie’s auctions came from estate sales of notable figures in the art world. The Pollock painting and the Brancusi sculpture of a women’s head, called Danaide, were owned by Conde Nast founder S.I. Newhouse, who died in 2017. The Rothko painting, which fetched just under $100 million, had belonged to Agnus Gund, an arts philanthropist and former president of New York’s Museum of Modern Art, who died last year.
Indeed, the estate sales of late have brought extremely high-quality pieces, many of which have been off the market for decades, to the auction block. That will continue to give collectors an opportunity to snag coveted pieces by artists that rarely come up for sale. Christie’s sales also included works by iconic artists such as Gerhard Richter, Pablo Picasso, Roy Lichtenstein, and Piet Mondrian.
Calling these high-ticket-price auctions “blood sport for the ultrarich,” Saltz remarked: “The entire spectacle feels especially grotesque in the spiritual atmosphere of our current era, where vulgarity has become aspiration and every human endeavor is translated into ratings, clickbait, branding, and leverage.”
Some art lovers may be turned off, but younger buyers are turning up in droves. Brennan says that about half of bidders at Christie’s auctions are Millennials or younger. At the Irsay auction, a guitar owned by Nirvana’s Kurt Cobain was a draw. “It had a very deep bidding audience of younger people,” says Brennan. “We see a tremendous new young audience really interested in vintage automobiles, so that’s something we’ve added to our portfolio.”
The opening IPO market in U.S. will also create “liquidity moments” as Brennan puts it and further expand the pool of buyers. And one of the destinations for that wealth are art and collectibles markets that can offer some diversification to a portfolio.
“You will see a lot of that wealth creation gravitate toward assets that are perhaps non-traditional,” says Bank of America’s Watson. “We know that those are on the rise, especially among younger generation cohorts.” He expects that some $1 trillion worth of art will change hands over the next decade. That will certainly keep the auction houses busy.
