Last month’s sales of Latin American art showed spectacular strength. So we took a closer look at the trends in the last seven sales covering three and a half years in the Latin American Market. Here’s what we found:
The overall sales volume shot up in each of the three May sales. Year over year growth has been very strong with the November sales consolidating the gains of the May breakout. If the recent strong total of $62 million can be sustained, the category will have seen explosive growth. In 2005, $48 million worth of Latin American art was sold. In 2006, that number rose by 62.5% to $78 million. In 2007, the rate of growth slowed to 28.2% or $100 million. If 2008 follows the pattern of previous years, the total will be around $124 million or an increase of 24% over the year before.
There is some indication from the strong results for American paintings and sculpture just two weeks ago, that money is moving from the most visible categories of Impressionist, Modern and Contemporary art into other categories. Given how strong the New York sales of Contemporary art were, that trend may be most evident in Impressionist and Modern art where there seems to be a soft landing taking place. The overall sale totals for Impressionist and Modern art remain steady but the number of lots is falling. Which means the Impressionist and Modern market is narrowing to fewer lots–but ones that are higher priced.
This flight to quality is having the surprising effect of raising the values in other categories. Latin American art is a great case in point. The combined sales in late May brought in $62 million with an 81.4% sell-through rate on the 596 lots. In three short years, the category has risen from a total of $21 million in May of 2005 with just under 70% of the 373 lots sold. In other words, the number of lots sold in May of 2008 wasdouble that of May of 2005. But the value of the lots was triple the value of May 2005.
But as the chart above shows, the average lot value for Latin American art made a big jump in 2006 and has remained in a much higher range. In May of 2006, that jump was caused by the sale of a $5 million Frieda Kahlo painting. But the remarkable thing about the Latin American category is that subsequent sales have grown even without the presence of such big ticket lots.
Here’s the evidence. We compared the percentage of the total sale value represented by the top ten lots to the sell-through rate of the entire category. Although the top ten lots accounted for 54% of the total in May of 2005, by May of 2008 they had represented 37% of the total sale. That’s because more of the lots are selling. The percentage of lots sold rose from just under 70%–a strong number for any sale–to just over 80%. That means more lots are selling and the top lots account for a smaller portion of the overall sale value, which shows a broad base of strength in the category.
It is impossible to isolate the cause of the rising value of the Latin American art market to one single factor. Surely the growth of capital in South America means there is more money available to buy art just as there is in Russia, the Gulf States and Asia. But the fact that the Latin American market spiked with the rest of the art market in 2006 but continues to rise two full years after the broader art market has leveled off or even seen a quiet correction, suggests a migration of collectors searching for under-valued art.