This analysis of the 12 years of Contemporary Art Evening sales at Christie’s, Sotheby’s and Phillips was made possible with data from our friends at Pi-eX. It is available to AMMpro subscribers. Subscriptions begin with a free month for the curious. (Please note: these numbers do not include single-owner and curated sales that have punctuated the market at various times. The point of these charts is to show year-over-year changes and so the single-owner and curated sales are thought to interfere with a consistent comparison.)

Continuing our look at the last 12 years of Evening sales, we’ve got data fro Pi-eX on the Contemporary Evening sales from 207-2018. The familiar three-phase pattern we described for the broader market is visible again here (because the Contemporary market composes a large portion of the overall art market and the Evening sales volume.)

Seeing the reduced number of lots sold over the last three years comes as no surprise. But it does confirm the significant shift in the Contemporary art market from the trophy market that dominated the years 2010-2015.

The consistent number of lots sold during the 2010-15 period and the 2016-18 period did not yield a consistent dollar volume. In the chart below, we can see the rising value of the Evening sale lots sold.

The value of Contemporary Evening sale lots peaked in 2014 before falling steadily to 2016. Total value in the Contemporary art Evening sales recovered in 2017 but not as much as the chart below suggests. The chart includes the sale of Leonardo’s Salvator Mundi during a Contemporary art Evening sale. Without that additional $450m, the total for 2017 would still exceed that of 2016. But the progression between 2016, 2017 and 2018 would be more consistent. With that recognized, we can begin to talk about a period of asset re-flation in Contemporary art from 2010 to 2014. The three years from 2016-2018 seem describe a similar recovery in spending at the top of the Contemporary art market but without the obvious or identifiable exogenous event. The dramatic decline of art buying in late 2008 and 2009 was an obvious response to to the global financial crisis. The diminution of spending in 2015 and the even greater reduction in 2016 had no clearly identifiable source.

Turning to the aggregate estimates and sales (both on an estimate basis and with works sold without published estimates) we see the same process playing out. In 2015, the market was unwilling to meet the seller’s expectations with an aggregate hammer total just at the aggregate low estimate level. Only the works without published estimates were able to help the sales meet anything like the previous year’s numbers.

Confining ourselves just to works with estimates, we can see the steady progression of the totals for 2016-18. The Contemporary art Evening sales have made solid progress toward reaching 2012-2013 levels again.

Average lot performance smooths out the results some. On that basis, last year reached the peak level of 2014. Although average prices can be affected by the top lots, the distortion is muted over large number of lots. There’s good reason to believe that the average prices in Evening sales have been rising because of the increased value of so-called “middle market” lots. The chart below seems to be the most telling indication of the Contemporary art market over the post 2009 period.

How has this rise in average lot value been achieved? It would appear that the increased use of third-party guarantees has had a dramatic effect on average sale prices. Below Pi-eX created two charts to look at the use of third party guarantees. The first chart shows the number of lots offered without guarantees (grey), with direct auction-house guarantees (red) and third-party guarantees (light blue.) It shows a widening blue wedge of works sold with a third-party guarantee. In 2011 there was a large increase in the number of third-party guaranteed lots but that trend tapered off by 2013. The third-party guarantees came back in a greater number than 2011 in the declining sales total years of 2015 and 2016.

Perhaps those efforts were not enough to get sufficient sales volume into the Evening sales which are both sales and marketing events for the auction houses. The use of third-party guarantees on a lot-by-lot basis kicked into high gear over the last two years. But the effect on sales totals was far more dramatic. That’s the subject of Pi-eX’s second third-party guarantee chart.

The few works sold with third-party guarantees in the period from 2010 to 2015 were high value works and so works with third-party guarantees had a greater proportion of the sold value than of the number of lots. It is worth noting the large value represented by direct auction house guarantees in the peak year of 2014—and to a lesser extent 2015.

Although the value represented by works sold with third-party guarantees varied in the 2010-2015 period, the consistent rise in value of the works sold with third-party guarantees was very evident in the 2016-2018 period. There are great concerns among market participants that the use of third-party guarantees has reached its viable limits. Many new guarantors were brought into the process and there are fears that many of those ended up owning works they only thought they were providing financing for. Those works are difficult to unload on the private market, if you happen to be a financial buyer. That will make the next guarantee cycle all the more interesting for what it tells us about the sustainability of third-party guarantees.