Art valuations: alive and well

The lives of some of the best known artists were characterised by obscurity and poverty. Fame and fortune arrived only after death. Today, however, a small collection of artists are enjoying an earlier appreciation of their efforts.

Transaction values for work by living artists hit $3.3bn last year, up 22 per cent on 2017. That should jump again this year. The increase reflects frothy financial markets.

In May, the $91m sale of Jeff Koons’s “Rabbit” set a new record for a living artist’s work, surpassing the previous record set by David Hockney’s “Portrait of an Artist (Pool with Two Figures)” at the end of last year. That sale made Hockney the overall best selling living artist, with $200m in auction sales in 2018 alone.

Behind this trend is a low supply of investable art coming to the market. Lack of confidence in the wider economy has made collectors cautious about putting their pieces forward. Individual sales are setting records but money is concentrated at the top of the market only. Other owners would rather hold on, or use private auctions. These keep any failed sales out of the public eye.

Auction sales fell 15 per cent in the first three months of the year at auction group Sotheby’s. Its share price has been suffering. That explains a recent offer from French-Israeli billionaire Patrick Drahi.

The criteria for high valuations seems to depend upon hyped prices of previous sales. For most sellers, the market is unfavourable. The only living artists benefiting from record prices have already done so.