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May 21, 2012 at 04:01 AM
The record-breaking $120 million sale of Munch’s painting “The Scream” in early May captured headlines. But Beautiful Asset Advisors’ analysis of the recent New York City art auctions tracked by the firm’s Mei Moses database reveal a more nuanced picture of price trends.
The Mei Moses Indexes track repeat sales of artwork that changes hands in publicly disclosed transactions. Their database now contains over 30,000 repeat sales for approximately 20,000 individual works of ar and the database is growing by about 3,000 paired transactions annually. That information allows BAA to calculate compound annual returns for an artwork’s holding period and compare that result with traditional asset classes’ returns over the same period.
BAA’s analysis of the May impressionist and modern sales at Sotheby’s and Christie’s New York May 2012 auctions revealed some interesting results:
The average compound annual return (CAR) for day and evening sales at the firms was 5%. That result was significantly lower than the 12% CAR at the London sales in February.
Had an investor held the S&P 500 Total Return Index for the same period, the CAR would have been 6.6%. “These results show a significant loss in momentum, and it will be interesting to see if next week’s post-war sales will help to regain this lost ground or continue this slowing trend like that which is plaguing the world economies,” BAA points out.
The day sales produced differing results at the auction houses. BAA was able to pair 48 sold lots at Sotheby’s with prior auction prices. Those lots generated an average CAR of 6.8% and an average holding period of 15 years, which was the highest CAR for the auctions. In contrast, the 76 lots tracked in the two day-sales at Christie’s produced an average CAR of 3.3% and an average holding period of 14.7 years. This was an extremely weak result of less than half the average return for that collecting category, BAA noted.
