Impressive growth

The world's two leading auction houses increased their revenue by 18% (Sotheby's) and 17% (Christie's) during 2014 and price records shot through the roof early on in the year. Postwar art and the contemporary segment increased by 34% compared to the previous year. Also, considering that both houses CEOs left their posts more or less on their own volition, management has more pressure than ever to make more money and increase profits.

The increase online presence is a large factor behind the successes. They were late on an international scale, far behind Sweden, to seriously adapt to the rest of the world's online behavior. However, when the door to the global market is opened one can see ascertain that the development has been drastic. Sotheby's present an increase of online buyers by almost 25%, and 20% new online bidders over the course of the year. Meanwhile, British industry association IMRG show that this past year Great Britain reached a historic milestone when e-commerce increased by 14% and for the first time saw a turnover of 100 billion pounds. E-commerce represents 24% of the total retail trade in the country, which indicates a distinct behavioral pattern in both consumers and businesses.

The most important shop front

Considering that every fourth pound is spent online it is inconceivable for most companies not to have a virtual shop front online. Today the rent for the shops on New Bond Street is can be motivated for brand building if nothing else. While other players, even in the auction business, solely focus on their online presence. In Sweden we know that 8 out of 10 between the ages of 16-25 initiate their purchase, no matter what they are buying, online. The importance of meeting people's searching and purchasing behavior while also having an effective shop front is no longer a question of if, but when.

A record year despite a misjudged market

Despite a strong, record breaking 2014 there is still a considerable growth potential in one of the world's most neglected and conservative industries. Barnebys can ascertain that the second hand market for art, design, antiquities and collectibles such as wine, vintage cars and watches is heavily underestimated. The industry usually appreciated at 50 billion Euro. That number seems to have been rounded down considerably. Barnebys can now present all new sensational numbers from the industry. The supply alone from the 510 auction houses connected to Barnebys in the middle of January have a net worth of over $1 billion, which indicates how much the market is actually worth and the auction season hasn't even properly begun yet.

The problem is that the numbers in most reports from the auction industry has for many years only included Fine Art, i.e. the higher segments of quality objects and art due to a lack of information.

A lasting trend

Over the past year we read about many new records. When it comes to the jewelry section Sotheby's netted in 2014 the highest revenue numbers ever for jewelry auctions. For the third year in a row. A total of 3,900 pieces of jewelry were sold in 2014 for $603 million, a historical record for the auction house. Approximately a fourth of the sales were made online when 77 jewels surpassed the million-dollar mark. Another section that seems to have broken all previous records is the timepiece market. Barnebys can confirm the increased interest as one of our most searched for categories on all of our sites is timepieces, preferably different types of watches, for example Rolex, Omega and Patek Philippe.

A strong start for 2015

Sotheby's starts the year off with what could be considered to be the strongest Contemporary Sale ever, where one of the top lots alongside Francis Bacon's self-portrait and Gerhard Richter's abstract painting is a painting by Fontana, Concetto Spaziale, Attese, which comes from a fantastic Swedish collection belonging to Anna-Stina Malmborg-Höglund and Gunnar Höglund. After Sotheby's, Christie's, Phillips and Bonhams follow.

Russian cold and Indian heat

The question is now whether or not it's possible to maintain the market year after year. Most people "in the know" have a bright outlook on 2015, although perhaps with a certain trepidation, nodding at the volume segment and increased online presence in new growing regions such as India, the Middle East, Northern Africa. The US dollar is stronger and the region has a better economic situation and increased demand for luxury products such as art, design and antiquities, and the role as a cog in the world market for auctions is believed to considerably contribute this year's results. Despite China's growing upper and middle classes there are still apprehensions. Perhaps a strengthened dollar and solid set of regulations can limit the revenue from the superpower, much like the unstable situation in and around Russia acting as a determining factor for how Russian auctions will make out. My gut tells me that we will see a considerable spike in the curve despite most of the heavy Russian or even Ukrainian buyers residing outside of Russia and the Ukraine's borders. In this case it is mainly due to a shift in focus, rather than money.

We should soon be able to tell which way the wind will blow, if the extreme curve keeps rising or if investors will abandon the field for greener pastures.

The supply, however, is impeccable. I can verify this after visiting the bigger auction houses' previews in London this past week. Sotheby's upcoming auctions are a solid as a rock, at least in regards to supply.