Investment

Art tops Yeelen Group 2017 Luxury Investment Index

A contrasting pair of record-breaking portraits helped art drive wine off the top of the Yeelen Group Luxury Investment Index in 2017. Andrew Shirley is blown away by the numbers

One is the serene face of Christ, the other a contorted slash of colour. One was painted in the 15th century by an “Old Master”, the other by a New York graffiti artist who died of a heroin overdose in 1988. Both made over US$100 million at auction in 2017.

If Untitled by Jean-Michel Basquiat, which was sold via Sotheby’s to the Japanese collector Yusaku Maezawa for US$110.5 million – a record for an American artist – had been the most expensive painting to go under the hammer last year it would still have been an amazing story.

However, it was Christie’s sale of Salvator Mundi by Leonardo Da Vinci that really focused the world’s attention on the art market. Some experts decried its condition, while others doubted it was even by Da Vinci, yet that didn’t stop a buyer from the Middle East deciding it was worth a staggering US$450 million, smashing the previous world record of US$179 million set by Picasso's Women of Algiers in 2015.

Appetite for Art

“Volatility in the art market has been driven by prices of post-war and contemporary art in the last few years. After a depressed market in 2016 caused widespread concern, consignors were tempted back by auctioneers last year,” says AMR’s Sebastian Duthy. The desire amongst wealthy art enthusiasts to add to their new museums carried on through 2017, while the appetites of great institutions such as the Louvre, which opened a new franchise in Abu Dhabi, put more pressure on supply.

“As prices for the very best 19th and 20th century art continue to hit the headlines, there is hope within the industry that the sensational Da Vinci sale could attract a wider audience to Old Masters in 2018.

Untitled by Jean-Michel Basquiat

Scarcity driven markets remain particularly strong, he adds. “Burgundy markets rose 16.5%, on the back of more or less insatiable global demand for the top wines, and a series of short harvests culminating in the 2016 release where some communes were down in volume by as much as 70% due to frost damage.”

Paul Newman and his Rolex Daytona

Much of the increase in demand is coming from Asia, says Andrew Gordon, Managing Director of Private Cellar, which provides a bespoke cellar management service for high-net-worth collectors. “Our Fine Wine List has seen unprecedented turnover in recent months with particularly strong demand for stock with perfect provenance from discerning Asian customers,” says Mr Gordon.

The Pink Star

“While partly due to the devaluation of sterling against other currencies, I do not believe that it’s a simple currency issue – buyers in the Far East have extremely sophisticated tastes and an ever increasing depth of knowledge, which makes it an exciting time for buyers and sellers alike. Demand for top Burgundies is stronger than ever, driven by the scant quantities produced in recent vintages, but blue chip wines from Bordeaux, Italy and California do not linger on our list for long.”

Record breakers

Even those asset classes that didn’t perform as strongly overall as art or wine in 2017 produced some record-breaking sales.

Classic cars, which are still by some way the best performing asset class in YGLII over a 10-year period, saw a number of striking auction results, with Bonhams dispatching a 1995 McLaren F1 for US$15.6 million, while a 1959 Ferrari 250GT California Spider LWB made US$18 million through RM Sotheby’s

But it was a 1956 Aston Martin DBR1, raced by legendary driver Stirling Moss, that was the year’s top seller. It set a new record for a British car at the same time when it was auctioned by RM Sotheby’s for US$22.5 million.

Although some have been suggesting for some time that the classic car market might fall significantly, Dietrich Hatlapa of analyst HAGI, which provides our YGLII car data, isn’t expecting anything quite so dramatic in 2018.

“It’s hard to make predictions, but what I can be fairly confident about is that strong prices will be paid for the best cars by knowledgeable collectors this year.” The results from the year's first major classic car auctions in Scotsdale, Arizona, seem to bear this out.

Luxury investments don’t need four wheels to benefit from the glamour surrounding the world of motor racing. The highly cherished Rolex Daytona worn by actor and keen racing driver Paul Newman was another record breaker. Given to him by his wife Joanne Woodward and inscribed “Drive carefully”, the watch, guided at US$1 million, was sold by Phillips for $US17.8 million.

Chinese luxury investments and buyers were firmly among the record-breaking action in 2017. Hong Kong jeweller Chow Tai Fook paid a record price for a piece of jewellery, snapping up the Pink Star, a 59.6-carat vivid pink diamond for HK$553 million (US$71 million), while a strikingly small and simple 1,000-year-old Ru Guanyao ceramic brush-washing bowl doubled its pre-sale estimate by fetching $HK295 million (almost US$40 million). Sotheby’s handled both sales.

Even furniture, which brings up the tail of YGLII, has the power to defy expectations when pieces with the right provenance catch the imagination of buyers. Bonhams sold an exceptionally rare set of four 16th or 17th century Chinese huanghuali folding chairs, estimated at around £200,000, to an Asian buyer for almost £5.3 million.

Whether we will see such a slew of record prices in 2018 remains to be seen, but it will take some work of art to overtake Salvator Mundi.

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