How to Approach the Art Market Like a Pro
Many art investors make the mistake of approaching the art market as a single entity when in fact the art market is made up of many different and often highly segregated markets. If an investor approaches the art market as a single entity they are basically denying themselves the benefits of trading between the different markets. Different markets have different desires, different demands and therefore value certain artworks differently which means that a savvy art investor can use these variations to their advantage by buying a certain artwork or type of art from a market that attaches a lower value and then selling to a market that attaches a higher value.
As an example of my point, a local Sydney auction house by the name of Vickers and Hoad (http://www.vickhoad.com) that deals primarily in art and antiques recently secured the sale of an estate of Russian antiques and art which included a rather nice Faberge imperial presentation kovsh that was estimated to sell for somewhere around the $10,000-$12,000 mark. The auction attracted over 500 bidders from all over the world including 8 phone bidders for the Faberge kovsh which would be a big deal for a major auction house such as Sothebys let alone a small local auction house. A final price, including buyers premium, of $138,000 was achieved for the Faberge kovsh which was more than ten times the estimate and a massive result for Vickers and Hoad. It just so happens that at the same time that Vickers and Hoad were having their sale of Russian art and antiques which had been advertised in the UK, Sothebys cancelled their sale of Russian art and antiques due to the whole sale being bought by Russian energy mogul Victor Vekselberg. A demand for Russian art and antiques combined with a shortage of works on the market resulted in a small auction house attracting many of the clients that would have otherwise gone to the Sothebys auction.
Because the bidders from the Sothebys sale migrated to the Vickers and Hoad sale one can presume that if the Faberge kovsh had been sold at the Sothebys sale that it would have achived a similar result. If the Sothebys sale had gone ahead then the Faberge kosch would not have had these extra bidders and would have sold for a price much closer to the estimate which would have meant that an investor could have bought the kovsh from Vickers and Hoad and then sold it for a big profit overseas at a big auction house such as Sothebys. So as you can see it is not that hard to predict what certain artworks will sell for provided you take the right approach.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.