Online art auctions become 'safe haven asset' among Spanish millionaires during pandemic
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With the arrival of the coronavirus, leisure and indulgences had to be postponed, at least those that involved socializing and leaving the house. Many businesses were forced to close due to lack of sales and many others due to the inability to move to the digital world.
However, one of the sectors that has managed to reinvent itself during the pandemic, and which is not always suitable for all budgets, has been the art sector, moving fairs, auctions, and galleries to the online environment.
With the confinements and the increase of mobility restrictions, plans were reduced and so were the investment options, so many people with high purchasing power decided to jump into the world of buying luxury works online.
This group has been by far the least affected by the economic crisis. According to data from the Global Wealth Report published annually by Switzerland's second-largest bank, the number of millionaires fell by about 56,000 in 2020, while billionaires decreased by 0.06%.
With so much money, why not invest it in luxurious and ostentatious works of art?
Art as 'safe-haven asset' among billionaires during the pandemic
Internationally important auction houses such as Christie's have seen this situation reflected with an increase in their client base of up to 40% over last year.
"In times of crisis and instability in the markets there are many people who see art as a refuge asset and this translates into an increase in sales," explains Beatriz Ordovás, international director and head of the post-war and contemporary art department at Christie's Iberia to Business Insider Spain.
"There is an increase in investments or purchases of art pieces, jewelry, watches or real estate, as their value over time is usually higher and more secure compared to other types of non-tangible investments," argues Laura López, art historian and general manager of the art and auction portal Artened.
However, it is certainly a volatile market, so the increase in sales at the present time does not necessarily mean that these works of art will be revalued in a few years.
"It is not an absolute truth that buying art is a good investment, it depends on many things, the artist, the stage of creation, the period, the technique," explains Llucià Homs, analyst and creator of Talking Galleries in The Vanguard.
With works as important as Leonardo da Vinci's Salvator Mundi sold for 450 million dollars or Pablo Picasso's Les Femmes d'Alger (Version '0') for 179 million dollars, Christie's auction house has been able to consolidate its leadership in the art world for years, a situation that has not changed during the current coronavirus crisis.
Private sales have been the big winners
What has changed, or rather, improved has been the online offer, since the Christie's team decided not only to add many more catalogs to the website, but they have also organized more auctions and even added a section dedicated exclusively to private sales.
"We have been fortunate that all these new digital initiatives have been very well received by our clients," Beatriz Ordovás confesses. "I would even go so far as to say that the pandemic, despite the many difficulties it has brought, has made us grow and evolve digitally at a pace that in other circumstances would have taken us years."
Specifically, private sales experienced a growth of up to 70% compared to last year, becoming the great favorites during the coronavirus.
This is due to the fact that with the closing of borders it was very complicated to deal with the auction of works, since these would have to be under the custody of Christie's and in the country where the sale is to take place, regardless of whether the whole process is done online.
This caused private sales to skyrocket, as they did not involve the obligation of immediate transport.
Digitalization and trust: the keys to success
New 20th century auction formats for the coronavirus pandemic at Christie's New York, October 2020.
Christie's Images 2020
Now the occasional physical sale has been forced to coexist with 2 online formats to guarantee the sale of art in a convenient and easy-to-do way.
The first is the use of the digital platform for live events, i.e. those that are planned for a specific day and time, and secondly, a format with purely online sales that are spread over time.
However, buying works of art valued at thousands of dollars over the Internet could generate distrust among users due to possible fraud.
This is an audience generally located in an age range between 45 and 68 years old, so they tend to bet on traditional face-to-face auctions when acquiring and buying art pieces, but that has changed with the pandemic.
Investing for the love of art... and the returns on artwork.
"Due to the pandemic, this trend has inevitably been reversed and more and more people are bidding online or live at auctions for the convenience and security it offers compared to traditional in-person bidding," Artened explains.
However, this system poses 2 possible problems: that the auction houses themselves do not have easy and intuitive platforms when bidding online and that the customers themselves cannot experience that emotional component they feel when they see the piece in person and that makes them connect with it.
From Christie's they assure that their clients trust blindly in their services and even thank them for this adaptation of their usual services.
"Our clients appreciate that we are moving with the times, as these changes bring more options than constraints for them," says the international head of Christie's Iberia's post-war and contemporary art department.
Christie's team has become, now more than ever, the eyes of its clients, so building trust is a fundamental pillar.
To do this, they are helped every day by their high-quality photography and zoom systems, increasing the contents of the catalogs so that buyers have a wide range of possibilities and have even managed to make digital exhibitions for private sale.
"Many of our clients were already used to not seeing the works live when we do our auctions and in-person exhibitions, since they can't always travel, but they still bid and buy privately," adds Beatriz Ordovás. "Now we have become their eyes and we know what we have to look at and transmit to them when they are not there."
A hybrid future with a strong presence in the online world.
Christie's managed to close the year having sold a total of works valued at $4.4 million, reflecting that online auctions and private sales have saved the industry.
However, those smaller businesses that did not decide or failed to modernize their platforms to improve the online auction experience were hit hard by the pandemic, with inevitable closures.
The big question is: will millionaires continue to bet on buying art, in this case online?
Beatriz Ordovás is optimistic and considers that online sales are a consolidated reality among the upper class, since it has not been a direct consequence of the pandemic, but an option that existed before and has experienced an explosion in 2020 for obvious reasons.
"Although these auctions when they started were focused on lots of lower value and a younger clientele, today they are auctions with important works and for all audiences, being a business model accepted and well received by our customers."
In any case, all eyes of companies like Christie's are on enhancing these digital projects, but also on continuing to offer the physical experience.
Its offices located in Madrid are known for their great contributions in the business at a European level, so among the plans of this great international auction house is betting on the Spanish market to a large extent.
For this reason, Artened is confident that online sales will become even more consolidated thanks to the growing presence of a young public in the investment of art and high-value collectibles, but they also believe that physical auctions will continue to exist.
"The in-person auction, or at least the physical exhibition of the pieces to be auctioned, will somehow always be maintained, due to that emotional and aesthetic component, for the enjoyment of being able to see and even touch a piece before acquiring it," concludes Laura Lopez.
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