This is why auction prices are soaring

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From Albert Einstein’s notes to a record-breaking Frida Kahlo to a € 6.6 million Triceratops, auction houses have seen a number of record breaking items go under the hammer and through the roof recently. Reviews are getting harder and harder to judge. On Wednesday the Einstein manuscript cost 11.3 million euros in Paris, five times the expected price. That happened just a few days after a storyboard for the failed film version of “Dune” from the 1970s triggered a bidding war that drove the price 100 times over the valuation to 2.7 million euros. Market watcher Artprice attributes the transition to online sales to spark new interest, particularly in the US and Asia. “The auction houses were very behind the times. But Covid has forced them to modernize and the result is that online sales have been spectacular and have attracted a new audience,” said Artprice founder Thierry Ehrmann.

Many dynamics are changing, he said using the example of the 30-year-old who would rather collect art than buy their first home.

Spectacular

After an initial freeze during the 2020 pandemic, online auctions exploded later in the year as millions looked for new ways to kill time and spend money during the lockdown. As stock markets skyrocketed during the pandemic, the rich got significantly richer while struggling to find ways to spend them. This has helped take the old masters to new heights.

In New York this month alone, a Van Gogh cost $ 71.3 million and a Kahlo self-portrait set a new record for the Mexican artist’s work of nearly $ 35 million.

But it also sparked a hunger for almost anything to collect, from Michael Jordan sneakers ($ 1.5 million) to an original copy of the U.S. Constitution ($ 43 million) to an 800,000- Euro bottle of Burgundy wine. “At a time when many art fairs can’t be in person and online viewing rooms are terrible, auctions have become a predominant form of sale,” said Anna Brady, art market reporter for The Arts Newspaper, on her podcast.

Brady highlighted the infusion of cash from a new source: crypto millionaires.

They’ve expanded from an initial focus on digital art – like the staggering $ 69 million one of its pioneers, Beeple, paid for a JPG file in March – to more traditional flavors.

The crypto whale Justin Sun bought works by Picasso and Andy Warhol this year and this month paid $ 78.4 million for Alberto Giacometti’s sculpture “The Nose”.

Sun then caused a lot of noise in the art world under stuffed shirts by bragging about his purchase on Twitter – breaking their traditional codes of secrecy and discretion in a way that suggests an even more competitive marketplace.

Will of course

Is it all a bubble

This question has been asked before, especially in the 1980s when the art market threatened to overheat under pressure from a new generation of yuppies trying to give away their money. But despite several slowdowns – including the 2008 financial crash and a sharp decline between 2015 and 2019 – the overall trend was skyrocketing.

According to Artprice, the contemporary art market has grown from $ 103 million in 2000 to $ 2.7 billion today.

“Buying and reselling has become much more natural: to refine your collection, after a divorce or because our taste has changed,” says Ehrmann.

Deloitte estimated in 2020 that the super-rich have art and collectibles valued at $ 1.45 trillion.

For these people, Ehrmann said, “there is no longer a psychological barrier to paying more than a million dollars for something online.”

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