Defying downturn, auction houses bid high on Hong Kong

HONG KONG

Exhibits are seen on display during a media tour of the new two-storey, 2,230 square metre Sotheby�s space at Landmark Chater in the Central district of Hong Kong on July 25, 2024.

Three of the world's top auction houses are racing to expand in Hong Kong, eager to woo young Asian buyers even as the global art market retreats from pandemic-era highs.

In the span of two months, Sotheby's, Christie's and Bonhams will each see the culmination of years-long efforts to upgrade their regional headquarters in the southern Chinese city.

Sotheby's on July 25 unveiled showrooms at an upscale mall in Hong Kong's finance district, a two-storey space previously occupied by fashion label Giorgio Armani.

"We envision for this state-of-the-art space in Hong Kong to be the epicenter of culture for global visitors," managing director of Asia Nathan Drahi said at the opening.

"We are very confident in the prospect of Hong Kong because it possesses some strong fundamentals for our industry," he told AFP, pointing to the favorable tax framework.

Nearby, Christie's is gearing up for a September opening at a new skyscraper designed by Zaha Hadid Architects, with its total floor space doubling to 50,000 square feet.

"Asia has been the pillar of the company," said Francis Belin, president of Christie's Asia Pacific.

"But we didn't have the physical tool, the infrastructure... to actually be at the level of our ambitions."

The firms are "putting their bets down and saying Hong Kong is the center for Asia," according to art adviser Patti Wong -- but she said the expansions come with risk.

Hong Kong's biggest auctions of the year are held every spring and autumn at the city's convention and exhibition center, an intense four months that build hype and draw visitors.

With new in-house venues, events will be more spread out.

"This is a big test for Hong Kong and whether we can develop into a more mature auction market with visitors throughout the year," Wong said.

Global art sales have slowed since Christie's and Sotheby's first announced their Hong Kong expansion plans in the heady days of 2021 and 2022.

This year, Christie's reported $2.1 billion in sales in the first six months — the second consecutive year of decline — down from its 2022 peak of $4.1 billion.

Wendy Goldsmith, a London-based art adviser and former Christie's auctioneer, cited China's real estate crisis as a major factor.

"[Asian collectors] are currently taking a bit of a breath buying-wise but the interest and appetite to collect is still there," Goldsmith told AFP.

"Auction houses know that they'll be back... and probably stronger than ever."

Bonhams, which will move to a 1,800-square-meter location at a new office building in September, said it found success targeting transactions under HK$10 million ($1.3 million).

"This segment has proven resilient despite broader economic uncertainties and represents a huge opportunity in Asia," said Julia Hu, Bonhams' managing director for Asia.

Hong Kong remained "an ideal base for tapping into other major Asian cities," Hu added, citing its strategic location, efficient logistics, collector base, and tax and legal frameworks.

 Young buyers

New York-based Phillips, another auction house, opened its regional headquarters next to Hong Kong's museum of visual culture in 2023.

The companies are unfazed by Hong Kong's political environment, even as critics say a crackdown by Beijing has chilled artistic freedoms, said cultural policy scholar Patrick Mok.

"The companies that operate in Hong Kong's art market are rather apolitical... they know those [political] works can't fetch good prices here," Mok said.

Auction houses are now competing for younger buyers and embracing online bidding, a shift accelerated by the pandemic.

Christie's said 29 percent of buyers in the first half of 2024 were millennials or Gen Z.

"Auction houses turned on a dime during Covid... They are marketing machines now," said Goldsmith, adding that auctions have been spiced up to resemble Hollywood productions.

"(They) are more than willing to provide these events, lectures, dinners, viewings... all to conjure up the next bid."

The opportunity and challenge of the Hong Kong venues will be to bring internet-native buyers into the real world.

But Hu from Bonhams was confident, saying that showroom auctions are irreplaceable. "Our clients still crave the sheer thrill and excitement of being physically present," she said.