Brexit Is Turning Auction Houses and Art Collectors Into Currency Traders
Christie’s, Sotheby’s, and Phillips are offering as much as 700 million pounds ($927 million) of Impressionist, modern, postwar, and contemporary art, in the first big test of the market this year.
Hours before the first auction at Sotheby’s on Tuesday, the pound rallied to its highest against the euro since 2017, after U.K. Prime Minister Theresa May promised a vote to delay Britain’s scheduled March 29 withdrawal from the European Union if her proposed deal fails. Uncertainty surrounding the divorce has already curtailed supply as some sellers opted to sit out the London auctions.
“There’s been a general preference not to sell into the uncertainty, with Brexit as a backdrop,” said Tom Mayou, director of London-based Beaumont Nathan Art Advisory. “Consignments have been fairly tough to come by this side of January.”
There’s still a smattering of masterpieces.
Monet’s scene of a pond with a weeping willow is estimated at more than 40 million pounds and a glowing sunset scene by Paul Signac may fetch between 12 million pounds to 18 million pounds at Christie’s on Wednesday.
Contemporary sales next week will include David Hockney’s Henry Geldzahler and Christopher Scott, estimated at 30 million pounds, at Christie’s. Sotheby’s has five works by Basquiat in its evening sale.
The top lot at Phillips is Gerhard Richter’s painting of a jet that once belonged to the late Paul Allen and fetched $25.6 million in 2016. The work has a low estimate of 10 million pounds.
A weaker pound could help spur sales.
“People like to buy in the places where currency is cheap,” said David Nahmad, an art collector who also trades currencies. “If the pound is very weak the day of the auction, you’ll see more bidding.”
With Britain at risk of being whipsawed by day-to-day Brexit developments, auction houses are taking steps to mitigate uncertainty. Christie’s is offering sellers an opportunity to lock in the exchange rate following a sale to protect them against volatility, said Adrien Meyer, co-chairman of Impressionist and modern art.
Price swings for the pound have been more pronounced in recent months and sterling has swung in a range of almost 20 cents over the past year, compared with relatively tranquil currency markets globally.
So far, auction results are within expectations, according to Consumer Edge Research.
At Sotheby’s on Tuesday, Monet’s 1908 view of the Doge’s Palace on the Grand Canal in Venice fetched 27.5 million pounds, within the pre-sale estimate of 20 million pounds to 30 million pounds. Prices include the fee Sotheby’s charges buyers; estimates don’t.
The aggregate sales of 86 million pounds fell 37 percent year over year, said Consumer Edge, which has a $49 price target on Sotheby’s.
“There is no question the uncertainty over Brexit has resulted in greater caution among European collectors,” Cheyenne Westphal, chairwoman at Phillips, said. “It is imperative the government is able to reach an agreement with Europe that will make the transition as smooth as possible and ease the apprehension that exists in the market.”