Record art auctions grab headlines, but low-end top performs

While record art auctions may have attracted huge media attention last week, it is the lower end of the market where the profits are being made.

Bacon Freud triptych
Francis Bacon and Lucian Freud painted a series of portraits of each other

The $142m sale of Francis Bacon's Three Studies of Lucien Freud at Christie's on November 12 set a new world record for any artwork ever sold at auction. Yet it seems that those investors with a more modest budget are actually seeing the best returns.

According to the Mei Moses Art Index, at last week's post-war and contemporary art sales, those that originally bought their works for more than $1m saw an average return of 8.5%, while sellers who had originally spent less than $100,000 made gains of 9.3%.

The same rule applies for the November impressionist and modern art sales in New York, where works under $100,000 made a 6% return for their owners, and those over $1m returned just 2.5%.

"Post-war and contemporary is different to any of our other databases because expensive works do better than the mid-price works," Michael Moses told Forbes. "However, the expensive works still under perform the low price works."

That's not to say that record-breaking works don't make a profit - just rarely. The Bacon piece was reportedly bought by its seller less than eight months ago for an undisclosed sum, however Toronto-based economist Don Thompson told Bloomberg Businessweek:

"It's not only the most expensive auction item of all time; it's also the most profitable flip of all time. It's the only painting ever purchased for more than $40 million dollars that's been sold at a profit."

But Moses urges caution to those attempting to replicate the speedy sale, saying that risk increases with art sales over a short period.

"It's difficult, particularly when you factor in transaction costs, to make money on a work that you've bought recently. It's possible, but it's hard," he says.

"Our results show that if you sell after a short holding period, you can make a big gain or a big loss. Over a longer period, the volatility drops dramatically and you get to defray the transaction and other holding costs."

Paul Fraser Collectibles has some superb reasonably priced art collectibles for sale. For more insights into the collecting world, sign up to our free newsletter.

Recent and related articles

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Images: Christie's

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