Bidding for art at US$10k?

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Posted on May 3, 2020

Background

Global Art Market

The global art market, valued at $67.4 billion, has never been more global and accessible. Yet, even highly experienced art lovers find auctions intimidating.

Auction houses are one of the biggest drivers of the art market, generating about 20% of annual sales. The powerhouses: Christie’s and Sotheby’s, account for more than 40% of auction sales.

Source: CNBC

Rear view of group of business people with signs buying a painting during the auction

Art Scene

In April 2020, George Condo's Antipodal Reunion (2005) sold for US$1.2 million at an online Sotheby's auction. This figure is not only astonishing for a contemporary artist alive, it's also made a new record for online auction sales!

If we are a newcomer to art investments, where do we start? Let's explore this by figuring out what US$10,000 can get us at the recent auctions hosted by Sotheby's.

Web Scraping - Selenium

The Sotheby's auction home page contains a summary of auctions in reverse chronological order with infinite scrolling. As such we'll be using a combination of Selenium and ChromeDriver for scraping. We have limited our scope to Contemporary Art and Impressionist & Modern Art from 2018 to 2020 for this exercise.

Ticket to Entry

With US$10,000 on hand, let's take a look at the universe of items available to us at the price range from USD1,000 to USD15,000.

Starting bids range from US$3,000 to US$5,000 with Hong Kong having the lowest bar to entry finishing with London being the most expensive to get one's feet into. Average price looks quite close across cities.

Great news! Now that we've got enough cash for our first bid, what's our chance of ending up with an item after all the bidding?

Let's take a closer look at the number of pieces sold at each of the price points.

There are a good amount of items within the range of US$1,000 to US$15,000, with most items sold between US$2,000 to US$4,000.

In terms of volume of items available, New York and London took the lead,

followed by Hong Kong. Although pieces seems to be within reach with our budget, don't forget the fierce competition in the process of bidding.

After all, it's a group of passionate people locked in a room fighting for something close to their hearts!

Bidding behavior across major hubs

Let's visualize the bidding actions with the help of the following scatterplots, which summarize the number of bids which took place at each starting bid and final sales price points across cities.

The table below them shows average price to estimates ratio.

Our findings:

  • There are a lot of bidding action in New York at the lower end of the starting bid, however 50% of the sales were closed at a range between US$9,000 and US$14,000.
  • At 2x average price to estimate ratio, Hong Kong offers a good spectrum of items within the US$2,500 to US$7,500 starting bid range, with most of its final sales end up somewhere between US$7,000 to US$12,000.
  • London has starting bid spread all over the place, where final sales price range seems out of our reach.
  • Paris and Milan, although may offer some price bargains, seems to be a smaller market where probability of pieces that meets our taste is lower.

Where should we start?

Hong Kong, with an average price to estimate ratio of 2, seems to be a good place to start if we were to put in our first bid on items between US$4,000 to US$6,000, we'll likely happily end up with a piece at US$8,000 to US$10,000.

However, at the end of the day, there's no promise! If we don't get to bring home some an uplifting piece of art, the thrill of going through our first auction is definitely a unique experience in itself!

If the auction lets you down, there might as well be an emerging artist around you waiting to be discovered. How about investing the US$10,000 to support your newly found local artist? 

About Author

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Deborah Leong

Deborah is a data scientist with 10+ years of domain expertise in Asset Management. She's a Certified Public Accountant with acute acumen for financial data analysis and an avid painter with natural intuition in pattern recognition. She believes...
View all posts by Deborah Leong >

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