May 3 (Bloomberg) -- Sotheby’s, the New York-based publicly traded auction house, will be opening a gallery for private sales close to its branch in London.
The company has taken an undisclosed amount of space in a five-story block at 31 George Street, opposite the back entrance of its New Bond Street auction rooms, the company said in an e-mail. A person with knowledge of the matter had told Bloomberg News that it would open a retail space in the U.K. capital.
The 1980s steel and brick building, incorporating a ground floor gallery, will be dedicated to hosting private selling exhibitions, Sotheby’s confirmed today. Billionaires often prefer buying big-ticket items through unpublicized private sales rather than in the glare of competitive public auctions.
“It’s very smart. I would do the same,” said the New York-based dealer Christophe van de Weghe, who trades in re-offered works by modern and contemporary artists -- the so-called ’secondary’ market. “Sotheby’s will have the same clientele for both their auctions and their gallery sales.”
The auction house is opening a selling exhibition of paintings by Jean-Michel Basquiat at its S|2 galleries in New York this week. Sotheby’s held a near sell-out show of works by Yayoi Kusama in Hong Kong in May 2012.
Discreet transactions are a significant growth market for the world’s two biggest auction houses. Private sales at Sotheby’s increased 11 percent in 2012, accounting for $906.5 million of a $5.4 billion total.
A figure of 631.3 million pounds ($980 million) -- up 26 percent -- was achieved by London-based Christie’s International, which took a record $6.2 billion last year.
Christie’s private sales figures included works sold by its wholly-owned subsidiary Haunch of Venison, a dealership with galleries in New York and London specializing in the “primary” market for new pieces by established and emerging contemporary artists. The company was acquired by the auction house in 2007.
Christie’s closed the dealership and stopped representing artists in March. The subsidiary’s premises at Haunch of Venison Yard, near Sotheby’s in Bond Street, has been retained as an exhibition space for the auction house’s private sales team, who will concentrate on secondary-market works.
“The primary market is a lot more difficult,” Van de Weghe said in an interview. “You need different kinds of specialists and there is whole separate group of buyers. You have to start talking to people like museum curators as well as private collectors.”
Most of Sotheby’s and Christie’s private sales income derives from high-value modern and contemporary works sold from viewing rooms within the auction houses. Neither company reveals details of individual transactions.
This discreet business is an attractive alternative for auction houses, which can struggle to make a profit from high-value lots at public sales. Owners of valuable items usually aren’t charged a selling fee and marketing costs can soar if artworks are put on view in different continents.
“We’re talking about one market here,” said Alexander Platon, Sotheby’s senior specialist in Impressionist and modern art, and the company’s European head of private sales. “We have clients who want to buy and sell art. Whether this is done at auction or privately depends on the particularity of the work and the situation.”
Platon said owners might choose to sell privately through at an auction house because of timing or discretion issues, or also to avoid the risk of “burning” the market for their work by failure at a public sale.
Sotheby’s London-based wholly-owned subsidiary, Noortman Master Paintings, deals in Old Master and 19th-century paintings.
The auction house also conducts private sales through its selling exhibitions of monumental sculpture at Chatsworth House, Derbyshire, and at the Singapore Botanic Garden.
“These shows have a public side to then,” Platon said. “Each transaction takes place at a private level and the result is not made known.”
The George Street building was vacant on May 1. Piles of room dividers lay scattered across the deserted ground-floor exhibition space. The refurbished gallery is scheduled to open in the fall and will specialize in selling secondary-market works, Platon said.
(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)
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