London's streets were packed over Christmas with tourists from the Middle East, China and the U.S. weighed down by Gucci, Rolex and Hermes shopping bags. They've had to move pretty sharpish to take advantage of the Brexit-induced fall in sterling, as the big brand-owners hike their British prices to readjust to the change.
In the U.K. art market, there's been no such need for foreign buyers to rush. While sellers have benefited from weak sterling, their chastening experience earlier last year will discourage them from trying to raise prices too quickly.
In the first eight months of 2016, auction sales of fine art in Britain and the U.S. slumped compared with 2015, according to Artprice.com, which collates auction results. Buyers were unnerved by the political uncertainty around the world, with a particular impact on contemporary works.
But Britain experienced a bit of a sterling-induced rebound in the three months between September and November. Some auction houses detect similar: Bonhams estimates that since Brexit, lots have sold for 20 percent above lower-end estimates -- not far off the slump in the pound. Works coming to market for the first time, with solid provenance, have performed best.
Difficult categories such as old masters, early sculpture and antique furniture also sold well in the autumn auctions, in part because of sterling, according to online auction group Auctionata Paddle8.
Of course, currency isn't the only thing at work. Particular sales attracted attention to the British market. Sotheby's November auction of David Bowie's personal collection raised 32.9 million pounds and was 100 percent sold.
Sellers may eventually try to adjust London prices higher. But the contraction in the international market will probably stay their hand. Global art sales were $63.8 billion in 2015, a 7 percent decline from the record $68.2 billion in 2014, according to Arts Economics. Last year was probably worse still.
Any recent Brexit boost won't have helped the post-war and contemporary sector much, as that market's more concentrated in New York. There were also fewer works available in the top-end $50 million-plus category, which will probably depress the overall figures.
What's more, the political uncertainty could affect mid-market collectors -- those spending up to $1m on an individual work. By contrast, any tax cuts from Donald Trump would probably boost demand for works valued at more than $10 million.
It's a little like the separation we've seen in luxury goods in Europe and the U.S. The very rich keep spending on top-end Chanel jackets, crocodile Hermes Birkins and Audemars Piguet watches. But the middle of the market is often being squeezed.
Still, if a so-called hard Brexit comes to pass, those sterling-denominated bargains might be hard to leave on the auction house wall.
With assistance from Elaine He
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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