How to buy Ultra Contemporary art
The art market has a new generation of rising stars, but there are unique considerations for investors in this segment.
Welcome to the first Priceless newsletter of 2023. I hope it’s not too late to wish you all a happy new year. I’m certainly determined to make 2023 a happy one. Here’s to bright days ahead!
One of the bright spots of last year, in the art market, at least, was that a new generation of young and diverse artists were in the spotlight. Collectors, galleries and museums alike wanted to support the work of new and emerging artists, and belatedly, of many more women artists and artists of color.
These young artists have been generating so much attention recently that the art market has come up with the new categorization just for them – the Ultra Contemporary art market. It’s so new that the jury is still out on exactly how old an Ultra Contemporary artist is – some say it is artists under 40, while others says it is artists born after 1975. Either way, it wasn’t long ago that these artists were lumped together in the large and wooly Post War and Contemporary art category, with all art produced after 1945.
As promised in my last newsletter, this edition is going to focus on the Ultra Contemporary art market and the specific things that art investors should consider that are unique to this segment.
A big year at auction
In 2022, new auction records were set for some of these rising stars as collectors flipped artworks for many multiples of the price they paid when these works were sold for the first time in galleries.
On one night in New York last May at ‘The Now’ evening sale at Sotheby’s, Happening, a large painting featuring robotic artists by Avery Singer that was estimated to sell for $2.5 million to $3.5 million sold for $5.2 million. Night Fell Upon Us Up On Us by Christina Quarles, with two intertwined figures under a moonlit sky that had a $600,000 to $800,000 estimate, sold for $4.5 million. Both set new auction records for the artists. Special Guest by Lucy Bull, whose work had never appeared at auction before that night, sold for $907,200, more than 10 times the pre-sale estimate.
Night Fell Upon Us Up On Us (2019) by Christina Quarles, via Sotheby’s
While conventional wisdom in the art market is that the price of an artist’s work should evolve as their careers develop, art sold at auction by these artists, who are still in their thirties, is now selling for millions, even though it was selling for thousands not that long ago – Singer’s first work to appear at auction sold for $36,000 in 2017.
These auction prices also rose dramatically in 2022. Singer’s previous auction record for $4.5 million was only set in November 2021 and the previous auction record for Christina Quarles was $685,500, also set last November. Although Lucy Bull’s work had never appeared at auction before the sale of Special Guest, just one month later, another of her paintings, 8:50, sold for HK$11.4 million ($1.5 million) at Phillips in Hong Kong.
The sale of new art is growing
These are not the only young artists that have seen their art flipped for a profit recently. In fact, the pace of resale of so-called wet paintings has also never been higher. According to Artnet, sales of work by Ultra Contemporary artists that were offered at auction within three years of their creation was $257.4 million in 2021, up from $22.8 million in 2012.
This Ultra Contemporary segment is growing rapidly, albeit from a small base. According to a report from Artprice last October, Ultra Contemporary artists accounted for just 2.7% of total art sales at auction between July 2021 and June 2022, while the broader Contemporary art segment generated 17.6%.
But the report also found that $420 million of Ultra Contemporary art was sold at auction between July 2021 and June 2022, up 28% year on year, and $200.9 million of that total was sold in the first six months of 2022, a record for any six month period.
This was even as prices for NFT art sold at auction, which is often produced by younger artists, dropped considerably in 2022. In the first half of 2022, the highest price fetched for NFT art at auction was $1.38 million for Living Architecture: Casa Batlló by Refik Anadol, whereas in the last half of 2021, Beeple’s Human One sold for just under $29 million.
A high risk, high volatility market
However, all markets go up and down, and as with many ‘new’ market developments, we have been here before. Reselling the work of young artists, while potentially extremely profitable, has proved to be a risky business for art buyers in the past. In fact, Ultra Contemporary art is the segment of the art market with the highest risk and the highest volatility, because when a young artist’s work rapidly appreciates on the secondary market (the resale market), it can easily damage the success of that artist's market in the long run, cratering prices.
In 2014, for example, the most recent peak for sales for young, emerging artists at auction, works by artists such as Lucien Smith, Oscar Murillo, Alex Israel and Mark Flood were all being flipped for many multiples of those artists’ original gallery prices. But by the first half of 2015, interest had already cooled and auction sales of art created within the three preceding years had dropped 23% from $217.4 million to $167.5 million, according to Artnet.
As Scott Reyburn wrote in the New York Times at the time, a Rain painting by Lucien Smith sold in February 2014 at Sotheby’s in London for £224,500, about $372,000, more than 30 times its original purchase price. In May 2015, at Phillips in New York, a Rain painting of the same size and from the same year was sold for $62,500.
Because of this, flipping the art of young artists – buying it from galleries where it is sold for the first time and reselling it for a profit – is big red flag for their representatives. Even if buyers get to the top of the waiting list for these sought after artists, some galleries demand that buyers sign contracts that either stop them selling the art for a certain number of years or give galleries the option to buy the art back before it is offered to anyone else.
Artists don’t tend to like art flipping either, because they don’t stand to benefit much, or at all, if art sold directly from their studio is resold for a big profit. Even in countries like the US and UK that offer artists resale royalties, this is capped at a tiny fraction of the resale price.
As with the art market as a whole, it’s also worth noting that a lot of the financial value of Ultra Contemporary art resold at auction is limited to a very small group of coveted artists. According to Artprice, the top 10 artists under 40 accounted for half of the $200.9 million auction turnover for the segment in the first half of 2022, as you can see in the table below:
In short, buyers purchasing Ultra Contemporary art as an investment can find themselves to be pretty unpopular with the artists in question; the galleries that represent them, making it hard to do business with them again; or end up owning art that they can’t sell for a profit.
“The rush on red-hot emerging artists going from £10,000 to £1m+ in a matter of months will cool down, with the realization that it can be a hot-potato competition; the last one in a rapidly increasing chain of buyers can easily be stuck and burnt holding it,” said art auctioneer Simon de Pury, sharing his art market predictions for 2023 in the Art Newspaper earlier this month.
Avoiding the pitfalls
So how can you avoid being stuck holding a potential hot potato? The answer is to buy in the primary market (where art is sold for the first time), from the gallery that represents the artist. While there’s certainly a lot of competition for coveted artists, getting to know the artist, their practice, their body of work, and the gallery that represents them all helps. If their art has been resold before, art data companies such as Artnet and Artprice enable you to research online the value and volume of that artist’s resales over time.
Above all, show a commitment to supporting that artist’s career, to owning their art long term, and a passion for their work. The latter is a cliché that’s often trotted out about art investing, but as I talked about on this podcast, it’s also a crucial piece of advice. The art market may be very unpredictable, but buying art because you love it can never be a mistake.
With that, I’ll leave you with my top art investment news picks of the last few months below. This quarterly newsletter is free to read, so I’d love it if you could subscribe, if you haven’t already. You can also click on the button at the end of this post to share it with anyone else who might be interested.
Finally, if you’d like to make a small donation to support my work, I’d be very grateful. There's very little data-driven reporting about art investment in most publications, so this will help me continue to get this newsletter out into the world. You can do so through buymeacoffee.com. Just click on the button below. Thank you and thanks for reading! Until next time, happy new year and happy art buying!
Thanks for reading Priceless! Subscribe for free to receive new posts and support my work.
News in brief
Total auction sales of Old Masters, Impressionist, Modern, Post-War and Contemporary Art at Sotheby’s, Christie’s and Phillips were $7.5 billion in 2022, up 15% from 2021, according to ArtTactic, a record high for the market. Single owner sales, some of which were postponed until 2022 because of the pandemic, accounted for 31% of this.
Some art indices show that the very top end of the art market is performing much better than the rest. The Artprice100 index, based on the world's 100 top-selling artists at auction over the previous five years, gained 3% over 2022, but the Global Artprice Index, which tracks the broader market of art that appears at auction, was down 18% over the same period.
NFT art, along with the rest of the NFT market, has experienced dramatic year-on-year drops in volume and value, according to Nonfungible.com, which tracks the market. The number of NFT art sales dropped from 514,819 on January 23 2022 to 343,810 on January 22 2023. The value of art sales dropped from $2.4 billion to $684,000 over the same period.