Auction houses slug it out in battle for top-dollar sales

COMPETITION between major auction houses for the top end of the market is intensifying, with Menzies Art Brands' executive chairman Rod Menzies planning to sacrifice volumes for margins and expand to the primary market, despite the depressed retail and investment environment and onerous rules deterring some superannuation funds from investing in art.

By InvestSMART · 20 Jun 2012

By InvestSMART ·
20 Jun 2012

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Menzies, whose second sale for the year is in Melbourne tonight, will reduce his four stand-alone auctions each year to three to coincide with the Sotheby's and Deutscher and Hackett's sales as they are, he says, "his only competitors".

He will also slash the number of lots for sale by half and only list works worth more than $80,000. His aim, he says, is to have more time between auctions to acquire the work of artists such as Brett Whiteley, whom he describes as "a centre of gravity in the secondary market now".

Menzies will also target contemporary artists from the primary market for the sales, arguing "that with many private galleries closing, more established contemporary artists are ascribing to sell their work through us. It's a megatrend."

Works valued at less than $80,000 will be sold from 2013 through his company, Lawson Menzies, which will hold four auctions each year and target single-owner collections. At present, Lawson Menzies sells works from $1000 to $40,000 three times a year. Its $1.5 million turnover per sale will rise to $3.5 million, he predicts.

But the top-end market, while lucrative, is small, as tonight's catalogue reflects. While 19 of the 140 lots have $100,000-plus price tags totalling $8.7 million, 29 lots (21 per cent) have $40,000-$100,000 estimates, 31 (22 per cent) $20,000-$40,000 estimates and 61 (44 per cent) $20,000 or less.

Deutscher and Hackett's first sale for the year last month achieved a record price for Arthur Streeton's 1888 Settler's Camp at $2.5 million but more than 85 per cent of the 162 lots were on offer for $30,000 or less. Yet later last month, prices for Sotheby's major works were realised despite criticism that it was pitching them too high.

Tonight the spotlight will be on Whiteley's 1985 oil, photography and mixed media on plywood Sloping up on the Olgas (1) (With Crow) and Jeffrey Smart's 1971 Holiday, both with $1 million estimates.

Can the supply of and demand for premium works keep three main players alive? Bonham's head, Mark Fraser, formerly a Sotheby's director, is also chasing the top-end market. Paintings in Bonham's May sale averaged $85,000, he said.

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Frequently Asked Questions about this Article…

Why is competition heating up among Australian art auction houses?

Competition is intensifying at the top end of the Australian art auction market as firms like Menzies Art Brands, Sotheby’s, Deutscher and Hackett and Bonhams chase premium works and top-dollar sales. Auction houses are adjusting schedules, lot mixes and marketing strategies to capture scarce high-value works, while supply and demand for premium pieces remain the key factors shaping the battle for market share.

What is Menzies Art Brands' new auction strategy and what does it mean for investors?

Menzies Art Brands plans to reduce its stand-alone sales from four to three a year, halve the number of lots per sale and only list works valued above $80,000 in its main sales. The aim is to prioritise margins over volumes, give more time to source major works (including those by Brett Whiteley) and expand into the primary market. For investors this signals a sharper focus on fewer, higher‑value lots at Menzies' marquee auctions.

How will Lawson Menzies operate differently from Menzies' main auctions?

Lawson Menzies will handle works valued under $80,000, running four auctions a year and targeting single‑owner collections. Currently it sells works in the $1,000–$40,000 range three times a year; management expects turnover per Lawson sale to rise (from about $1.5 million to an estimated $3.5 million) as it focuses on lower‑priced lots and more frequent sales.

How concentrated is the top‑end art market in a typical auction catalogue?

Top‑end works are a small but valuable slice of most catalogues. For example, in one 140‑lot sale cited in the article, 19 lots carried $100,000‑plus estimates totalling about $8.7 million, while 61 lots (44%) were estimated at $20,000 or less. That mix shows high value is concentrated in relatively few lots.

Are auction houses still achieving record prices for major Australian works?

Yes. Deutscher and Hackett, for example, achieved a record price of $2.5 million for Arthur Streeton’s 1888 Settler’s Camp, and Sotheby’s realised strong prices for major works despite criticism that some estimates were pitched high. These results show that demand can still produce standout outcomes at auction.

Which artists and lots are drawing the most attention and high estimates right now?

Artists singled out include Brett Whiteley—described as a 'centre of gravity' in the secondary market—and major lots such as Whiteley’s 1985 mixed‑media Sloping up on the Olgas (1) (With Crow) and Jeffrey Smart’s 1971 Holiday, both carrying $1 million estimates in the cited sale. These high‑profile works are focal points for top‑end bidding.

Are superannuation funds investing in art through auctions?

The article notes that onerous rules have deterred some superannuation funds from investing in art, despite auction houses targeting institutional and high‑net‑worth buyers. Regulatory and practical hurdles mean super funds are not universally participating in the art investment market.

What should everyday investors take away from the auction house shake‑up in the art market?

For everyday investors, the auction landscape suggests a two‑tier market: a small, competitive top end where a few players vie for premium works and where prices can be strong, and a larger volume of lower‑value lots available through houses like Lawson Menzies. The shift toward listing more established contemporary artists at auction (as some galleries close) may create new buying opportunities, but investors should be mindful that top‑end supply is limited and competition can be intense.