Global Auction Houses Target Asia’s Wealthy Despite Economic Slowdown

In a strategic move to tap into the affluent Asian market, major global auction houses are expanding their presence in Hong Kong despite recent downturns in the art and luxury sectors. These developments come at a critical time when China’s economic growth is slowing, yet the ultra-rich seem largely unaffected by broader economic trends.

New Horizons in Hong Kong

Christie’s, a 250-year-old auction house, is set to relocate its regional headquarters to a sprawling 50,000-square-foot space within Hong Kong’s new Henderson skyscraper this September. This move is part of a strategy to enhance its annual auction schedule and increase the volume of transactions within the Asian market.

Similarly, Sotheby’s and Bonhams are making significant investments in the region. Sotheby’s recently inaugurated a new retail outlet in the heart of Hong Kong’s business district, while Bonhams is scheduled to open its new headquarters in September. Phillips took a comparable step last year by establishing a new location.

Navigating Economic Challenges

These expansions are occurring amidst a challenging backdrop. The global art market has seen a slowdown, and luxury spending in China has weakened significantly. Art sales at Hong Kong’s evening auctions have dropped by 40% in value during the first half of the year, marking the lowest level since 2017. Furthermore, China’s economy grew by only 4.7% in the second quarter, underperforming relative to expectations and signaling persistent weak consumer spending.

The Ultra-Rich Remain Unfazed

Despite these challenges, Francis Belin, Christie’s President for Asia, remains optimistic. He notes that while the general luxury market in China is not performing well, the ultra-high net-worth individuals — who make up 80% of their clientele in the region — continue to invest in rare and high-value items. This segment of the market appears to be insulated from the economic slowdown, often viewing rare art as a stable investment compared to real estate or stocks.

Market Insights and Future Prospects

ArtTactic reports a significant participation of Asian buyers, who accounted for 41% of Christie’s luxury sales in the first half of the year. However, the overall contribution of Asian buyers to Christie’s total auction sales has decreased from 39% in mid-2021 to 21% in the first six months of this year.

Sotheby’s is also adapting its strategy by venturing into Asian retail. The new two-story maison in a Hong Kong mall aims to attract local buyers with items priced between HK$5,000 (US$640) and HK$50 million. Nathan Drahi, managing director for Sotheby’s Asia, expressed confidence in the long-term prospects of the Asian market, highlighting the strong participation of Asian buyers in their recent New York auctions.