Early reports from this week's New York fall art auctions show that experts’ sales totals predictions will be far surpassed.
Sales were expected to hit $1.4 billion, CNBC reported last week, citing art experts. That number would have marked a 50% increase from last year's sales totals and put an end to three years of market declines.
Christie's sales totals surpassed $960 million. Sotheby's has also outpaced initial predictions, generating $706 million on Tuesday for the highest single-night total the auction house has ever seen.
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The dealers and auction executives who spoke to CNBC before auctions began said that they were basing these predictions on factors like increased demand and a strong supply of pieces, as well as larger economic factors like falling interest rates and climbing stock prices that inspire confidence in buyers.
They also said that recent sales in Paris and London brought in stronger-than-expected results, which could bode well for New York City sales.
"All year long we've seen very strong demand in the art market," Sotheby's CEO Charles Stewart told CNBC. "Our demand levels have been setting records, whether that's bidders per lot or our hammer [prices] versus our low estimate or our sell-through rates. What we've seen more recently, though, is the supply catching up with the demand. Something's definitely shifted in the last two months.
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A strong supply of masterpieces
There were a number of significant pieces from the collections of major estates hitting the auction block at Sotheby's and Christie's this week that are expected to demand high prices.
Sotheby's had a number of works from the collection of Leonard Lauder, the heir to Estée Lauder Companies (NYSE:EL), up for sale, CNBC reports. Among the pieces was a Gustav Klimt portrait titled "Portrait of Elisabeth Lederer," which sold Tuesday for $236.4 million, setting a record for the most valuable piece of modern art to ever sell at auction.
"You don't need 20 years of art history to understand the appeal of those Klimt paintings," art advisor Andrew Fabricant told CNBC ahead of the sale.
On Thursday, the brokerage auctioned off 37 works from the collection of Jay and Cindy Pritzker of the Pritzker real estate dynasty. That collection had an estimated value of more than $120 million, and its crown jewel, a Vincent van Gogh painting from 1887, sold for $62.7 million or 35% higher than pre-sale estimates.
Meanwhile, Christie's said that it sold Monet's "Nymphéas" water lily painting, David Hockney's "Christopher Isherwood and Don Bachardy," and Mark Rothko's "No. 31 (Yellow Stripe)," for more than $40 million each.
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A cautious look ahead
Despite the general sense of optimism surrounding this week's sales, many wonder if this upswing will have staying power. As tastes change, the market has begun to shift, which may have a long-term effect on earnings.
Traditionally, older art collectors have preferred status trophies and pieces by well-known artists that demand higher prices. Meanwhile, younger collectors, who often have tighter budgets, are looking for pieces done by emerging artists at lower price points.
"The more mature collectors are aging out and the next cohort may come with different motivations or tastes," Bank of America Head of Art Services Drew Watson told CNBC. "Many of that older generation of collectors over the past 30 years — the hedge fund principals, the private equity investors — are getting to the point where they are not as focused on accumulation and more focused on succession and transition."
However, Watson says that the declines in market totals, which are largely driven by weaker sales at those high-end price points, have obscured the fact that the art market is thriving overall. Younger collectors are very involved at a gallery and art fair level, and are frequently making purchases directly from artists rather than going through auctions or secondary markets.
"Collecting as a lifestyle seems to be on the rise," he said. "The art fairs are packed."
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