Korea's art auction market loses steam amid subdued leveraged investment

The pandemic heyday may be coming to a close on the Korean art auction market amid global tightening in loose liquidity that has splashed cold waters on leveraged investment and high-risk assets.

Paintings by top artists Park Seo-bo Lee Ufan, and Yun Hyong-keun with price tags of over 500 million won ($402,868) each failed to sell by Seoul Auction, Korea’s first and largest art auction house. Last Wednesday, Javier Calleja’s artwork, one of the signature pieces at the auction house was sold at 880 million won, lower than the anticipated price of over 900 million won.

Artwork bidding rate at Korea’s two auction majors, Seoul Auction and K Auction, have steadily gone down, marking 75.2 percent and 83.5 percent in May.

According to the Korea Art Authentication & Appraisal Research Center (KAAARC), the auction turnover by the two auction houses from January to May amounted to 94.1 billion won, 24 percent up from a year ago, but its growth started slowing down since February.

The subdued demand for artwork biddings has been somewhat anticipated after many masterpieces, such as Chun Kyung-ja’s “Woman” and Lee Jung-seop’s “Chickens with Family,” canceled purchases at the last minute, said a source in the auction industry. “The bubbles may be fizzling out,” said Jeong Jun-mo, head of the KAAARC. “It has become doubtful to judge a boom from so-called young rich.”

The waning demand for artwork bidding also coincides with the bearish sentiment toward risk assets like stocks and cryptocurrencies amid fast rising interest rates and the Terra/Luna collapse.

While the domestic market is downbeat, the overseas markets enjoyed somewhat solid appetite for artwork bidding despite the shock from the financial market.

Christie’s Hong Kong auction exceeded HK$1.4 billion ($181.42 million) with a success rate of 93 percent, selling artworks of Pablo Picasso and David Hockney. In the first quarter, three major auction houses on the globe, Christie’s, Sotheby’s, and Philips, posted $1.66 billion in combined sales, up 32 percent from a year ago. However, as Andy Warhol’s “Shot Sage Blue Marilyn” was sold for $19.5 million, short of the expected $200 million, signs of a downward trend are felt in the overseas auction market.

[ㄏ Maeil Business Newspaper & mk.co.kr, All rights reserved]