Does Modigliani show us the best investment art is in short supply?

28 August 2018|investment |James Nicholls

Does Modigliani show us the best investment art is in short supply?

A new record was set earlier this year when a Modigliani artwork achieved the highest ever auction price for a work sold at Sotheby’s. The piece also carried the highest guarantee ever given by the company. Does this suggest that demand for the best investment art is rising, while supply is on the decline?

Does the best investment art now cost millions?

In May 2018, Amedeo Modigliani’s 1917 painting ‘Nu Couché (Sur Le Côté Gauche)’ sold for $157.2 million, the highest auction price ever for a work sold at Sotheby’s. The auction house also confirmed that its $150 million estimate was the highest to ever be placed on a work at auction.

Perhaps even more noteworthy, however, the painting also carried the highest guarantee ever given by Sotheby’s. In the case of an auction lot exceeding the guarantee price, the guarantor earns a percentage of the surplus amount, thereby benefitting the auction house. However, by assuring a minimum price to the owner, Sotheby’s was also risking millions. So what made Sotheby’s so sure the artwork would exceed its price tag?

Modigliani is in high demand

The guarantee confirms that buyers can be secured in advance for the very best investment art. But why?

The Modigliani painting was consigned to Sotheby’s by art collector John Magnier, who won the work at auction in 2003 for just $26.9 million, which was a high for the artist at the time. In just 15 years, the artwork saw a 484% return on investment.

At 147cm wide, ‘Nu Couché (Sur Le Côté Gauche)’ is the largest work Modigliani painted, and the majority of his reclining nudes are in museums, mostly in the US. In New York, the Guggenheim, the Museum of Modern Art (MoMa) and the Met own one each, and the only Modigliani in the UK is in the Courtauld gallery in London.

A record $170.4m was paid for another Modigliani in 2015, when ‘Reclining Nude,’ another of his 22 nudes from the period, was sold to Chinese billionaire Liu Yiqian and his wife, Wang Wei, making the painting the second most expensive ever sold at auction.

The good

Simon Shaw, the co-head of Sotheby’s impressionist and modern art department, told The Guardian the increase in the painting’s value “reflects the growing love of Modigliani’s work and the significance of this piece in his oeuvre.”

“It’s a masterpiece-driven market, collectors are increasingly good at differentiating the best from the rest and this is an A+ piece from an A-class artist.”

The seller may have also capitalised on the painting’s recent inclusion in the Modigliani retrospective at Tate Modern in London. However, perhaps there were other factors at play.

The bad

With a majority of blue chip works in public and private collections, it’s argued that the best investment art rarely comes up for sale. As a result, there can be a feeding frenzy when the moment does arise. “You cannot find any more masterpieces,” dealer David Nahmad explains.

Throughout the investment art market, the number of works selling for $100 million or more keeps on growing. Jean-Michel Basquiat’s ‘Untitled’ painting sold for $110.5 million last year, while Pablo Picasso’s ‘Women of Algiers’ sold for $179.4 million in 2015 and Andy Warhol’s ‘Silver Car Crash (Double Disaster)’ sold for $105.4 million in 2013.

“Basically, $100 million is where one has to begin to price a truly great work by any of the major artists,” states David Norman, art adviser and former vice chairman of Sotheby’s Americas.

Where can the best investment art can be found?

Here at Maddox Gallery, we disagree with this sentiment. When it comes to identifying the best investment art in the market, there can be a huge variety in price.

While trophy works by blue chip artists are very likely to hold their value, the most dramatic returns on investment can often be seen from emerging names. For instance, we have seen pieces by Michael Moebius and Bradley Theodore soar in value within a year, thanks to collectors buying incredible works as the artist’s star is starting to rise.

What’s more, it’s still possible to invest in household names in the investment art world. Maddox Gallery shows a range of pieces by established artists such as Banksy, Damien Hirst and Andy Warhol. Please get in touch and speak to one of our expert Sotheby’s-trained art consultants to find out more about the best investment art for your needs.

If you want to learn more about investing in contemporary art, take a look at ‘The Six Key Factors to Consider When Making an Art Investment.’ To find out more about any of our represented artists, please contact Maddox Gallery. Our Sotheby’s-trained art consultants will be happy to provide expert advice.

Written by James Nicholls, Chairman, Maddox Gallery.

e0a6a096 e20c 4d34 a30e 32354077e675 - Does Modigliani show us the best investment art is in short supply?