Fast money on the art auction market: from Picasso and Basquiat… to flipping Ultra-Contemporaries


Pablo Picasso and Jean-Michel Basquiat represent two of the most important figures in 20th century Art History, but in auction market terms their works generate more turnover than any other artists living or dead. While Picasso regularly takes top position in our annual auction turnover ranking (with over $550 million in 2021), Basquiat reached second place in 2021 with a turnover total of 377 million dollars! These two signatures respectively constitute the ‘core’ of the Modern art market (Picasso) and of the Contemporary art market (Basquiat), and both seem to be on constant and remarkable growth paths. The pride of museums, they are also highly coveted by major collectors, some of whom generate superb financial gains when they decide to part with their major paintings.

Among the art market’s strongest capital gains in recent years, a work by Pablo PICASSO generated the most spectacular resale result in auction history. In 1997 his Les femmes d’Alger (Version ‘O’) appeared at auction for the first time during the dispersal of the Ganz collection at Christie’s where it reached $31.9 million, a price that was considered “stratospheric” at the time. Eighteen years later (2015), the same painting fetched a staggering $179.3 million, the highest art auction result ever hammered anywhere in the world (at the time)… plus 147 million dollars in just 18 years!


Pablo Picasso: world ranking at auction



Resales provide an exciting source of information on art market trends and while the exceptional increase in value of Les femmes d’Alger (Version ‘O’) tells us about the ever-more spectacular character of the “Picasso myth” (consecrated as the pivot of the art market), Jean-Michel BASQUIAT is today standing out as a serious competitor to the founder of Cubism. The highest ROI since the 2015 resale of Les femmes d’Alger (Version ‘O’) has been generated by Basquiat’s In This Case (1983) which resold at Christie’s in May 2021 after a similar holding period (just under 20 years). Reaching $93.1 million, its value rose over 9,000%, i.e. + $92.1 million! Picasso and Basquiat are of course extreme cases, being respectively number 1 and number 2 in the global auction market. When their best works appear on the market (having languished for many years in prestigious collections), these are events in themselves… events that mobilize the planet’s most powerful collectors attracted to the idea of owning and displaying (if only temporarily) some of the most essential artworks in history, and feeling that they are contributing to that history.


Basquiat: price index evolution at auction



However, in recent years, the holding period associated with “substantial returns on investment” has dramatically contracted on certain artworks that were acquired at the right time and then subsequently resold at the most strategic time and place. As Hong Kong becomes the new hub for the global Contemporary art market, a large work by Louise BOURGEOIS became, last spring, the most expensive sculpture ever sold at auction in Asia: a Spider IV sold for $16.5 million versus two million less in 2017, when Sotheby’s presented it at a New York sale.

Another more ‘confidential’ example concerns a work by the artist Moïse KISLING, whose price index has been growing slowly but surely for twenty years. One of his works – Portrait of a Young Woman (1931) – was purchased last year (11 March 2021) during an online Sotheby’s sale for $69,300 and subsequently resold in record time for $137,000 in Poland (the artist’s native country). That’s plus $90,000 in just 3 months! In this example, the place of sale was the key factor and although Sotheby’s is one of the world leaders in the Modern art market, the company had not attracted enough Polish collectors online to obtain the best price for the Kisling canvas. So, while Online sales clearly have a ‘global’ dimension, local marketplaces nevertheless remain targeted and effective sales channels for bringing competition to ultra-motivated national collectors.

Flipping on Red Chips

These days, astonishing value increases are observed on the Ultra-Contemporary art market. The practice of ‘flipping’ (the rapid resale of newly completed works by fashionable young artists) is spreading like wildfire, especially since the major auction houses are now actively participating in the price inflation of many young artists.

And yet flipping is regularly criticized by galleries and sometimes by the artists themselves, who know that overly rapid price changes can destabilize the fragile balance between supply and demand. In 2020 the Ghanaian-born artist, Amoako BOAFO (b. 1984) openly expressed his reservations to Bloomberg’s journalist Katya Kazakina just before the highly speculative resale of one of his paintings. In her article, Hot New Artist Laments That His Work Is Being Flipped for Profit, Kazakina relates that “Just eight months after Boafo finished The Lemon Bathing Suit – a portrait of his friend’s mother floating in a swimming pool – the Los Angeles-based entrepreneur who bought the canvas is reselling it at Phillips in London”, and she quotes Boafo as saying “Now he (Stefan Simchowitz) wants to profit from it… It’s truly sad. The paint is so recent”. The article was published the day before the Phillips sale on 12 February 2020.

Nevertheless, such considerations are of little consequence in the face of very substantial and very rapid profit-taking. Flipping has indeed become increasingly common in a globalized market where the major players (Sotheby’s, Christie’s and Phillips) actively seek to inflate the prices of their young ‘prodigies’ by fostering international competition (offering the works in New York, London and Hong Kong). Christie’s strategy – now focused on “prestige” sales that bring together works from the 20th and 21st centuries – allows artists in their thirties to be presented alongside masterpieces by Monet, Chagall, Picasso and monuments of Contemporary art like Damien Hirst and Jeff Koons. This strategy, which immediately positions the emerging generation in the same ballpark as the most established and expensive artists in art history, has worked wonders for many young artists like Flora Yukhnovich, Loie Hollowell and Shara Hughes. Indeed, Shara HUGHES’ market is so tense that we have already seen cases of resales generating substantial capital gains in record timeframes. On 21 January 2022 her painting HERE AND THERE (2007) fetched $208,000 in Hong Kong versus $73,000 on 10 July 2020 in the same city. That’s a price increase of approximately +188% after just two years of ownership.

The market for some young artists is so overheated that six- or seven-digit results sometimes seem easier to hammer for ‘fresh’ works than for Modern classics. Last October Flora Yukhnovich crossed the million-dollar threshold at the age of just 31 when Sotheby’s, having estimated her painting I’ll Have What She’s Having (2020) at $80,000 – $110,000, brought the hammer down at over $3 million…