The largest auction ever held by Sotheby’s in Asia of a single owner’s art collection raised less money than expected on Thursday, a sign that rising global interest rates may be starting to weigh on the market for fine art.
A portrait by Amedeo Modigliani sold for considerably less than predicted, and 10 other artworks failed to sell when bidding fell short of reserve prices.
The auction, which was held in Hong Kong and streamed online for bidders around the world, produced total sales of $69.5 million including commissions, Sotheby’s said. The auction house had predicted last week that the sale would raise $95 million to $135 million before subtracting fees.
China’s best-known art investor, Liu Yiqian, and his wife, Wang Wei, who has managed the museums that hold many of the couple’s artworks, were selling part of their large collection. Mr. Liu is a former Shanghai taxi driver who has said he made a fortune with investments in Chinese real estate and pharmaceutical stocks. He became a global celebrity in 2014 and 2015 by paying top dollar for Chinese antiquities and Western paintings.
In 2014, he paid a record $36.3 million for an ancient Chinese porcelain cup, followed by $45 million for a 600-year-old silk wall hanging. He paid $170.4 million for Amedeo Modigliani’s risqué “Nu Couché” painting a year later. To display these and other purchases, Mr. Liu and Ms. Wang built three museums, two in Shanghai and a third in Chongqing, China.
Those three items were not included in Thursday’s sale. The auction did include a different Modigliani painting, “Paulette Jourdain,” which Sotheby’s had sold for $42.8 million in 2015.
Sotheby’s had predicted that it would sell in Thursday’s auction for “in excess of $45 million.” But the portrait ended up fetching $34.9 million, including fees.
Sotheby’s said this was still the highest price paid in Asia for a modern Western work.
Art investors face a difficult global environment as interest rates around the world have surged. Higher interest rates have made it more attractive to park money in bonds or bank accounts instead of assets, like art, that pay no interest. Owning fine art offers aesthetic dividends, but the security and insurance costs can be considerable.
An increase in interest rates “changes the calculus and incentives to store part of one’s assets in art,” said Amy Whitaker, an associate professor of art and economics at New York University.
A painting by René Magritte, “Le Miroir Universel,” which had a previously estimated price of $9 million to $12 million, sold for $9.9 million on Thursday — still a record for the artist at an auction in Asia.
But 10 of the 40 artworks sent to auction went unsold because the final bids were lower than reserve prices set as the minimums for a transaction to take place. A painting by Léonard Tsuguharu Foujita, “Nu au chat,” with a previously estimated price of $5.1 million to $7.7 million, and a David Hockney painting, “A Picture of a Lion,” for which the estimated price had been $5.4 million to $7 million, were the most valuable of the unsold paintings.
A painting by Wang Xingwei was withdrawn from sale shortly before bidding began. But it had an estimated value of $255,000 to $383,000, so the withdrawal appeared to have little effect on the overall proceeds from the auction.
Bidders appeared to be bargain hunters, competing for the least expensive artworks on sale, particularly by younger artists still working today, while demonstrating less interest in higher-priced offerings. The auction had a strong start, for example, with the sale of “Room With Venus” by Ji Xin, a contemporary Chinese painter.
The artwork, which had a date of 2021 on the back, had an estimated price of $38,000 to $64,000. But the winning bid was $243,000, including auction house commission.
Art investors do not just follow interest rates but “are often championing the economic sustainability of artists,” Dr. Whitaker said.
As the auction continued into the evening, there was a hint that market weakness might extend beyond fine art. Separate from Mr. Liu and Ms. Wang’s collection, Sotheby’s also auctioned an 11.28-carat blue diamond set with smaller diamonds in a gold ring. It fetched $25.3 million, including commission, compared with a prior estimate of $26.6 million to $36.8 million.
Mr. Liu and his family helped build one of China’s largest art auction houses, the Beijing Council International Auction Company. In 2016, Beijing Council was acquired by Jiangsu Hongtu High Technology, an electronics retailer in which Mr. Liu and his family held the second-largest stake.
But Beijing Council stopped holding auctions in 2020, at the start of the pandemic, and never resumed after pandemic restrictions were lifted 10 months ago. Jiangsu Hongtu disclosed in April a wide-ranging falsification of its financial statements from 2017 to 2021, and the value of its shares collapsed. The Shanghai Stock Exchange then delisted the company over the summer.
Jiangsu Hongtu said in April that regulators had blamed the false information on executives at the company and at its controlling shareholder, Sanpower Group. Mr. Liu and his family were not implicated or punished by regulators in connection with Jiangsu Hongtu’s difficulties.