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July 25, 2013 5:15 pm
Classic car market shuns cash when doing business
By Dave Selby
Just imagine this. It is 1986, the age of the ‘yuppie’, and the international classic car market is soaring towards a peak. In your garage there nestles a rare and exotic 1950s Maserati A6G sports coupe with exquisite Zagato body.
Then, in the cold light of day, someone offers you a 1970s Ferrari 365 GTB/4 Daytona plus some cash in exchange for your Maserati.
That was the precise question posed to a prominent Italian surgeon in 1986. What would you do?
Back then Daytonas were hot properties – “blue-chip appreciating assets”, so that would have been a factor. We will never know how much cash was offered on top of the Daytona, but it is not strictly that relevant.
Fast forward to June 29 2013 and that Daytona is being released from the enthusiast’s collection after 27 years at a Coys’ auction at Blenheim Palace, Oxfordshire. It is reckoned to possess “extraordinary originality” and on the day it realised £304,000, pretty much regulation money for a Daytona at auction in today’s market.
That was also what Daytonas were making in 1989, the peak of the 1980s boom. As for the Zagato-bodied Maserati A6G, these days it is likely worth is at least three or four Daytonas, which is proportionately considerably more than in the late 1980s. So, it would be fair to assume that whatever amount of cash was added on top of the Daytona, it was not enough.
What this demonstrates, on the one hand, is just how much shade, texture and tone there is in the classic car market, with a wide variation in price-performance curves over the long term. What it also shows is how unreliable cash is. In fact, in today’s market it is just about the last thing anybody wants, as the latest figures from the HAGI Top illustrate.
In June, the HAGI Top classic car index gained 1.84 per cent. Meanwhile global equities, as measured by the S&P Global 1200, dropped back 2.89 per cent over the same time period. That is certainly gratifying for collectors and investors who have resisted inducements to sell but it is not the headline story.
In the first place, June’s relatively modest gain has taken the HAGI Top to a new all-time high of 194.34. In April alone, the HAGI Top gained 8.55 per cent, contributing to quarter-on-quarter growth of 11.81 per cent, which closely corresponds to the market’s historic long-term compound annual growth rate from 1980 to 2009. In simplest terms it has taken the HAGI Top three months to achieve what “normally” takes place in a year.
So why would you want money or the other things you can do with it. That is certainly a sentiment being expressed within the trade, particularly among stockholding dealers – as opposed to brokers on percentage – who regard the sale of high-quality stock as lost profit, such is their confidence in the continuing strength of the market. For others, the only attractive transactions are part-exchange deals.
It also helps explain why June was a relatively quiet month in terms of trading volume. Aside from the seasonal holding pattern that generally forms this time of year, there is little inducement to sell except in cases of personal need or the pursuit of new classic driving experience.
It is easy to understand the mindset, considering the HAGI Top has posted year-to-date growth of 21.34 per cent and an even more bullish 27.64 per cent year-on-year.
Liv-ex Fine Wine 100 Index
Rarest of wines buck stable market trend
By Sam Judah
A string of rare Burgundies from winemaker Henri Jayer were the stars of a remarkable auction at Sotheby’s earlier this month, though the index of leading wines shows little sign of movement.
Eleven bottles of Jayer’s 1970 Richebourg sold for more than double their high end estimate, reaching £72,850, and three further wines bearing his name were in the top five lots at the London sale.
Fine vintages from the famed French region can still command impressive prices, and Jayer – who died in 2006 – has become one of Burgundy’s most desirable producers.
“There was very strong Asian activity in this sale, bidding with enormous brio online,” says Serena Sutcliffe, Sotheby’s worldwide head of wine.
David Elswood, head of wine at Christie’s agrees that “buyers are prepared to pay significant premiums for the rarest wines,” with the market for those with excellent provenance “strong across the board”.
Their performance is not representative of the market as a whole, however. The Liv-ex 100, which reflects the movement of the 100 most sought after fine wines, remained almost unchanged falling 0.4 per cent. Though the data does not include the result of July auctions, it does reflect the current market trends. The index is comprised primarily of Bordeaux which have slid considerably from their 2011 peak.
The results mark the end of a disappointing second quarter, which failed to match the modest gains made in the first few months of the year.
As buyers diversify away from Bordeaux, however, Champagne has seen prices rise steadily through much of the year, and many brands have now established themselves as fine wines. The 1996 Krug leapt 10 per cent in June alone, and Cristal 2002 and 2004 also showed impressive growth. The sparkling wine is increasingly viewed as a safer and more affordable investment than more volatile first growth Bordeaux. Cristal 2004 accounted for nearly a fifth of the Champagne trade in June and, at a little over £1,200 per case, it is attracting more investors.
Outside of France, Sutcliffe notes huge interest in Vega Sicilia, an iconic Spanish wine producer located around 100 miles north of Madrid, whose reds have long been considered among the finest in the world. Supplies of its best vintages were readily available in the early 1990s but are now far scarcer and – in response – prices have soared. Aged at length in French and American oak casks, the Spanish estate withholds its wines until it considers them ready to drink. Unico, its flagship wine, is aged for between 10 and 25 years before being released to the market.
Looking ahead, Elswood thinks that investors’ appetite for scarce wines from prestigious vineyards in the heart of France will continue to be the most salient trend over the coming months. “It seems likely that the market’s attention will continue to rest on rare Burgundy,” he says.
Sutcliffe agrees that there is an insatiable thirst for the region’s finest wines, pointing to impressive auction results for another of its leading producers. In the same auction a handful of lots from Domaine de la Romanée-Conti breezed comfortably past their guide prices. “It is all about demand for the best,” she says.
Artprice Global Index
Specialist territory attracts wider interest
By Sam Judah
The imposing image of “Saint Dominic in Prayer” – last exhibited over 75 years ago – took bidders by storm at a Sotheby’s auction of Old Masters this month.
One of two paintings on offer by El Greco, it achieved an unprecedented £9.15m, almost double its high end estimate and a world record for the artist.
Seven further records were broken on the same evening including the highest ever price for a female Old Master, with the sale of Rachel Ruysch’s “Still Life Of Roses” for £1.65m.
“Generally the market is performing extremely well,” says Helena Newman, Sotheby’s chairman of Sotheby’s European impressionist and modern art department.
“What’s interesting to note is strong bidding on works on paper,” she added, referring to both drawings and watercolours.
Previously the domain of specialist collectors, interest in the category is now much broader. “The geographical base of buyers has expanded,” says Newman, who thinks an improved understanding of how to preserve the works has given buyers greater confidence. Raphael’s black chalk drawing, “Head of a Young Apostle” sold late last year for a shade under £30m.
It is not the only category usually considered the realm of specialists which is attracting interest from a wider range of customers. A New York sale earlier this month included a selection of antique rugs which also defied expectations.
One Iranian carpet that had lain in the apartment of a New York politician for years – now visibly worse for wear – stormed past its high end guide of $1.2m. The hammer finally came down at $4.65m.
Soon afterwards the star lot, another piece from 17th century Persia, broke all records for a rug from the Middle East. A protracted auction saw four bidders fight for the carpet, estimated to attract up to $7m, with the final bid reaching $33.76m.
Sales of contemporary art in London at the end of June did not prove quite so dazzling. Around a fifth of the lots at a Christie’s auction went unsold, with some commentators suggesting that more obscure artwork made for a riskier investment in times of recession.
Jean-Michel Basquiat’s 1982 painting “Untitled” – in his trademark scribbled, colourful, style – was the most successful lot, fetching £18.76m. “Cup of Coffee”, a 1961 piece by Roy Lichtenstein that is not immediately reminiscent of his iconic Pop Art images, achieved a healthy £2.8m nonetheless.
A similar proportion of work failed to sell at Sotheby’s rival sale. The evening’s centrepiece, Francis Bacon’s “Three Studies of Isabel Rawsthorne” from 1966, only just beat its low end guide of £10m.
The Artprice Global Index fell to 72.62 this month, reflecting a lower volume of total sales. Martin Bremond, head economist at Artprice, thinks the drop is the result of less inventory being released to the market at this time of year. “During the summer, prices tend to fall due to the lack of good auction material,” he says.
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