December 13, 2012 5:20 pm

Indices: December 2012

HAGI Classic Car Index

Car prices take another downward turn

By Dave Selby

The classic car market has undergone a correction over the past three months – but trading volumes have remained healthy throughout this period.

That implies a market that accepts the downward adjustment from an all-time peak at the end of August, when the HAGI Top 50 classic car benchmark index from Historic Automobile Group International hit 167.65. Since then the index, which measures the market in high-end collector-grade vehicles, has dropped back in undramatic incremental steps to end November at 161.37, down 3.74 per cent on the summer bright spot.

However, over 2012 the HAGI Top 50 has posted a very impressive year-to-date gain of 16.17 per cent, and that certainly is one of the factors contributing to continued healthy trading volumes. Indeed, the very best cars are selling quickly, and brokers have confessing to difficulty in acquiring quality stock.

Among the models that are showing strongly are: Mercedes-Benz 300SL Gullwings at £600,000 and up for top restored cars: Bentley R-type Continental Fastbacks at £750,000-plus for the right cars; and the Porsche Carrera RS 2.7, now closer to £400,000 than £300,000 for the best examples. Today’s values represent substantial gains on 2012 year-opening figures.

At auctions since the summer peak, record prices have been notable in their absence. At RM Auction’s Battersea Park event on the last day of October the top seller was a 1959 Ferrari 250GT Tour de France that sold for £1.96m. Estimates of more than £2m had been hoped for but the consensus was that the price was appropriate for the car – it had an interesting in-period Italian privateer race history, with a well-documented history. The overall sale total of £14.27m (up £1m on last year) and sale rate of 84 per cent reflects a market where there is plenty of active trading.

An emerging feature of the market is an increasing variation in prices among some higher-volume models. Higher or lower prices sometimes reflect condition, provenance, originality and so on – but not always. For example, Ferrari 246GT Dinos have recently traded at auction at prices ranging from £101,000 to £224,000. Another factor is the entry of new players eager to gain a foothold.

Ferrari detractors have latched on to the fact that there are plenty of Dinos, along with Ferrari 365GTB/4 Daytonas, selling at lower levels as proof of a potential weakness in the market. But in fact the weakness is in the cars. To some extent the same applies to Aston Martin DB5s, which routinely crop up at auction in numbers that belie their relative rarity.

Another factor helping to maintain healthy turnover volume is a need for liquidity among some existing collectors. For those in that situation it may be some consolation that, if they acquired wisely, the assets being disposed of will have appreciated by more than 61 per cent since December 2008.

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Liv-ex Fine Wine 100 Index

Fine wines struggle on in downturn

By Louis Supple

The market for fine wines continues to struggle in the economic downturn. The Liv-ex 100 index, the industry’s leading benchmark, was generally positive in August and September but October was less promising – the Liv-ex 50 ended on 297.7, down 0.44 per cent on the previous month. The Liv-ex 100 also dropped, falling 0.64 per cent to the end the month at 258.4 – down 9.8 per cent on last year.

This is particularly disappointing because October was the busiest month of the year for auctions. A Liv-ex analysis of auction results for this month shows that many wines sold below their Liv-ex mid price.

A recent survey by the fine wine marketplace indicated that in the current economic climate investors are looking at safer investments and cutting back on luxury purchases, affecting both those who buy in the hope of making money, and those who buy fine wines to drink.

However, auction sales for November showed signs that the market may be recovering. Christie’s rounded off the month in Hong Kong with a three-part sale that fetched a total of HK$108.39m ($14m), led by a case of Romanée-Conti 2005 Domaine de la Romanée-Conti, which sold for HK$1.69m, and 12 bottles of the same producer’s 2007 that reached HK$968,000.

Bordeaux remains the core element of the fine wine market, reflecting 80 per cent of Liv-ex trade.

Wines from 2009 are particularly popular, accounting for nearly a third of Bordeaux trade by value with the recently upgraded Pavie among the most popular of the 2009s on offer.

The 2005s also took a sizeable proportion of trade, with 13.8 per cent, while the Grand Cru Classe A Cheval Blanc took 40 per cent of all 2005 trade.

Looking ahead, Dutch bank Rabobank, which has specialist expertise in the wine trade, points to a number of exciting growth prospects. “While China and South Korea probably rank as the most attractive emerging wine markets, Rabobank has identified Mexico, Brazil, Poland and Nigeria as four ‘hidden gems’ that have the potential to become important growth markets,” the bank says in a report.

“Early investments to establish a route to market and build brand awareness hold the key to long-term growth in these markets.”

This month the wine trade will inevitably be focused upon Christmas and so it will be difficult to gauge underlying market conditions.

But in a recent competition by Cellar Watch, the wine data provider, its collector members from around the world were invited to predict the year-end level of the Liv-ex Fine Wine 100 index.

Predictions were generally optimistic – 77.8 per cent of respondents expected that the index would rise by December 31. The average guess for its level was 268.74, which would mean a 3.3 per cent rise from September.

The first test of those predictions will come in early January with the tasting of the 2011 Burgundy en primeur.

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Artprice Global Index

Art market ‘robust’ despite seasonal results blip

By Louis Supple

Auction house Sotheby’s provided an indication of the health of the art market recently with the release of its financial results for the third quarter of 2012.

Despite a pre-tax loss of $46.4m for Q3 (against $57.9m for the same period in 2011), an upbeat Sotheby’s dismissed the figures as symptomatic of seasonal trends – the third quarter is traditionally lossmaking at Sotheby’s and represents only 7-10 per cent of its annual auction sales.

The auction house also says the reduction in income was offset by an increase in revenues from private sale commissions and a reduction in company expenses. Bill Ruprecht, president and chief executive of Sotheby’s, said: “The art market remains quite robust, especially at the high end.”

Prices achieved last month in New York by rival auction house Christie’s offer further proof of the resilience of the market. A series of postwar and contemporary art sales featuring work by Jackson Pollock and Mark Rothko fetched more than $1bn.

Less certain is the health of the contemporary Chinese art market. Confidence looks increasingly fragile, with the Chinese Art Market Confidence Indicator from ArtTactic, the art market research company, dropping 35 per cent from May 2012.

The indicator now stands at 49 – out of 100 – suggesting that opinion is almost evenly split between experts positive about the market and those that feel increasingly pessimistic.

Meanwhile, the main auction houses continue to see China as the leading global market. Mr Ruprecht acknowledges that growth in China is slowing, but maintains the country’s prospects still make the rest of the world “look very pedestrian”.

Sotheby’s has invested heavily in the region, announcing a joint venture with Beijing’s state-owned GeHua Art Company in September, meaning it will now be able to hold auctions on the mainland.

Christie’s also maintains that the Chinese art market is relatively strong at the moment. Francois Curiel, president of Christie’s in Asia, says recent results “dispel any doubt that the Chinese and Asian markets remain vibrant and strong, with active buyers and major collectors from the region participating at high levels. The quality of works offered consolidates the role of Hong Kong as a leading auction centre that attracts a global audience competing for the best works available.”

As for other regions, according to ArtReview magazine’s Power 100 list, Brazil is the most exciting of the emerging markets for the art industry.

Leading western dealers are now establishing a presence in the region. The Gagosian Gallery staged a temporary exhibition worth $130m to coincide with the ArtRio fair in September. White Cube added to the buzz at that time by announcing its plans to open a space in São Paulo on December 1 with a show of works by British artist Tracey Emin.

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