Overstone Art Market Liquidity Insights 2020

While 2020 was clearly a volatile year in the art market, the second half included sustained online activity. Although the market contracted 40% in volume, the total number of offered lots sold well, and the overall market liquidity (as measured by the Overstone liquidity scoring system) rose over 2020. Our Expert Guest, Harco van den Oever, CEO of Overstone Art tells us more.

Market Volatility

2020 was a volatile year in the overall markets, and the art market was no exception. 

While the first half of 2020 saw many of the most significant auctions cancelled (first in Asia, and later in Europe and the US), the second half included a significant amount of high profile auctions and online activity. 

Despite the recovery in the second half, the market contracted considerably in volume, with nearly a 40% decrease in activity (though only a 30% drop in value according to the UBS Art Market report, a telling sign). 

While the total number of lots sold during 2020 decreased when compared to previous years, when lots were offered, they sold well. In fact, when examining the overall market liquidity (as measured by our proprietary liquidity scoring system ARM), it rose over 2020, as can be seen in the graph below. 

Overstone Art Risk Monitor (ARM score) measures liquidity
The Overstone Art Risk Monitor (ARM score) measures liquidity on a scale of 1-100, with 100 being the most liquid. 

Artwork Liquidity and Market Depth

A liquid work indicates a depth of market and a significant volume of interest. In the context of an auction it is this volume which will not only contribute to a work being sold, but selling at a higher price than the auction estimate. 

One way to measure the depth of the market is by frequency and volume of activity, indicating a robust market. As it is exactly the volume of transactions that has dropped this year, the rise in liquidity is all the more interesting and indicates other factors in a work selling particularly well. 

In the above graph the average market ARM score rises for the high 50’s to mid-60’s. 

One curious change in the art market in 2020 vs previous years is that those items that are most liquid had higher realized prices vs their estimates, suggesting that even in a market downturn, highly liquid art assets still sell well. 

This can be seen in the graph below, which compares the lots with an ARM score higher than 50, examining their performance in 2020, vs pre-2020.

The X axis percentages measure the realised price versus the minimum auction estimate. 

Overstone realised price versus the minimum auction estimate

Art Period Analysis

The ARM score shown in the graphs above is of the overall art market. However, when examining different Period Categories in the graph below, it is clear that the group which contributed most to the positive trend in the market liquidity is that of artworks post-2000. 

The interpretation of this statement means that at a given moment, statistically, there would be a higher demand for that work in the market. 

As with other trends, 2020 did not necessarily generate a new trend, but accelerated an existing one. This is evidenced in the rise over time (and dramatic uptick) of the post-2000 category. 

While the Impressionist and Modern category seems relatively stable, an interesting development is the slight rise in performance of Old Master works. While this is no doubt aided by top lots sold as the $92 Million Botticelli sold recently, this bump exceeds the performance of 2017 during which the Da Vinci Salvatore Mundi sold for $450 Million. This indicates that the change in performance belongs to the category overall rather than the performance of a single work. 

Liquidity and Market Sales per Art Period 

Author Bio – Harco van den Oever

Harco van den Oever - Overstone Art

Harco van den Oever is CEO of Overstone Art, founded in 2012. He served 12 years at Christie’s as Continental European Head and Global Managing Director of the Impressionist and Modern Art Department. With another 12 years in debt capital markets under his belt at Paribas, Bankers Trust, and Credit Suisse First Boston, Harco also founded Fredfinds.com, the UK’s first online mortgage brokerage business, acquired in 2001 by Netwindfall Ltd. Harco has an MBA from University of Hartford and is an INSEAD alumnus.

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