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Buyer interest pushes prices through
the roof at auction |
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While the
general diamond jewellery market has only started seeing widespread
growth again in the past year, following the slump brought on the
global financial crisis, the high end of the market, specifically
the auction sector, has seen extraordinary levels of activity for
close to three years.
Indeed, the international auctioneers
are struggling to keep up with demand, as collectors and investors
appear to be ready to break records at every opportunity for high-end
diamonds and jewellery. Several auctions in the past three years have
seen amounts garnered for the top 10 items raising the same amount
as those for entire jewellery auctions in the past.
There is no single reason for the exploding
prices, say the auction houses. Clearly rich buyers from developing
countries have been active in the high end of the market. In addition,
the Internet and widespread use of mobile phones, which has led auctioneers
establishing phone bid departments working in real-time during sales,
have also played a part in boosting prices, by enabling more bidders
to take part. In addition, continuing concerns about the global financial
markets have helped drive up the price of gold, silver, diamonds and
precious stones and jewellery, said one industry expert. |
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”It’s
difficult to give a specific explanation for the rise in prices,”
he said. “Sometimes it is investors looking to place their money
in non-financial assets, and it is often collectors who are snapping
up rare items, the type of jewellery that only comes on to the market
once in 30 years or even longer.
”The
Far East is becoming increasingly important and we are seeing many
buyers from China and Hong Kong. But the American market remains important
and there are a lot of wealthy buyers in Russia, Brazil and the Middle
East due to rising oil and commodity prices. There appears to be a
good spread of buyers and the market is very healthy,” he said.
Rahul Kadakia, Head of Jewelry,
Christie’s Americas, said the rise in prices can, in most cases,
be attributed to increased demand from a growing global community
of both private collectors and trade buyers, coupled with increased
scarcity, particularly for large oloured and D flawless diamonds.
He pointed to several recordbreaking
sales the auction house has held in the past two years that have set
new per-carat records. These include a blue diamond, the Bulgari Blue,
sold at Christie’s New York in October 2010 for $15.7 million,
or $1.4 million per carat; a colourless diamond, the Annenberg Diamond,
sold at Christie’s New York in October 2009 for $7.7 million,
or $240,000 per carat; and for any diamond sold at auction, the Vivid
Pink, sold at Christie’s Hong Kong in December 2009 for $10.8
million, or $2.1 million per carat.
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Is it logical
for the price of high-end jewellery items to soar in the midst of
an economic downturn, with the U.S. economic recovery remaining weak,
and sovereign debt issues affecting several European countries, most
notably Greece, creating widespread ripples of fear across global
markets? “Jewels have long been regarded as a very stable and
highly portable store of wealth over the long term, so an upward trend
in tangible, portable assets like diamonds is not wholly unexpected
during times of economic volatility,” Kadakia commented.
”That said, we have been
pleasantly surprised to see very strong gains for Christie’s
in this category through the downturn. The year 2010 proved to be
the strongest ever for Christie’s global jewellery department,
with $426.4 million in total sales, which represents a 56 percent
increase over the Christie’s 2009 total for jewels.”
Indeed, Christie’s is confident
that prices will continue to remain high this year. “Christies
Spring 2011 season was our best ever from a global jewellery sales
perspective, with approximately $231.5 million in sales and very strong
prices achieved for top diamonds and signed jewels in our Geneva,
Hong Kong, New York and London salerooms. Barring any greater economic
events, we do expect this positive trend to continue into the fall,”
Kadakia said.
As for the countries
leading demand for high-end jewellery, Kadakia said that Christie’s
hosts 14 major jewellery auctions annually in New York, Dubai, Geneva,
Paris, Hong Kong and London, with smaller sales throughout the year
in Amsterdam, London South Kensington and Milan. “Because every
sale is accessible online and on the phone as well as in person, each
one of our jewellery sales is increasingly becoming an international
event, with bidders from dozens of countries participating in every
major sale.
”Our jewellery
sales calendar is very well balanced globally among our major sale
sites in New York, London, Dubai, Geneva and Hong Kong, with strong
sales results for each. We continue to host two major sale weeks each
year in Hong Kong, with additional stand-alone sales added as needed
for important estate and single-owner collections. Our decision to
add or expand sales in that region will be driven by client needs
over time, so that we can continue to achieve the best results for
our consignors at auction.
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”In
general, Christie’s New York sales draw strong buying from
within the United States, but also from the U.K., Europe, South
America, Asia, Russia, India, and the Middle East. The same is true
for our sales in Hong Kong, where Asian buyers dominate the buying,
followed by Russian, European, Middle Eastern and American clients.
Our Geneva sales draw a strong European trade component, followed
by private collectors from all across Europe, Russia and the Middle
East,” he said.
However, he said, Asia is a very
important growth region for Christie’s, with jewellery sales
totalling $163 million last year for Christie’s Asia which
was the leading sales region. Asia was followed by Christie’s
Americas. with $130.5 million. “Our major May jewellery sale
in Hong Kong achieved nearly $90 million, making it the largest
jewellery sale ever held in Asia. We do expect the market there
to remain strong, as even more private collectors enter into the
auction marketplace.
”Meanwhile, Jonathan Stone,
Christie’s managing director in Asia, said Hong Kong would
continue to attract millionaires from greater China, and Asian countries
such as Indonesia and South Korea in greater numbers. “There
will be a point when Hong Kong is on the level of London and New
York. In Asia that is really a great objective to have ... let’s
say something between 5 and 10 years perhaps,” Stone said.
In terms of a breakdown of who is
buying the big-ticket items, Kadakia said that private collectors
have become “formidable competitors” in a field that
that was dominated for many years by dealers and members of the
trade. Although the trade is still very active, private collectors
have become increasingly powerful due to a “greater familiarity
and comfort with the auction process”.
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He explains that among private buyers, “the motivation to
buy diamonds and fine jewellery may be in part driven by an investment
strategy, but more often than not we find the primary motivation
is a great appreciation for design and artistry, When exceptional
period jewels from the
great houses come up at auction, our clients now regard it as a
rare collecting opportunity, much as they would a master work by
Picasso or
Monet. Every major collector I know wants to acquire a great diamond,
special signed jewel, or a rare coloured gemstone for their collection.”
The strength of the auction market
for jewellery was confirmed by David Bennett, Chairman of Sotheby’s
Jewellery Department for Europe and the Middle East. Following the
sale at Sotheby’s Geneva of a 10.99-carat pink diamond at
its Magnificent & Noble Jewels auction last month, he said,
“I do not remember the market for coloured diamonds to have
ever been as strong as it is today. This was underlined by the unprecedented
results of our last November sale and undoubtedly influenced the
owner’s decision to sell this beautiful pink diamond which
has not appeared on the market for over 30 years.
”Sotheby’s reported total
sales of $4.8 billion for 2010, with $161 million in net profit,
the best figures since 2007. Auction sales soared to $4.3 billion,
and sales of jewellery surged 113 percent to $405 million. Sotheby’s
total Hong Kong auction sales doubled in the first half of this
year to $540 million from the same period last year due to soaring
demand.
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The interest
in such a wide range of goods also shows the strength of the market,
Bennett said following the sale last December by Sotheby’s of
a bracelet owned by Wallis Simpson, whose love affair with Edward
VIII led to his abdication in 1936. It sold for a world record $7.3
million at auction. It was one of 20 pieces owned by the late Duke
and Duchess of Windsor to go under the hammer in the sale, which raised
almost $13 million compared with a pre-sale estimate of around $4.8
million.
“Wherever we
exhibited the jewels – whether it be Moscow, New York, Hong
Kong or the Middle East – the response was extraordinary, and
the Windsor collection was introduced to a new audience of buyers.” |
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Perhaps the
best example of the way the market has taken off for jewellery at
auction was with the sale of one of the world’s rarest diamonds
for a record-breaking $46 million. The 24.78-carat fancy intense pink
diamond was sold to well-known British jewellery dealer Laurence Graff
at an auction in Geneva. Bidding at the Sotheby’s auction was
fierce, pushing the price beyond expectations since it had been expected
to sell for around $1 million per carat. The excitement caused by
the sale led bidders and spectators at the sale to break out into
spontaneous applause. “This was the highest price ever bid for
a jewel at auction,” said Bennett, adding that Sotheby’s
sold jewels worth $105.1 million at the sale, a world record for a
single sale. Bennett said that the very best jewels are offered for
sale at the May and November sales in Geneva where the market is strongest.
But why are auctions the preferred
sale venue. If they inevitably lead to a buying frenzy, why don’t
buyers try to buy goods in private deals. “Firstly,” says
an auctioneer, “a great deal of trade is done privately. Because
it is private, we cannot know how is being paid for similar goods
and so the spotlight inevitably falls on goods sold at auction where
sales are open and media interest is intense.
”From the seller’s point
of view, it is worth selling his goods at auction because he is more
likely to get a better price, even when subtracting fees. Sellers
are looking for the best price, and auctions tend to be preferred
way as the jewels are exposed to the widest possible market that includes
private collectors as well as dealers.
”In addition, sellers often are
not experts in the jewellery field so they need a specialist to tell
them exactly what the items are and how much they could achieve at
auction. If they went to a dealer, he would tell them what was his
interest, not theirs. We can ensure that does not
happen and we also know private clients. We can then advise you on
the offers available or if you should run the gamble of going to auction.” |
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