Art is on display at a new two-storey Sotheby’s space in Hong Kong, where three of the world’s top auction houses are seeking to expand – Copyright AFP ISAAC LAWRENCE

Holmes CAN

Three of the world’s largest auction houses are seeking to expand into Hong Kong, hoping to attract young Asian buyers even as the global art market slows after the pandemic’s peaks.

Over the next two months, Sotheby’s, Christie’s and Bonhams will conclude years of efforts to modernize their regional headquarters in the southern Chinese city.

Sotheby’s opened showrooms Thursday in a luxury mall in Hong Kong’s financial district, a two-story space previously occupied by fashion label Giorgio Armani.

“We envision this state-of-the-art space in Hong Kong becoming the cultural epicentre for visitors from around the world,” said Nathan Drahi, Asia Director, at the opening.

“We are very confident about Hong Kong’s prospects because it has some strong fundamentals for our industry,” he told AFP, pointing to its favourable tax framework.

Nearby, Christie’s is preparing to open a new skyscraper in September, designed by Zaha Hadid Architects, which will double the total floor space to 4,650 square meters.

“Asia is the pillar of the business,” said Francis Belin, president of Christie’s Asia Pacific.

“But we didn’t have the physical resources, the infrastructure… to actually get to the level of our ambitions.”

According to art consultant Patti Wong, the companies are hedging their bets and saying Hong Kong is the center for Asia. But she said the expansions also come with risks.

– ‘An ideal base’ –

Hong Kong’s biggest auctions of the year are held every spring and autumn at the city’s Convention and Exhibition Centre. It’s an intense four months that generates a lot of excitement and draws visitors.

Thanks to the new private locations, events can be better spread out.

“This is a big test for Hong Kong and whether we can develop into a more mature auction market with visitors all year round,” Wong said.

Global art sales have slowed since Christie’s and Sotheby’s first announced their expansion plans into Hong Kong in the turbulent years of 2021 and 2022.

This year, Christie’s reported revenue of $2.1 billion in the first six months. That’s the second straight year of declines, down from a peak of $4.1 billion in 2022.

Wendy Goldsmith, a London-based art consultant and former auctioneer at Christie’s, cited China’s property crisis as a major factor.

“(Asian collectors) are a bit reluctant to buy at the moment, but the interest and willingness to collect is still there,” Goldsmith told AFP.

“Auction houses know they are coming back… and probably stronger than ever.”

Bonhams, which is moving into a new 17,500 square metre office building in September, said it had been successful with transactions under HK$10 million (US$1.3 million).

“This segment has proven resilient despite broader economic uncertainties and represents a huge opportunity in Asia,” said Julia Hu, Bonhams’ managing director, Asia.

Hong Kong remained “an ideal base to tap into other major Asian cities,” Hu added, citing its strategic location, efficient logistics, aggregator base and tax and legal frameworks.

– Young buyers –

New York-based auction house Phillips also opened its regional headquarters next to the Hong Kong Museum of Visual Culture in 2023.

Cultural policy scholar Patrick Mok said companies are not being distracted by Hong Kong’s political climate, even as critics say Beijing’s crackdown has curtailed artistic freedoms.

“The companies operating in the Hong Kong art market are quite apolitical… they know that those (political) works cannot fetch good prices here,” Mok said.

Auction houses are now competing for younger buyers and embracing online bidding, a shift accelerated by the pandemic.

According to Christie’s, 29 percent of buyers in the first half of 2024 were millennials or Gen Z.

“Auction houses have turned around in a heartbeat during Covid… (They) are now marketing machines,” Goldsmith said, adding that auctions have been jazzed up to resemble Hollywood productions.

“(They) are more than willing to host these events, lectures, dinners, viewings… all to generate the next bid.”

The opportunity – and challenge – for Hong Kong locations is to bring internet-loving buyers into the real world.

But Bonhams’ Hu was confident, saying showroom auctions are irreplaceable.

“Our clients still crave the sheer excitement and thrill of being physically present,” she said.