Veteran Advisor Patti Wong on How the Auction Market Is Recalibrating

In a wide-ranging interview, advisor Patti Wong discusses recent changes in the auction industry, what Asian collectors are buying, and the rise of the Middle East as a key market. The interview was conducted in February, before the start of the Iran war.

In 2023, after three decades at Sotheby’s, you left to create your own advisory, Patti Wong and Associates. What’s changed in the auction industry since then?

What I noticed the most over the past few years is a new level of discipline across the houses and the buyers. There was a recalibration following the very frothy post-Covid years. Auction houses have been relying more heavily on third-party guarantees, and there’s far greater scrutiny from buyers on provenance and estimate level.

The houses have collectively become more disciplined in where they set estimates. They now realize that if works are not properly estimated, they are not going to find buyers. They are also more selective in terms of what they offer. We saw last season that fresh, rare, historically significant works at the right estimates performed very well.

The curation is also very different. Some houses are expanding into new geographies like Saudi Arabia and new collecting categories. They are offering what people want: cars, real estate, luxury, memorabilia, and dinosaur skeletons. It’s a brave new world.

The past months saw auction houses adjusting their buyer’s-premium—BP—structures, raising the percentage for certain price brackets to bring in higher fees. How will this impact the market?

I understand that houses are operating in a high-cost environment and there is pressure to produce the margins that they need, but the BP rate is becoming very unattractive versus private sales. It has reached a state where, is an auction really the best place to offer the very-high-value works? Maybe not. Why don’t people do more private sales, where we all know that the premium or the commission is highly negotiable? Whereas, a 28 percent BP environment: Can this really carry on? I don’t know.

The BP rate could be 30 percent for collectibles, which can draw a lot of buyers, like the Birkin bag [sold for $10.1 million last year at Sotheby’s Paris]. You need the theater of an auction to generate that kind of excitement, and the house did very well for the seller. The BP was well worth it. But if you are talking about other very-high-value works with only a handful of buyers, is an auction with a high BP still the right place, especially when we saw so many works sell to the IB [irrevocable bid] or one bid above the IB? Those are private sales publicly displayed.

Auction-industry veterans often say that their relationships with clients are crucial to their business. Is that still true in this cut-throat environment?

We have seen consignors who had traditionally worked with one house jumping house because of the terms they were given. We are just entering the Great Wealth Transfer, and it is very competitive when estates come on the market. The houses all go out and compete for that piece of business, and they all squeeze their margins in order to get it.

I have gone into pitching thinking that we would get the estate because we had such a good relationship. But with estates, your relationship is probably with the deceased, so he’s no longer in the room to decide. There are lawyers and everyone else acting for them. They are going to be looking at the terms.

Since going independent, you have bid on blue-chip lots by artists like Gustav Klimt and Mark Rothko on behalf of clients. Are they all Asian?

Many of them are Asia-based, but no, not all of them are Asians. They are very global. Asian collectors show more maturity and confidence in buying now. They have always been avid, cross-category collectors. Many of the collectors I spoke to when I first introduced Picasso and Impressionism to Asia, in Hong Kong in 2010, are still active in the international art market and collecting with much more confidence across a much broader range of property and price levels.

I am also seeing a deeper level of connoisseurship among the seasoned collectors. Many clients, including younger ones, are looking into Old Masters. The growing interest in Old Masters is particularly telling, because that is real connoisseurship. It requires time, study, and patience.

You witnessed the East Asian market evolve, and now attention is turning to the Gulf. How does this compare with the boom in China at the start of the 2000s?

I am very excited about the Middle East. Without a doubt, this is going to be a focus of attention over the next few years. Museums and wider national cultural ambitions can really accelerate the creation of a thriving art ecosystem, and the Gulf countries have certain distinct advantages, as they have the financial power to realize that ambition. The Middle Eastern players have been active in salesrooms, albeit very discreetly, for the past decade already, but the base is not that big.

People seem to have forgotten how recent this kind of art-collecting phenomenon has been for Asia. It’s been only 20 years since all of this was new, and Asian buyers are engaging at the highest level. Having Art Basel, Frieze, and auctions in the Gulf is the right thing to do. But building that local collector base will take some years.

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