Warhol, Doig Resurface as High-End Flippers Fuel Art Auctions

(Bloomberg) -- Peter Doig's painting of a house in the woods is up for sale. Again.

The work returns to Sotheby's in London Wednesday with an estimate as high as 18 million pounds ($25 million), the top lot at the contemporary art evening auction. It has been just two years since Christie's sold it for 11.3 million pounds, and it will be the work's fifth auction appearance in 16 years.

“The Architect's Home in the Ravine” is resold so frequently that one dealer calls it a “frequent flier.” But this week it's got plenty of company. Dozens of pieces at the 20th and 21st century art sales in London are being resold in hopes of quick profits. At the evening auctions at Christie's, Sotheby's and Phillips, about 40 lots, or 23 percent, of the offerings, have been bought privately or at auction in the past six years, according to catalogs.

Warhol Portraits

Andy Warhol's "Six Self Portraits," which led Christie's auction on Tuesday, was purchased in 2014. Works by other blue-chip artists with a global collector base, such as Louise Bourgeois, Rudolph Stingel and Martin Kippenberger, are also returning to market.

The “flipping” trend is fueled by an increased global demand for certain artists, particularly from new collectors in Asia, and a shift to viewing art as an investment. The result is a shrinking ownership period, said Wendy Goldsmith, a London-based adviser in modern and contemporary art.

“In my day, one really had to wait at least 10 years before the house would even look at re-offering a picture at auction,” said Goldsmith, who spent 15 years at Christie's until 2003.

Read More: Art Flippers Target Masterpieces as French Painting Gains 220%

Auction houses may need to rely more on repeat sales after the recent overhaul of the U.S. tax code. Works no longer qualify for the 1031 like-kind exchange, a tax loophole that allowed investors to defer paying capital gains on the sale of certain assets, if the profit is rolled into a similar business or investment.

“Now that 1031s are gone, it will be much harder for the auction houses to pry the works off the walls because of the capital-gains implications,” said private art dealer Gabriela Palmieri in New York. “They may become more dependent on investors.”

More Fairs

The resales are also a result of more competition for quality material. The auction companies save the best works for their big auctions in New York, in May and November. The smaller London sales in March and October typically don't have the same caliber of trophies. Adding to the pressure are competing international art fairs this month, including the Armory Show in New York, TEFAF in Maastricht, Netherlands, and Art Basel Hong Kong.

“These sales are really rough to fill,” said New York-based art adviser Todd Levin. “The auction houses have to employ more gymnastics in order to do that."

The Doig painting has an impressive track record as an investment. The 1991 work fetched 314,650 pounds in 2002, when it first appeared at auction. Five years later, as the art market was booming, it sold for $3.6 million. The canvas more than doubled in price by 2013 when it sold for 7.6 million pounds and then climbed an additional 49 percent, to 11.3 million pounds in 2016. Doig's auction record is $28.8 million, set in May at Phillips.

But quick resales in the high-end art market don't always result in outsize gains.

The 1986 Warhol self portraits -- six square panels, each depicting the artist's face in a different color on black background -- sold at Christie's Tuesday for about $31.4 million, including commission. It was last bought at Sotheby's for $30 million in 2014.

To contact the reporter on this story: Katya Kazakina in New York at kkazakina@bloomberg.net.

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Mary Romano, Peter Eichenbaum

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