Tag Archives: hong kong

Conspicuous Consumption “Here To Stay” In China: How Will Retailers Take Advantage?

Luxury Market In China A Mixed Bag For Foreign Brands, Who Fight To Get Customers To Buy Inside China Rather Than Traveling Overseas

Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture

Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture

We’ve discussed recent reports on the rebound of the Chinese luxury market (which didn’t drop that much to begin with, despite global economic woes), and this year’s findings in McKinsey & Company’s Insights China report that China is rocketing towards the top of the list of the world’s biggest luxury markets. Although China remains one of the only bright spots in the world of luxury retailing at the moment, foreign luxury brands — despite rapid growth in the mainland market — often have difficulties convincing many of the country’s highest-potential customers (the wealthy and super-rich urbanites in top-tier cities) to buy their products within the mainland, strangely enough, because of the large luxury tax China levies on high-priced imported goods.

Possibly to combat this problem, as we’ve seen this year, many companies are looking towards second- and third-tier cities as a source of future growth, and perhaps leaving the top-tier cities alone and letting their Beijing or Shanghai boutiques function only as “showrooms” for ultra-rich customers who’ll simply buy the products on their next overseas or Hong Kong/Macau trip. In these smaller urban areas, middle- and upper-middle class customers, who still want to differentiate themselves through conspicuous consumption but are most certainly not part of the economic elite, could be the key for luxury brands who want their China locations to actually sell things rather than simply show them off like a real-life catalog. Middle- and upper-middle class urban professionals in cities like Xi’an, Qingdao, Nanjing and Chongqing — who make a decent living but can’t afford to fly to Hong Kong or Macau (let alone Paris or Tokyo) for luxury shopping sprees — are likely going to buoy luxury brands’ losses in top coastal cities.

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Hong Kong Apartment Is World’s Most Expensive

Five-Bedroom Luxury Duplex In City’s Mid-Levels Area Sells for US $57 Million

The world's most expensive apartment was recently sold in this building for 57 million US dollars

The world's most expensive apartment was recently sold in this building for 57 million US dollars

We’ve written before about the Hong Kong real estate market’s relatively fast rebound in the face of the global economic downturn, with exclusive properties like The Masterpiece attracting the attention of well-heeled mainlanders and Hong Kong residents alike. This week, an apartment in Hong Kong’s Mid-Levels area sold for a record-breaking HK$439 million,  or around US$57 million, and analysts expect a continued flow of money into the city’s luxury real estate markets as cash-rich individuals look to take advantage of the Hong Kong government’s recently lowered interest rates and the city’s appeal as an investment  haven.

Today, the AFP writes on the recently sold duplex, noting that the massive flood of mainland money coming into the market is exciting developers but worrying some economists who think this year’s 40% leap in the luxury property sector portends that a property bubble could be forming:

“You may see some more record-breaking prices in the luxury segment,” said Buggle Lau, chief analyst for Midland Realty.

“We have all the ingredients for a bubble coming up… With low interest rates and ample liquidity people are inclined to put their money into real estate.”

Demand from mainland Chinese investors looking to diversify their new-found wealth and snap up trophy property assets was also likely to buoy the market, said Savills’ head of research Simon Smith.

“There is quite a lot of momentum out there. If you look ahead there’s a chronic undersupply of residential units for luxury and the mass market,” he added.

Chinese Buying Drives Sotheby’s Hong Kong Sale To $170 Million

Bidders From Mainland China Dominate As Expectations Are Surpassed In Landmark Autumn Auction

Chinese contemporary artist Liu Ye's "Portrait of L" sold in Hong Kong for $209,000 over its high estimate

Chinese contemporary artist Liu Ye's "Portrait of L" sold in Hong Kong for $209,000 over its high estimate

Over the last week, we’ve followed the Sotheby’s autumn auction in Hong Kong, which included sales of everything from fine wine to antiquities to contemporary Chinese and Asian art, noting that sales were well above estimates and sell-through rates were promising. Today, in a wrap-up of the sales, Le-Min Lim of Bloomberg illustrates how this series of auctions, led by Chinese rather than American buyers, represents a major shift in auction buying trends:

The total beat both the presale estimate of HK$950 million and last year’s auction, which raised HK$1.1 billion ($141.7 million at that time), half its forecast, three weeks after Lehman Brothers Holdings Inc.’s September 2008 failure.

“The bidding was intense,” auctioneer Henry Howard-Sneyd said in an interview after the auction. The mood in the saleroom was “electric” when Emperor Qianlong’s throne came on the block yesterday, he said: “This shows when the right item comes along, the money is there — especially from China.”

Chinese collectors have come out in force over the last year, recognizing quality lots and quickly developing a sophisticated eye for collection-worthy wines and paintings. In terms of antiquities, an area in which Chinese collectors have more experience, however, they seemingly can’t be beat:

The strength of Chinese bidding at the antiques sale defies a decade-old trend of Western dominance at the priciest end of the market. As recently as June, Sotheby’s rival, Christie’s International, said Americans were its top clients in this category, followed by the Chinese and Hong Kongers. Of the 2,400 lots offered this week, 88 percent found buyers.

The Chinese also bought the priciest wines and oil paintings by masters and contemporary art. Over the weekend, a Chinese buyer paid a record $94,000 for a 6-liter bottle of Chateau Petrus 1982; another spent HK$7.3 million for a 1984 oil-and-color on paper by Li Keran at the auction of classical Chinese paintings; while a third spent HK$36.5 million on a mid- 1950s oil-on-board painting, “Lotus et Poissons Rouges” (“Lotus and Red Fish”) by deceased Chinese master Sanyu.

While this article claims contemporary art underperformed, I think the sell-through at the contemporary Asian art auction speaks for itself. If lumping together all of the pieces at the contemporary auction — which included Chinese, Japanese and Korean artists in one large sale — I would say the final tally is brought down significantly by the Japanese and Korean artists, who sell, on the whole, for significantly less than quality Chinese contemporary artists.

In terms of the Chinese artists up for grabs in the contemporary sale, selling rates were excellent, with 5 of the 6 Zeng Fanzhi paintings up for auction going for well above than their high estimates, Yue Minjun’s “Hats Series – Two Lovers” selling for $372,000 over its high estimate, and works by top Chinese artists like Liu Ye, Wang Guangyi, and Huang Yongping destroying pre-sale estimates.

“The Chinese Are Out In Force” At Sotheby’s Hong Kong Auctions

Mainland New Collectors Pushing Contemporary Chinese Art Nearly Back To 2007 Levels As Classic Chinese Photography Sells Out

Sold in Hong Kong for $1.1 million USD, $372,000 over high estimate: Zhang Xiaogang's "Comrade (Diptych)" Image: Sotheby's

Sold in Hong Kong for $1.1 million USD, $372,000 over high estimate: Zhang Xiaogang's "Comrade (Diptych)" Image: Sotheby's

There’s been no shortage of jaw-dropping figures coming out of Sotheby’s Hong Kong autumn auction, as this weekend’s fine wine auctions brought in nearly US$8 million, Fine Chinese paintings took in US$23.5 million, 20th century Chinese art made US$14 million and today’s contemporary Chinese and other Asian art pulled in almost US$15 million — mainly on the strength of contemporary Chinese artists like Zhang Xiaogang, Zeng Fanzhi and Yue Minjun. Among the countries represented in the Asian contemporary art sale — China, Japan and South Korea — sales of Chinese art were the most consistent and showed the highest sell-through.

With spirited bidding by mainland Chinese collectors, and important milestones like 100% of the classic Chinese photography selling out, it looks like the contemporary Chinese art market is back in business in a very significant way, driven more by domestic rather than foreign demand as its performance parallels the Chinese economy. The prevalence of mainland collectors in all of this week’s auctions could really indicate that these autumn auctions are a major turning point in contemporary Chinese art as the point at which the Chinese collector really came into his own.

Although news reports are still forthcoming about the buyer breakdown, based on the turnout these last few days it seems as if Golden Week has indeed attracted many mainland Chinese collectors to depart with their gold in Hong Kong. From Bloomberg yesterday, regarding Chinese buyers at yesterday’s auction of Fine Chinese paintings:

The Chinese are out in force,” said Jerome Chen, 60, a Hong Kong-based collector…“It’s hard to outbid them.”

Low-key and unassuming, the Chinese buyers at yesterday’s auction sat mostly clustered in the back rows, watching their rivals and whispering into mobile phones between bids. China’s accelerating growth and a 50 percent gain in the benchmark Shanghai stock index from the same time last year have generated wealth and stirred buyer confidence.

The fresh figures coming out of Hong Kong this morning indicate that these “low-key” Chinese bidders were not only present, they dominated at the contemporary Asian art auction, pushing contemporary Chinese art prices to some of the highest levels seen in the last couple of years. One of China’s premier contemporary artists, Zhang Xiaogang, attracted the highest bid with his “Comrade (Diptych)” going for US$1.1 million  (US$405,000 over high estimate), and top artists like Yue Minjun (whose “Hats Series – The Lovers” sold for US$823,000, US$372,000 over high estimate), Liu Ye (whose “Portrait of L” went for US$467,000, or $209,000 over high estimate), Huang Yongping, Zeng Fanzhi (who sold 5 out of 6 paintings, all above high estimates), Wang Guangyi, Xiang Jing and others all surpassed estimates and found new homes — presumably back in the country of their origin.

In October, Sotheby's will put on a large-scale sale of Asian art in Hong Kong. Will The New Chinese Collector continue to flex his (or her) muscles at that sale?

Yue Minjun had an exceptional showing, taking in $823,000 for "Hats Series - The Lovers"

Following the reputation we’ve seen developing over the last several months, Chinese collectors are fast becoming notorious in the auction world as sophisticated and determined buyers. As the Bloomberg article about yesterday’s auction notes, either you love [selling to] them or you hate [competing with] them:

It’s very clear the Chinese are holding up Asia’s art market,” said Eddie Leung, 51, an art collector and managing director of Paper Communication Exhibition Services, in an interview at the venue. “It’s great if you’re a seller, but awful if you’re bidding against them.”

Though James Pomfret, writing for Reuters today, says the contemporary auction had “mixed results,” it seems to us that the Chinese works stole the show. Although some Japanese and Korean pieces did well, they by and large reduced the overall sale figures. Looking only at the Chinese pieces sold, it would seem that this sale was a major success overall:

In the Asian contemporary sale, Chinese artists once again dominated. While there were few blockbuster prices testing the $1 million mark except Zhang Xiaogang’s “Comrade,” solid results were seen for the works of Liu Ye, Li Songsong and Fang Lijun, with most top lots bought by mainland Chinese collectors.

Hong Kong Now World’s #1 Wine Auction Market, Surpassing London & New York

Sotheby’s Fine Wine Auctions Sell $8 Million Over The Weekend As Chinese Collectors Dominate In Hong Kong

Hong Kong is now the world's top wine auction market, having surpassed London and New York

Hong Kong is now the world's top wine auction market, having surpassed London and New York

This weekend, Sotheby’s began a five-day string of auctions in Hong Kong — continuing until October 8 — with auctions of fine wine from the cellars of two anonymous American collectors. Though one of the world’s newest hubs for wine, due to a combination of ending wine duties, encouraging mainland buyers to take part in wine auctions, and growing demand both in Hong Kong and in mainland China, Hong Kong has within a few short years become the world’s #1 auction market for wine, overtaking traditional leaders London and New York. From James Pomfret in Reuters:

“Asian buyers represented 99 percent of buyers in this two-day sale,” said the head of Sotheby’s international wine department Serena Sutcliffe. “Hong Kong has become Sotheby’s most important wine center, ahead of very successful auctions in New York and London,” she added in a statement.

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Art Market Confidence Index Shows 75% Of HK Auction Respondents In The Mood To Buy

As Hong Kong “Stirs From Slumber” And Buyer Confidence Remains High In China, What Can We Expect To See Next Week?

Zeng Fanzhi is one of the historical Chinese contemporary artists up for auction in Hong Kong next week

Zeng Fanzhi is one of the historical Chinese contemporary artists up for auction in Hong Kong next week

We’ve been interested in the upcoming Hong Kong Sotheby’s auctions of Contemporary Chinese, Southeast Asian and other Asian art, with a particularly obvious fixation on the Chinese side, for some time. After the surprising turnout of mainland Chinese, and their willingness to go far above and beyond lot estimates to take home something they’ve set their hearts on, Sotheby’s is likely expecting a good proportion of bidders both from the mainland and other areas of Greater China — definitely Hong Kong, since buyers from that market have been something of a fixture at Chinese art auctions for ages. And while the unpredictable nature of art auctions makes it difficult to forecast how next week’s auctions turn out (although total revenue estimates for all of the Hong Kong auctions are close to US$100 million), many people are excited and motivated to buy some high-quality, historical art.

One thing that makes the auction of contemporary Chinese art even more interesting to me on a personal level is the way it will coincide with “Golden Week,” a week of celebrations coinciding with both Chinese National Day and the Mid-Autumn Festival. If last year’s turnout was any indication, Golden Week could draw well over a million mainlanders to Hong Kong this year, most of whom are coming to the city either to shop for expensive objects or eat and drink for days. While Golden Week, on its own, really shouldn’t affect the Sotheby’s sale too much, it is within the realm of possibility that some of the shopping-mad mainlanders might be shipping a Yue Minjun or Liu Ye painting home along with their boxes of luxury goods.

Another reason I’m excited about the Hong Kong sales next week is because of this article, published today by Art Market Insight, which is bullish on the article because of the comparatively fast re-emergence of Hong Kong following the global economic crisis:

Once again, Sotheby’s is weighting its sale in favour of the Contemporary segment (Contemporary Asian Art) which carries the richest of the three catalogues with 190 lots and a total revenue estimate of $12.5m. In order to re-kindle interest amongst its biggest clients, the auctioneer has built a catalogue of very attractive signatures. Among the star lots: a powder drawing by CAI Guoqiang , Money net NO.2, estimated at HKD 4.7m – 5.5m, ($606,000 – $710,000), several paintings by YUE Minjun , including Hats series – The lovers expected to generate around $400,000 (estimated HKD 2.8m – 3.5m), three paintings from the famous Chinese Portrait series by FENG Zhengjie including a superb contemporary Amazon (4 x 3 metres) estimated at $100,000 – $130,000 (HKD 800,000 – 1m). A very similar monumental portrait fetched $133,000 in June 2009 (Phillips de Pury & Company, London, £81,000).

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Rise Of New Chinese Collector Continues As Chinese Antiquities Remain “Recession Proof”

Astronomical Prices Paid For Historical And Quality Pieces In Recent Asian Auctions Defies Global Economic Woes As More Chinese Collectors Get In The Game

In October, Sotheby's will put on a large-scale sale of Asian art in Hong Kong. Will The New Chinese Collector continue to flex his (or her) muscles at that sale?

Since good works by historical artists like Yue Minjun are becoming more scarce, Chinese collectors are expected to continue to flex their muscles in upcoming auctions of Chinese contemporary art

Hardly any industry has escaped the global economic slowdown unscathed, and art is no exception, but recent auction results indicate that the art market — or at least pockets of the art market — are coming back to life. As the Wall Street Journal reports today, in some recent auctions some pieces have sold for exponentially more than their estimates, surprising collectors and market analysts alike. The common bond shared by most of these pieces? They were Chinese — or, if not Chinese, Asian:

Last week, the longest string of Asian art sales since the Zodiac clock dispute was held in the U.S.—and amid the most entrenched art-market recession in nearly two decades, the auction prices of many more than a handful of pieces went through the roof. At the Sotheby’s sale of works from the collection of Arthur M. Sackler, for example, the auctioneer sang out fast-rising numbers, first in English, then Chinese, as if he were rising in the elevator of some fantastically tall Hong Kong skyscraper.

The emergence of the New Chinese Collector is a subject we’ve followed pretty much since our inception, and is a subject that is endlessly fascinating simply because it’s such a new phenomenon. While, technically, Chinese people have collected art for a few thousand years — with the exception of a few Mao-era decades where the practice was virtually nonexistent but for a few elite art lovers here and there — the New Chinese Collector has only existed for around 20 years, and arguably even less than that. This collector base was out in full force in recent auctions of Chinese and other Asian art — in New York, London and Hong Kong — and the motivation, desire and intensity of the Chinese collector is becoming somewhat legendary right before our eyes.

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