Distressed art sales amid Covid-19 squeeze

Last week British Airways sold 17 major artworks from its collection of over 1,500 pieces at two separate Sotheby’s sales. BA has long been building an assortment of works by British artists to adorn its executive lounges and London HQ, and artists whose works were selected for sale included Bridget Riley, Terry Frost, Patrick Heron, George Shaw, Julian Opie, Peter Doig and Damien Hirst.

The outcome of the sale underlines art’s value as an investment vehicle, with the works having performed particularly well at auction. The headline piece was Bridget Riley’s Cool Edge (1982) which sold for £1,870,000, beating its high estimate of £1,200,000. Similarly Peter Doig’s Grasshopper Portfolio went for £56,250, beating its high estimate of £15,000; and Terry Frost’s Colour Down the Side went for £47,000, beating its high estimate of £30,000.

The strong sale values also support the generally held consensus that art as an asset class tends to perform comparatively well in times of economic downturn. Like gold, art is often seen by investors as a ‘real’ asset that is comfortably insulated from the contagious malaise of bear markets, with art frequently considered a safe harbour in which to park funds when the prospects of other potential investment vehicles are up in the air (or grounded, in BA’s case).

Major banks including UBS, Deutsche Bank and J.P. Morgan Chase are famed for their art collections, and while once upon a time clients visiting corporate boardrooms, HQs or indeed airport lounges might have considered a towering Damien Hirst a conspicuous status symbol, now these collections seem a prescient example of exactly the wise portfolio diversification that financial institutions recommend to clients.

Unfortunately, with Covid-19 losses expected to accumulate over the coming months in many industries, we predict many more distressed art sales by corporates. Our market-leading art team is able to advise on all aspects of art sales and purchases, with extensive experience assisting the buyers and sellers of substantial collections and significant individual works, and we operate in tandem with our Insolvency team in the unfortunate instances where those sales arise in the context of economic distress.