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A Tale of Two Auctions

May 1, 2009 8:00 AM   By Amber Michelle
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RAPAPORT... With dealers in a holding pattern for buying, privates were able to pick up diamonds at reasonable prices. 
  

Despite a sputtering economy, diamonds held their own and sold for strong prices at the New York jewelry auctions. Although Christie’s and Sotheby’s had totally different sales and results, one thing was clear — diamonds are in demand.

The spring auction season kicked off at Christie’s with a 208-lot sale that — while much smaller than the norm for this time of year — went very well. The auction garnered $19,293,675 against a $15 million presale estimate and was sold 84 percent by lot and 85 percent by value. This compares to the October 2008 sale, which totaled $29,423,450 for 264 lots and April 2008 — the peak of the market — which tallied up $49,884,875.

Sotheby’s realized $11,098,638 for its 369-lot sale against a $16.6 million presale estimate and was sold 68 percent by lot and 55 percent by value. The December 2008 Sotheby’s sale pulled in $20,348,376 for 430 lots. The April 2008 sale total was $26,343,850.

Christie’s

Surprisingly, the sales room at Christie’s was packed and the mood was heady with very competitive bidding from dealers and privates on the phone and in the room. Many familiar faces and important dealers were in attendance. Auctions are as much about the items for sale as they are about theater and a number of industry insiders showed up to find out the fate of a 30.02-carat, pear-shaped DIF type IIa diamond. With much fanfare, the perfectly cut bowtie-less stone set in a ring with a shank styled as an eternity band of pink diamonds sold to a private for a whooping $4,002,500*, or $133,000 per carat against an estimate of $2.5 million. While diamonds fared well throughout the sale, it was specific to this auction that this stone sold so well and is not necessarily an indicator of the diamond market in general.

“In April 2008, Christie’s sold a 21.90-carat DIF at $140,000 per carat and today we sold a similar stone for $133,000 per carat. In my eyes, it is the same price and it goes to show how firm prices are for great gems,” states Rahul Kadakia, head of jewelry, Christie’s Americas.

Strong prices were  achieved for other diamonds in the sale as well, although one industry observer at the sale noted that prices this year were generally about half what they were a year ago. Still, dealers were satisfied that diamond prices were strong and that the sparkling gems were moving well throughout the sale, even those less spectacular than the top lot. Despite the success of diamonds, the sale was geared more toward jewelry, much of which was signed and from very specific time periods.

“It’s a new market and a new economy. We have to gear ourselves and the merchandise to that and go on,” says Kadakia. “Now the market is more toward jewelry than stones. But we have a few special diamonds at good prices. Right now, we will take a D flawless at $80,000 per carat or even $95,000 per carat, but not at $120,000 per carat.”

Sotheby’s

The next day at Sotheby’s New York told a somewhat different story. Perhaps at a disadvantage because Sotheby’s is not located near the jewelry district, there were far fewer members of the trade in the room and most of the action was on the telephones. The sale held up well for wearable, signed and decorative jewelry, which sold for strong prices. Diamonds under 10 carats did well, as did some larger brown and yellow diamonds. But there was resistance to diamonds over 10 carats, perhaps because there were no DIFs. Those connoisseurs buying larger diamonds demand perfection, especially buyers from China, where many of those stones are going these days. Some dealers in the room felt that prices were a bit high for this market and so they held back on bidding. Most of the buying for this sale came from privates from Asia and the U.S.

The top lot at Sotheby’s was a diamond necklace with a fringe of 17 pear-shaped diamonds with a total carat weight of 44.33, ranging from D to F color and IF to SI quality. It sold to a European private collector for $698,500. The second lot of the sale was a 13.98-carat G, VS2 diamond ring, which sold to an Asian private collector for $482,500, or $34,514 per carat. The number three lot in the sale was a 10.51-carat, H, VS2 diamond that pulled in $338,500, or $32,207 per carat.

“Reports of the demise and collapse of the diamond industry are premature,” comments Lisa Hubbard, Sotheby’s chairman of international jewelry for North and South America. “If you look at the auction results of Sotheby’s, Christie’s and Doyles, there is opportunity to buy.The market is in a state of transition, but some people are buying.”

A year ago at the auctions, the trade was riding high and bidding up the prices on diamonds, but now the picture has changed and so have the buyers — more privates are buying. According to Hubbard, the trade accounted for only 21 percent of the buyers in the December and February sales. At this sale, the trade accounted for 27 percent of the buying and 35 percent of the value, compared with privates who made up 73 percent of the buyers, accounting for 65 percent of the sale’s value.

“Privates have a chance again,” observes Gary Schuler, senior vice president, head of Sotheby’s New York jewelry department. “A year ago, the market was so bullish theprivates couldn’t buy. There was no selling around the estimates; the prices went way higher, the trade was bumping up the market.”

For this sale, Sotheby’s had opted to place the emphasis on colored diamonds and was touting an 8.24-carat fancy blue,VS1 clarity, cut-corner rectangular diamond set in a ring surrounded by pink melee. The diamond was a very spready cut, giving it the appearance of being a much larger stone. Estimated at $2.5 million, bidding stopped just short at $2.1 million. Nonetheless, a 17.33-carat fancy deep brownish orangy yellow, VS2 diamond found a home for $170,500.

The sale suffered a big blow when two high-ticket lots were pulled out at the last minute. One, a 15.40-carat, cushion-shaped F, VSI diamond set in a ring, had presale interest, but found no real buyer in the end and was withdrawn. It was estimated at $1 million to $1.5 million. A 15.61-carat, fancy vivid yellow, VVS1, estimated at $925,000 to $1 million, faced the same fate.

It seems as if the more things change, the more they stay the same. In a very selective market, that which is rare and truly special will sell at top prices and that which is not the crème de la crème passes, an adage that holds true in an up or down economy, but more so in a downturn.

*All prices include buyer’s premium.
 
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Tags: Auctions, China, Economy, Jewelry, Sotheby's
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