Newly rich mainlanders push antique prices through the roof
Forget about investing in Hong Kong property. Prices for top-quality antique Chinese furniture have increased fourfold in five years, bid up by newly rich mainlanders.
Prices are rising steeply not only because mainlanders are paying more but because sellers are withholding supply in the hope of even higher prices.
In the process of inflating the market - and transforming it with their enthusiasm for 'imperial' furniture - mainlanders are also ensuring that Hong Kong's role as an antiques market is likely to grow.
At Sotheby's auction in the city in October last year, an unidentified Shanghai businessman - understood to be mainland stock investor Liu Yiqian - paid an astonishing HK$85.7 million for a rare Qianlong-period zitan dragon throne. It was a record auction price for a piece of Chinese furniture. The throne was made for the 18th century emperor - the fifth during the Qing dynasty - out of zitan, purple sandalwood.
To many industry insiders, last year's auction was a landmark event, a record sale that showcased the rise of mainland collectors with an extravagant taste for rare imperial pieces. It also broke a record set by the April 2008 sale of a zitan three-railing bed, also from the Qianlong period, which fetched 32.48 million yuan (HK$36.89 million) at Beijing's China Guardian Auctions.
Ma Weidu, founder of the Guanfu Museum in Beijing, the mainland's first private, non-profit antiques museum, who is also a well-known collector of antique Chinese furniture, said prices for top pieces had increased too much, too fast.
Ma said he had planned to bid for the imperial throne and set himself a bidding limit of about HK$40 million.
'But the limit that I set was not even half the final price,' he said. 'HK$80 million was not an extreme price, but the increase was too fast,' he said, suggesting the sharp rise in prices might not truly reflect the value of antique Chinese furniture.
'Pieces of great value will be bought by mainland collectors sooner or later, but I'm afraid that such a sharp rise in prices within such a short time is not that healthy,' Ma said. Moreover, he said those who had eagerly bid for the imperial throne were not the faces he was familiar with. 'They were not the regular collectors,' he said. 'They came from other businesses.'
Ma said that the influx of new collectors had contributed to a sharp increase in prices since 2003.
'People have made money, from businesses like property or coal mining, and they want to invest,' he said. '[But] they don't have the knowledge about art.'
Veteran Hong Kong antique dealer Andy Hei, founder and director of the Hong Kong International Art and Antiques Fair, said that before the 2000s, 90 per cent of his clients were Westerners, 80 per cent of whom were Americans.
'But after 9/11 [the 2001 attack on New York's World Trade Centre], things changed. Now 95 per cent of my clients are mainland Chinese,' Hei said, adding that these new collectors were extremely rich. 'I can't even find the words to describe how rich they are. Just imagine a very rich person like Li Ka-shing spending 10 per cent of his company's profit buying classical Chinese furniture. You just can't imagine the amount of money they spend.'
Nicolas Chow Kuo-shih, Sotheby's international head of Chinese ceramics and works of art, said that in the past five years the number of mainland clients had increased at least threefold and prices had tripled or quadrupled.
Christopher Engle, a specialist in Chinese art at Christie's New York, said mid-range items were beginning to fetch multiples of what they brought five years ago.
'Some top pieces would bring in excess of 100 to 200 per cent of their previous values today,' he said.
Hong Kong veteran dealer Ho Hung-yung, who has been trading antique Chinese furniture for more than 40 years, said the rise of mainland collectors had had another effect on the market.
'Market supply has dried up,' Ho said. 'People are not selling, and they are in no rush to sell anything at a discount. Even I'm in no rush to sell. The value of the pieces keeps going up. What [other investment] can be better than this?'
While collectors are not selling, genuine fine pieces in good condition have become increasingly difficult to find, Engle said.
'So much of the extant furniture has been heavily modified over the years,' he said, noting that too much modification could damage the historic value of a piece of furniture.
Ho said that fine antique Chinese furniture could be seen as a great investment compared with other investment avenues.
'If your company makes HK$100 million profit, you spend half of it buying antique furniture [for your company] and deduct the amount in the expense account. Then you make only a HK$50 million profit, and you subsequently pay less profit tax,' Ho said. 'But the value of the HK$50 million you have spent on furniture will definitely go up, and so has the value of your company's assets.'
Those with a good eye could make very good profits in as little as six months. Hei said that because of supply shortages, a piece of classical furniture could be recycled through the auction system only six months after it was first sold.
'It's possible to make a substantial profit,' he said.
Mainland tastes, as well as mainland money, are also shifting the market from the traditional classic yellow rosewood furniture from the Ming dynasty to imperial rosewood pieces from the Qing dynasty.
Historically, Engle said, fine huanghuali (yellow rosewood) furniture had dominated the collectors' market. The classic style from the Ming dynasty, characterised by simple lines and elegant forms, attracted mainly American and European collectors. But mainland collectors prefer the larger and more elaborate zitan furniture.
'They tend to bring the highest prices,' Engle said. Zitan was already rare in the Qing dynasty, and many pieces were produced either at imperial workshops or made for the court. 'Tastes are starting to shift towards items that are often considered to be more [suited to the] Chinese taste.'
Chow said mainland clients preferred pieces that had an imperial connection, partly because that is what they liked but also owing to a lack of sophistication. He said collectors had to attain a certain level of understanding of Chinese furniture to appreciate the best. 'It is a taste that needs to be cultivated,' he said.
But imperial pieces are different.
'They are immediately recognisable,' Chow said, adding that imperial furniture was made under strict controls. So, a detailed knowledge of antiques was not as crucial to buying these pieces as it was to collecting huanghuali furniture. Mainland collectors also preferred unaltered surfaces, which showed clear signs of age, use and wear, Engle said.
'Mainland buyers prefer unpolished pieces,' Ho said. 'Their collecting culture is still a little behind. If a piece looks more worn out, they find it more genuine. If a piece looks too pretty, they think it could be fake.'
With the rise of new mainland collectors, Hong Kong's position as a major trading port for antique Chinese furniture will be even more important. The city is the world's third-largest market for art auctions.
Dealers said that when the communists took over on the mainland in 1949, many people fled to Hong Kong with some of their best pieces of furniture. This explained why most of the great pieces were found in the US, Taiwan and Hong Kong, Hei said.
During the civil war, many fine pieces were shipped to Hong Kong, renowned for its restoration of classic furniture. But despite the exodus of furniture, some great pieces remained hidden on the mainland.
Well-informed dealers managed to locate many in rural areas of northern China and bought them at low prices in the 1980s, Hei said. Some dealers made a fortune accumulating such relatively inexpensive pieces and waiting for demand to raise prices.
Hong Kong's reputation among world collectors is high. Collectors from major galleries and museums - from New York's Metropolitan Museum of Art to London's Victoria and Albert - acquired collections here.
Now, with the advent of wealthy mainland buyers, Chow said, 'there are more sales here than a few years ago in New York'.