Sotheby’s Hong Kong Auction Yields Mixed Results

Sotheby’s auction in Hong Kong yesterday ended with mixed results. Some unique diamonds did not sell, which always considered a setback, but their overall sales figures compared to the auction at this time last year have increased, which is a huge gain both for Sotheby’s. First, let’s discuss the overall statistical information about the auction, then we will review the specific items that we covered prior to the auction and then we will conclude by trying to understand what is happening in the market.

Sotheby’s sold HKD $381,800,000 (USD$48,645,138) during this auction. During last year’s auction in Hong Kong, they sold HKD $355,043,750 (USD$45,694,130), which means that this year yielded a 7.5% increase. It may seem excellent on a net value basis, but keep in mind that Sotheby’s offered 85 more items for sale this year than they did last year. This implies that the higher total price did not mean higher prices for the individual diamonds sold. Another important result from the auction is the number of lots that successfully sold. This year only 61% of items sold, compared to 74% success last year. Additionally, the average selling price per item sold decreased by about 10% from HKD$2,500,308 last year to HKD$2,245,882 this year. In these calculations, I did not take into consideration the price of the extraordinary Pink Star diamond that occurred last year, as it was sold by itself.

First, we will cover a few things that did sell, then we shall review our highlighted items from our previous article that were not sold and try to understand the reasons behind it.

 

The 30.16 carat Fancy Vivid Yellow diamond with VS1 clarity sold for $2,843,791, or $94,290 per carat. It was valued at $2.4 million to $3.2 million, so it ended up selling at the middle of the range of Sotheby’s valuation. Not many Fancy Vivid Yellow diamonds are available for purchase whose size is above 30 carats. The buyer of this diamond must have been shopping around, and had to pay this price, which is quite strong for this color and size category, especially considering that major cutting modifications were made in order to render this a Fancy Vivid when it otherwise would have gotten a Fancy Intense color grade.

The 30.16 carat Fancy Vivid Yellow VS1 diamond          Image credit: Sotheby’s

 

The 5.01 carat Fancy Vivid Purplish Pink diamond ended up selling for $2,461,561, or $491,329 per carat. Although it finally sold near the high end of the auction house’s valuation, it still sold for considerably less than the average price for such a rare diamond. The clarity was not disclosed as the certificate was a “half certificate”. In most cases a half certificate means that the clarity was an I1 or an I2, which is a very low clarity grade. Some of the people who saw the diamond in person described it as an SI2, but the diamond was not an eye clean (a little bit higher clarity grade than the assumption). A 5 carat Fancy Vivid Purplish Pink diamond would normally sell for a much higher price, at least 3 times what this diamond was sold for!

The 5.01 carat Fancy Vivid Purplish Pink diamond          Image credit: Sotheby’s

 

The 10.30 carat Fancy Vivid Orangey Yellow diamond ended up selling for $1,391,317, or $135k per carat, which is only $1000 less per carat than the high estimate! The orangey secondary color had a positive effect on the value, as it made the color much stronger. The other reasons for the high price are its Internally Flawless clarity grade and its excellent polish and symmetry.

The 10.30 carat Fancy Vivid Orangey Yellow IF diamond          Image credit: Sotheby’s

 

The 6.40 carat Fancy Orangey Pink diamond was sold for $1,085,533, or $169.6k per carat, near the low end of the valuation by Sotheby’s despite its Internally Flawless clarity grade. An orangey secondary color in pink diamonds is less desired than a singularly pink diamond. If this diamond had been so, it would have sold for at least twice the final price.

The 6.40 carat Fancy Orangey Pink IF diamond          Image credit: Sotheby’s

 

The 1.97 carat Fancy Intense Green diamond ended up selling for $596,279, or $302,679 per carat. It was valued to sell at a price between $509,640 and $700,755 total. The highest bid before any commissions and fees reached HKD$3.6 million or USD$463k total, a price below its low estimate by Sotheby’s. As we have stated previously, the diamond has been re-polished in a way that the color of the face would be strong enough to make the diamond certified as an Intense Green, yet the overall color was weak enough that it was most likely officially certified as only a Fancy Green. As such, the value it was sold at was much more than how we appraised it. This acquisition would make sense for the single reason of gifting it as jewelry. Any future attempt to resell this diamond would fail to gain back any capital invested.

The 1.97 carat Fancy Intense Green VS1 diamond          Image credit: Sotheby’s

 

The 14.18 carat Fancy Blue diamond, the diamond that headlined the auction, failed to sell as expected. This diamond was weak in color and was sold at auction only 2 years ago as we stated in our auction review last week. It did not reach the low-end value of $5,886,342, or $415,115 per carat, which makes sense. It was sold 2 years ago for $261k per carat. The price was justified due to the weak color. As usual, we reiterate that to see real growth on diamonds, it takes a long period of time to see price growth, not such a short time span.

The 14.18 carat Fancy Blue diamond          Image credit: Sotheby’s

 

The 0.62 carat Fancy Red diamond also did not sell even though the low-end value was $216,597, or $349,350 per carat. Normally, a diamond like this should have sold, given its size and red color. Perhaps the reason that buyers didn’t bid was because the color was not strong enough, and was closer to a Fancy Deep Pink color?

The 0.62 carat Fancy Red SI1 diamond          Image credit: Sotheby’s

 

The 1.26 carat Fancy Intense Blue IF diamond and the 1.15 Fancy Intense Pink IF diamond set into a ring did not sell. The highest price that the piece reached was $1.04 million total, while the low valuation, which was the reserve price, was valued at $1.2 million total. If we look at our low-end valuation for each as we reviewed in our initial article on this auction, the pink would be valued at $250k per carat and the blue at $650k per carat, putting it at a total value of $1.1 million, only slightly above the highest bid. We correctly anticipated what the market was willing to pay for diamonds like this at this time.

The 1.26 carat Fancy Intense Blue IF diamond and 1.15 carat Fancy Intense Pink IF diamond          

Image credit: Sotheby’s

 

The 1.08 carat Fancy Deep Bluish Green diamond did not sell for its low-end value of $332k. It is difficult for the majority of people to evaluate such a color. It is most suitable for a collector, as both its color and shape are unique. If only investment type buyers were attending, they would not have necessarily been attracted to this diamond.

1.08 carat Fancy Deep Bluish Green SI2 diamond             Image credit: Sotheby’s

 

The overall feel to infer from this auction is that investors very much want to connect with the history of a diamond, its provenance. It is not only the color, shape or size that draws a buyer. That creates an emotional relationship between the buyer and the diamond, just like what occurs with to artwork. Every artwork has a story behind it. Fancy color diamonds and unique jewelry are no different. We look forward to reporting results from the upcoming auctions in New York. Got any questions about the diamonds that did sell or the diamonds that didn’t? Ask us in the comments!

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