Sebastian Neußer, a director at Ketterer Kunst, was reclining in a chair in the company’s Munich salesroom with a phone pressed to his ear. He was bidding on behalf of a client for an abstract oil on canvas by German modernist Ernst Wilhelm Nay.

The lot ended up blowing past its €200,000 ($237,540) estimate to sell for €2.25 million ($2.7 million) to an online bidder. It was one of many works on offer this summer that soared beyond €1 million, much to the surprise of German auctioneers like Neußer.

While many regional markets are still digging their way out of a pandemic-induced downturn, Germany has emerged as a success story. The collector-rich economic powerhouse continued to buy art during lockdown—in fact, it was one of very few nations that actually saw their market grow (by three percent, year over year), according to the Artnet Price Database.

Employee Donata Richtsteig standing in front of a folding altar with an enthroned Madonna (Meister des Tobias) from the estate of Cardinal Meisner at Lempertz in 2018. Photo: Rolf Vennenbernd/picture alliance via Getty Images.

Experts attribute the momentum to a number of factors, including the impact of Brexit, the globalization of buyers, and an ascendant class of young collectors. While the secondary market in Germany remains considerably smaller than those in the U.S., the U.K., and China, it has benefitted from the fact that buyers and sellers alike are looking for new European hubs as the movement of assets and people between the U.K. and Europe becomes increasingly mired in red tape.

Another sign that the fifth largest market in the world—which has long been dominated by independent regional auction houses—is gaining steam? Sotheby’s is returning this fall to Germany after pulling out more than a decade ago.

“Germany has everything that we are looking for,” said Sebastian Fahey, managing director of Sotheby’s for Europe, the Middle East, Russia, India, and Africa.

A Summer of Sales

Over the past decade, the backbone of sales in Germany has been works between $10,000 to $100,000. But in recent years, more and more works have gone for $100,000 to $1 million and beyond, according to the Artnet Price Database.

“I never would have expected it,” Sebastian Neußer of Ketterer Kunst said of the runaway success of just one of those $1 million-plus works, Ernst Wilhelm Nay’s Doppelspindel-Rot. “It is by a traditional German artist and it is a later work, whereas the market has been focused on earlier works by Nay,” he noted.

All told, nine works sold at Ketterer that June evening for more than €1 million/$1.2 million (Germany has summer and winter auctions, with online auctions scattered between). A work by Wassily Kandinsky, pulled out of obscurity from a private collection after 70 years, fetched €1.1 million, selling to a buyer from the Berlin region.

Doppelspindel Rot by Ernst Wilhelm Nay. Courtesy Ketterer Kunst.

At Grisebach, a leading auction house in Berlin, a late painting by Max Liebermann sold for double its estimate at €1.5 million ($1.8 million), the largest sum ever bid online at a German auction. At Nagel in Stuttgart, a bronze Chinese artifact went for €14.1 million ($16.8 million) to an Asian buyer. At Van Ham, a complete series of Flowers prints by Andy Warhol went for €2.3 million ($2.7 million).

Last year marked the first time Germany sold more works in the $100,000-to-$1 million range than any other price bracket. It helped that German auctions were better equipped than some of their peers to handle the bumps in the road brought on by lockdowns.

“Auctions were already digitalized here,” said Henrik Hanstein, director of Kunsthaus Lempertz, Germany’s oldest auction house. Against the odds, Lempertz had a record year in 2020, with sales of €60 million ($71.3 million).

Pandemic-induced layoffs at Sotheby’s and Christie’s also played into Germany’s favor. “We were able to pick up really important senior experts for Old Masters,” Hanstein said. One example is Anke Held, who joined the house last year from Christie’s. Ketterer hired Sotheby’s director Nicola Gräfin.

Ketterer Kunst in Munich. Ketterer Kunst.

Growing Appeal

On July 15, Germany’s market faces another test when Lempertz holds a major sale of the Belgian Bernard De Leye collection—including 220 exquisite antiquities like a golden jug that French King Louis XV gifted to his mistress estimated at €1.2 million ($1.4 million).

Hanstein was emphatic that the sale is the best he has seen pass through Germany in years. “Brexit is changing the art market,” he said. While a collection of this caliber might otherwise have been offered in the U.K., “you would never get an export license for items like these to leave the E.U.”

The ease of mobility in the E.U., particularly around the Benelux region with its proximity to Swiss collectors, is also a boon. Lempertz’s record sale last year of a painting by Georges de La Tour to the Louvre would not have been possible, Hanstein said, if the Louvre team did not come to see the work in person.

As a head of the European Federation of Auctioneers, Hanstein also laments the difficulties faced by his colleagues in the U.K. “The walls of the E.U. are getting higher and higher,” he said. “It is making it more complicated to bring things to and from the continent—it is a nightmare.”

Golden Jug given by Louis XV to his Mistress €1.2 million. Courtesy Lempertz.

New Competition

Considering German auctions’ strong run, it is not surprising that Sotheby’s made the decision to return to the nation after closing its salesroom more than 10 years ago. (Both Christie’s and Sotheby’s kept local teams to scout consignments, but not to hold sales.)

“We saw the overall value spent by German buyers in our London online sales go up by 40 percent last year, versus 2019,” said Fahey, Sotheby’s managing director. “A lot of new German collectors are coming into the market as well, including younger collectors. Germany has it all.”

The country does indeed have all the ingredients for a strong market: prestigious collectors who have long been a sourcing hub (though their most valuable works are still offered in London, Paris, and New York); rich art scenes; eminent artists; an art fair, Art Cologne; and top art schools.

Dirk Boll, Christie‘s president for Europe, the Middle East, Russia, India, and Africa, declined to comment directly on whether the company would follow Sotheby’s lead, noting that it already has a salesroom in Geneva and staff in Munich, Hamburg, Frankfurt, and Stuttgart. “Christie’s strategy is to offer art enthusiasts the best possible sale platform with a high international exposure for their objects,” he said.

Despite frequent complaints about taxation in Germany, especially on the primary market, auctioneers shrugged it off when asked. “The VAT is one of the lowest rates of the EU,” Fahey said. Plus, secondary-market art sales operate on a margin scheme, so sellers must only pay tax on the commission made rather than the full purchase price.

One other piece of fine print, however, may prevent higher-value works from being offered in Germany: guarantees, which are frequently used to help houses secure top-flight material, are against the law here. (On the plus side, it keeps a certain fairness on the auction floor, noted Hainstein: “Guarantees are not correct.”)

Sotheby’s in Cologne. Image courtesy Sotheby’s.

A New Collector Class

Germans have been saving record amounts of money throughout the pandemic, giving them unprecedented levels of disposable income. A recent report in Deutsche Welle noted that, between January 2020 and January 2021, money in private bank accounts increased by €182 billion ($215 billion). “People are seeking alternative investments,” said Neußer of Ketterer Kunst.

“Maybe ten to 15 years ago, the really expensive lots in Germany were often sold to U.S. collections—this has changed,” he added. “A very similar number of German or Swiss collectors are starting to buy these works. For them, of course it is easier if the work can be seen before auction in Germany.”

What’s more, auctioneers say, the rising class of collectors are younger, more interested in luxury items, and very willing to buy online. Unlike in the past, when the trade was a major presence at auctions, the majority of lots today are going to private individuals rather than dealers. And while the usual clientele remains German-speaking people, including those from Switzerland, Austria, and the Italian region of South Tyrol, the audience is becoming more and more international.

Lempertz’s Hanstein says that 50 percent of their sales are to buyers abroad; by now, 90 percent of buyers for their Asian sales are from China or Hong Kong; and up to 85 percent of all bids are made online or over the phone.

“The Internet changes everything,” Neußer said. “People start to realize that it more depends on the quality of work an auction house is doing, and that it doesn’t really matter where the room of the auction is.”