Three big auction houses will kick off their major London sales on Tuesday, facing what many say could be the most important test for the art market since 2008.
Yet while the U.K.'s vote to exit the European Union is expected to pressure results, it's also likely to provide bargains for opportunistic collectors.
The weaker British pound, which rebounded slightly in early trading Tuesday after hitting a 31-year low Monday, has made the art on sale this week roughly 10 percent cheaper in U.S. dollars than it was last year.
"The new exchange rates have the potential to make ... contemporary art sales in London more attractive to global art buyers," Sotheby's said in a statement.
The auction house added that it is confident in the long-term outlook for its company and the art market, saying "Sotheby's will continue to thrive in and adapt to whatever environment Brexit brings."
Christie's auction house said in a statement that, "For now, it is business as usual."
"We are used to adapting to suit the shifting political, legal and cultural issues wherever we do business," Christie's said. "Our experience across the years has shown us that collectors want to collect."
Yet as the curtain raises on contemporary art sales at Sotheby's, Christie's and Phillips this week, Brexit is adding another challenge to an already struggling art market. Fine art sales have slowed dramatically this year because of weaker stock markets and a pullback from the rich in the Middle East, Russia and Asia. Renewed volatility after the Brexit could more cast more clouds over the week's sales of more than $300 million worth of art.
"I think the [Brexit] referendum will have an impact," said Evan Beard, global art services executive with U.S. Trust, Bank of America Private Wealth Management. "I think a lot of people may stay on the sidelines for now."
Sotheby's estimates sales for its evening contemporary sale on Tuesday will be between £55 million and £78 million ($73 million and $104 million) — potentially less than half of last year's £130 million total.
Christie's expects to sell between £40 million and £58 million at its contemporary evening sale Wednesday. At last year's comparable sale, it brought in £95.6 million. But this year the auction house will sell an additional £30 million to £50 million of contemporary art at a special anniversary sale Thursday.
Indeed, Christie's has the most at stake this week. Its 250th anniversary sale, called "Defining British Art," will include the most expensive works of the week and is expected to bring in a total of £97 million to £140 million.
Among the works up for sale are Francis Bacon's "Version No. 2 of Lying Figure with Hypodermic Syringe," which experts say could sell for around £20 million (there is no published estimate), and Lucian Freud's "Ib and her Husband," which is estimated to sell for £18 million.
Sotheby's top lots include Jenny Saville's "Shift," which is estimated to sell for between £1.5 million and £2 million. Keith Haring's "The Last Rainforest" is estimated to sell for £2 million to £3 million. And Sigmar Polke's "Red Fish" is estimated to go for between £3.5 million and £4.5 million.
Beard said that while roiling stock markets may be spooking buyers, the bigger problem for the art market is reluctant sellers. With prices down and the auction companies cutting back on their once generous guarantees — through which they pay a seller a fixed price regardless of the auction results — collectors are less willing to part with their best works.
"Sellers just don't want to take the risk right now," Beard said. "So there is a lack of supply."
Correction: This version corrects the spelling of Phillips and Lucian Freud.