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The global art market reached its limits in 2023, falling 4 percent to a three-year low of $65 billion, as the macroeconomic and geopolitical backdrop slowed activity at the upper end, according to a new report. The annual Art Basel and UBS Art Market Report found that the wealthy “are not immune to disruptive financial, social or political changes,” according to author Clare McAndrew of Arts Economics. She added that continued uncertainty indicates a “stable” outlook for 2024.
In a stark reversal of recent trends, the biggest declines were in the highest-priced works. Values have fallen sharply for artworks worth more than $10 million at auction — the only sector that will grow in 2022, but which fell 40 percent last year. The largest private dealers, with annual sales of more than $10 million, reported an average sales decline of 7 percent, based on a McAndrew survey of more than 1,600 showrooms.
There was some better news at the lower end of the scale where volumes improved and traders with sales of less than $500,000 had the largest increase in sales (11 per cent). This dynamic helped boost online sales, which mostly generated less than $50,000, representing 18 percent of total market sales, double the share compared to 2019.
The pressure of rising costs was clearly evident in the trader survey, which showed that issues including rent and salary increases meant lower profits for 40 per cent of the sample (up 8 percentage points in 2022). The report said many found it “an extremely difficult year to balance their budgets”, with buyers looking for deeper discounts in 2023, averaging 18 per cent – and higher for more expensive businesses.
The overall market decline, which brought it back to pre-pandemic totals in nominal terms, was not as dramatic as some had expected, and was partly saved by strong results from China in the first half of the year. Here sales rose 9 per cent year-on-year to $12.2 billion, meaning China took second place behind the UK (down 8 per cent to $10.9 billion). The United States remained the leading geographic region in the art market with sales reaching $27.2 billion, representing 42 percent of the global market. Total US sales still represent a 10 percent decline year over year, with higher value items tending to sell in New York and London.
However, China's relative strength was mostly a result of sales held back by Covid restrictions that remain in place in 2022. This “unique reopening context” was reversed in the second half of the year, exacerbated by the country's real estate slump, McAndrew said. . On the other hand, persistent problems related to non-payment and arrears remained the hallmark of the Chinese market. Data from the China Auction Association used in the report showed that only 54 percent of the value of goods sold in 2022 was fully settled by May 2023, although this was up 8 percentage points from the previous year.
The report indicated that the challenging environment and accompanying low prices are expected to continue until 2024, when economies representing 40 percent of global output will hold elections. “Election years are notoriously complicated for the art market, especially when they are so divisive,” Art Basel CEO Noah Horowitz told the Financial Times.
Hopes for the uncertain future rest on what the report's authors describe as the Taylor Swift effect – that people will now pay higher prices for entertainment and leisure activities. The social aspect of art collecting, “always mixing physical collectibles with fun,” is a potential ray of hope for the fragile year ahead, the report said.
theartmarket.artbasel.com
