As the global art market weakens, the Art Basel fair and the major bank UBS conducted a survey of its main target groups. One medium in particular is popular as an investment among wealthy art collectors.
The Covid-19 pandemic has hit the art market less severely than feared. But last year, global sales in the art trade fell 4% to $65 billion. Especially at the top of the market, buying interest has decreased, but not due to purchasing power, which has only turned to other, cheaper investment sectors. This is a finding announced by Art Basel and its main sponsor UBS in their current study on the art trade.
For many years the large Swiss bank, which itself has built an important art collection and looks after many financially strong art collectors and investors, and the powerful art fair have been collecting data on the international art trade and prepare them at regular intervals. In the new edition, chief analyst Clare McAndrew focuses on this top of the market, whose financial sector participants are grouped under the acronym HNWI. This stands for “High-Net-Worth-Individual”, or in German: rich millionaires who have at least one million euros in liquid capital.
In 2023 there were 58 million (a slight decrease compared to 2021); statistics show that they owned assets worth as much as $214 trillion; This clientele is a key clientele at the Art Basel fairs, where works of art are sold for five-, six- and sometimes seven-figure sums in dollars, euros or Swiss francs.
There are no signs yet of a turning point in the downward trend this year, he said “Survey on global collecting”. An indicator of the collapse is also the decline in sales of the four major auction houses Christie’s, Sotheby’s, Phillips and Bonhams, whose revenues fell by a good quarter and are therefore still below the pre-pandemic level.
Survey of 3,660 millionaires
Geopolitical tensions, inflation and high interest rates would weigh on the mood of the entire sector and its solvent customers. This is the result of a survey conducted on 3,660 private individuals. Their spending (including on art) was expected to decline by a good 32% in 2023, and for younger HNWIs – affluent millennials – by as much as 50%.
Both quantitative and qualitative data were collected in the survey. The most popular genre in the art trade is paintings; they make up more than three-quarters of art purchases. Works on paper such as drawings and prints saw an increase of 33% compared to 2022. The “cutlery” often derided by critics and which can be hung on the wall is and remains the medium for collectors and investors. Insight that galleries that have more of a conceptual art program I now (have to) respond to.
A sales market that only Corona created has established itself: online viewing rooms. 72% of HNWIs have purchased artworks through these digital platforms without seeing them in the original. But Instagram’s share as a sales tool is also growing, as is the willingness to purchase new galleries. The number of galleries millionaires bought from also increased from 13 to 18.
Many “are open to new artists and play an important role in supporting artists’ careers,” which is reflected in the fact that around half of their spending goes towards works by young and emerging artists. The percentage of female artists has also increased, from 33% in 2018 to 44% in 2024.
Market reports from Art Basel, which organizes fairs in Basel, Paris, Miami Beach and Hong Kong, always contain some self-praise – after all, it is probably the most successful brand in the art fair sector. A second survey of our VIP guests shows that 26% of them prefer to spend their money at trade shows, more than double the general survey. However, one of the main competitors seems to have been left behind: “The auctions represented a significantly lower expense of 12%”.
What are the key factors influencing high-net-worth individuals’ decisions to invest in art?
Interview: Navigating the Art Market Landscape with Clare McAndrew, Chief Analyst at Art Basel
Editor of Time.news (TN): Good afternoon, Clare. Thank you for joining us today. It seems the art market is experiencing some turbulence. Can you elaborate on the key findings from your recent survey with UBS that profiled high-net-worth individuals’ (HNWIs) attitudes towards art investment?
Clare McAndrew (CM): Good afternoon! It’s great to be here. Yes, our latest survey indicates a notable shift in the art market. While the overall impact of the pandemic on the art market was less severe than expected, we still observed a decline of about 4% in global sales last year, bringing it down to around $65 billion. The affluent art collectors are certainly feeling the pressure from external factors like inflation and geopolitical tensions.
TN: That’s indeed concerning. You mentioned the spending habits of affluent millennials in particular. What trends are you seeing there?
CM: The spending outlook for younger HNWIs is quite drastic. We anticipate a sharp decline in spending by around 50% for this demographic in 2023. This reflects a broader concern related to economic factors. Many affluent individuals are diversifying their investment portfolios and turning towards cheaper sectors, which impacts their willingness to spend on high-value art.
TN: Interesting. Now, it appears that paintings remain the most sought-after form of art among collectors. Why do you think that is?
CM: Paintings have a unique allure, and they comprise over three-quarters of art purchases. Their historical value, combined with the emotional connection that collectors often have with them, makes paintings a favored choice. Moreover, they often command higher prices at auctions and fairs, adding to their appeal as an investment.
TN: When it comes to auction houses, you mentioned a significant drop in their revenues. How do you think this trend will shape the future of art transactions?
CM: Yes, the major auction houses like Christie’s and Sotheby’s have seen revenues decline by over a quarter, which is still below pre-pandemic levels. This decline can alter the landscape of art transactions—buyers may start looking for alternative platforms or galleries for acquiring art. The market might also see a restructuring of how art is valued and sold in light of these challenges.
TN: Speaking of alternative platforms, do you think digital platforms and online sales will play a larger role in the art market moving forward?
CM: Absolutely, I think the pandemic accelerated the shift towards digital platforms, and many collectors appreciate the convenience they offer. As younger, tech-savvy collectors enter the scene, digital sales channels will likely expand and evolve to accommodate evolving buying trends.
TN: Looking ahead, what would you say are the main indicators we should watch for to gauge the recovery of the art market?
CM: Key indicators would include the general sentiment among HNWIs—especially regarding their spending plans for luxury items—and the performance of auction houses. A stabilization in geopolitical tensions and a favorable economic outlook could spark renewed confidence in high-level art investments.
TN: Thank you, Clare, for sharing your insights. It seems the art world is at a fascinating crossroads, and I’m excited to see how it evolves.
CM: Thank you for the opportunity to discuss these important trends. The resilience of the art market is truly remarkable, and I look forward to seeing how it adapts in the coming years.