The art market has faced a number of challenges in recent years. This includes strong inflation, which has reduced demand from collectors, economic instability, and a slow recovery after the coronavirus pandemic. As a result, the art market in the leading countries of the industry, the United States, Great Britain and France, declined last year. But the Chinese segment showed unexpected growth and took second place in terms of sales.
The Art Basel & UBS companies have prepared a large-scale study of the art market, in which they talked about its condition and potential. Finam.ru talks about the main trends for 2024.
The global art market has shrunk to $65 billion
For two years in a row, 2021 and 2022, the global art market has been gradually growing, recovering from lockdowns and covid restrictions. However, in 2023 it decreased by 4% to $65 billion. Despite the drop in value, the number of transactions increased by 4%.
The United States has maintained its leading position - it accounts for 42% of the global art market. China has become the second largest market - its share has grown to 19%. The United Kingdom fell to third place with 17%. France holds the stable fourth place with 7% of the market.
After a steady recovery that reached a record high of $30.2 billion in 2022, the U.S. market declined by 10% to $27.2 billion in 2023.
Of the big four, art sales among the largest markets increased only in China by 9% last year and reached $12.2 billion. In the UK market, they fell by 8% to $10.9 billion. The French market fell by 7% in 2023 to $4.6 billion, although it remained slightly above its 2019 level. Sales in the EU decreased by 2% to about $8.6 billion.
Digital sales are growing, but still significantly inferior to offline
Online sales continue to gain momentum in the art market. In 2023, they grew by 7% to $11.8 billion, accounting for about 18% of the total market turnover. According to experts, these figures will continue to increase over time as the economy digitalizes. However, the main transactions are still concluded offline. For example, more than 95% of purchases at online auctions were made at prices below $50 thousand. Despite the fact that offline accounted for mostly large transactions worth from $ 1 million. However, in general, sales at both public auctions and art dealers in 2023 decreased by 7% and 3%, respectively.
After a sharp increase in online transactions during the pandemic, the art market seems to have switched to a double transaction mode. Offline is still in demand, especially for expensive lots, and online sales of more affordable art objects are growing. The share of the digital art market is expected to increase to 24% by 2026.
Surveys of collectors have shown that price is still the determining factor when choosing the way to conclude a deal. The more expensive the lot, the more there is a desire to personally evaluate it before buying. The majority of collectors surveyed, 86%, purchased works of art through a gallery or dealer in 2023. Moreover, those who bought from dealers, in 65% of cases, made an order online through the company's website. This is the most popular way to buy art online. At the same time, representatives of generation Z most often bought online - they accounted for 39% of online sales in the art market.
What awaits the art market in 2024?
In 2024, the main interest of collectors in the art market is focused on China. Unlike the economy of China, the Chinese art market has managed to recover after the lifting of covid restrictions in the country at the beginning of last year. Art remained one of the most liquid instruments on the Chinese market, so collectors and investors took the chance to replenish their portfolios and buy art market items while they were cheap. Now some investors have already started selling collections that have reached peak prices.
A study by the Chinese Auctioneers Association showed that Chinese calligraphy and painting remains the largest sector, accounting for 54% of total sales in the market. The demand for modern Chinese art has decreased by 21%, stable sales from deceased artists of the Middle Kingdom - they account for 90% of paintings in the country.
As the authors of the study expect, in 2024, speculative purchases may increase in the Chinese art market, when investors will buy lots to sell them as soon as they grow. This approach can lead to price instability for art objects.
In general, participants in the global art market look positively at its prospects in 2024 and believe that this year will be stable. Thus, 36% of dealers surveyed and 38% of auction house representatives said they expected sales to improve. Only 4% of respondents are pessimistic and predict a decline in art sales in 2024.
Experts expect lower inflation and lower regulatory rates in large markets, which will also contribute to an increase in demand in the art market. Interest rates are important because, according to a study of collector behavior conducted by Arts Economics and UBS in 2023, 43% of them used loans to finance purchases of works of art. On average, the share of works of art in the portfolio of wealthy investors-collectors was 19%. It is expected to remain stable or increase slightly in 2024.
