A gallery employee looks at a painting by Andy Warhol and Jean-Michel Basquiat, Collaboration, 1982-1985, estimate £1,000,000 – £1,500,000, during a photocall at Christie's auction house highlighting the highlights of the 20th/21st evening sale. Century in London, United Kingdom, on October 6, 2023.
Wiktor Szymanowicz | Future publishing | Getty Images
A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide for wealthy investors and consumers. Sign up to receive future issues straight to your inbox.
The global art market is set for a second straight year of declines as demand for the best trophy works wanes and a new generation of buyers prefer cheaper pieces, according to a new survey.
Auction sales in the first six months at Christie's, Sotheby's, Phillips and Bonhams fell 26% from 2023 and 36% from the market peak in 2021, according to The Art Basel and UBS Survey of Global Collecting. The number of wealthy collectors surveyed who plan to buy art next year has fallen to 43% from over half in 2023. At the same time, the number of those planning to sell increased to 55% – that is, there are more likely sellers than buyers in the market.
“The largest lenders have seen a moderation in their spending or a slowing of their pace,” said Paul Donovan, chief economist at UBS Global Wealth Management. “They’re taking a more considered approach.”
As the art world prepares for major auctions in New York in November and Art Basel Miami Beach in December, dealers, galleries and auctioneers are hoping for a post-election rebound.
There are some bright spots. The vast majority (91%) of wealthy collectors are “optimistic” about how the global art market will perform over the next six months, up from 77% at the end of 2023, the survey said. At 88%, this is a larger share than the stock market optimistically estimated. Only 3% of wealthy collectors are pessimistic about the short-term future of the art market.
According to the survey, the average artificial dials of wealthy collectors remain stable at around $ 50,000 per year. Over three quarters of the wealthy collectors surveyed had bought a painting both in 2023 and in the first half of 2024.
But a wide range of metrics — from shopper interest to online sales — point to another year of declines or, at best, stagnant sales. Traders and auction experts say geopolitical concerns (particularly in the Middle East and Ukraine) as well as economic weakness in Europe and China are weakening buyer confidence. Higher interest rates also increased the opportunity cost of buying art, as wealthy collectors could easily make 5% or more on cash and government bonds.
Just like the classic car market, the art market is also going through a generational change, which leads to a mismatch between supply and demand. Older collectors reduce their collection by selling expensive but not masterful works. Younger collectors, especially the generation
“2024 suggests that trends toward higher sales are likely to impact sales volumes primarily, rather than triggering a supply-driven boom in value as in other years, with collectors tending to sell at the bottom of their collections and more, “But lower-value works and consultants reportedly focused on “streamlining client collections” by disposing of more unwanted or insignificant works of art rather than attempting to achieve price increases,” the UBS report said.
Dealers say the different paths of different generations have led to an oversupply of seven- and eight-figure impressionist and abstract works. According to the survey, the upper end of the art market, i.e. works with a price of $ 10 million or more, was strongest before 2022. Now it is at its weakest.
“Generation “They are more committed but may also have greater budget constraints. The people who have traditionally bought higher priced art are slowing down the purchase of these artists.”
In fact, Generation X has quickly become the most important generation for collectibles. According to the UBS survey, respondents from Generation
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Overall, wealthy collectors are reducing their contact with art. While the role of art as an “asset” is hotly debated, the report states that the average allocation to art was 15% in 2024, up from 22% of their portfolios in 2021. Admittedly, some of the decline could be due to the increased Value of art can be attributed to stocks and other assets in their portfolios. Still, the decline suggests that many collectors have stopped buying.
The super-rich have the highest level of contact with art. Those worth $50 million or more have an average of 25% of their wealth invested in art, compared to 29% last year. Millionaires with assets of less than $5 million have about 12%.
Collectors who have been in the market for decades have built large collections that either need to be sold, passed down to family, or bequeathed to museums or nonprofit organizations. The average number of works owned by wealthy collectors worldwide is 44, according to the survey. Generation Z collectors own an average of 33 works, while collectors who have been buying for more than 20 years own an average of 110 works.
When asked about their biggest concerns for the art market, most respondents (52%) cited “obstacles to the free circulation of art internationally.” The second largest concern was the “emergence of legal issues in the art trade,” such as restitution cases, forgeries and forgeries, and “ethical considerations regarding artists,” such as the way they are compensated and supported. “Art market fluctuations” took fourth place.
The “Great Wealth” transfer, in which tens of trillions of dollars of wealth could be passed from older generations to younger generations, could also usher in a “Great Art” transfer. According to the survey, fully 91% of wealthy collectors had works in their collections that were inherited or given away through a will or other gift.
Despite expectations that families would sell their inherited works, 72% of respondents kept at least some of their inherited art. Those selling inherited art cited a lack of display space or taxes rather than taste as reasons.
“There has always been an assumption that as art progresses through a generation, the younger generation has different tastes,” Donovan said. “But to assume that this will lead to the complete dissolution of the collections or sales is wrong. Art is something that arouses emotions, and you may have a connection with your parents through certain pieces of art.”
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