According to the Art Basel/UBS report, due to “inflation and wars”, last year there was a decline in sales of very high-value works but also an increase in the volume of transactions
Art Basel in Basel in 2023. Courtesy of Art Basel
According to the eighth annual report released today by UBS/Art Basel, after two years of recovery from the Covid-19 pandemic, last year the global art market shrank by 4%, from $67.8 billion to $65 billion. The report analyzes 1,600 independent art galleries and dealers and more than 500 auction houses, analyzing their turnover for 2023 and exploring broader questions about the trade.
The global market has returned to close to the level of 64.4 billion dollars recorded in 2019, net of inflation. One of the main reasons for this contraction is the decline in sales of the most expensive works, those with prices starting from 10 million dollars. The report places this phenomenon in a context of «rising interest rates, stubbornly high inflation, wars and political instability [che] have had repercussions on more selective and cautious purchases in the high end of the market». These high-end sales were “critical” to post-pandemic growth in 2021 and 2022.
All in all, Auction sales fell more than dealer sales, by 7% versus 3%.. The largest private dealers, with annual sales exceeding $10 million, saw an average drop in sales of 7%. The United States continues to dominate the global market, although their 42% share is down 3% from last year’s peak. The domestic art market contracted by 10% compared to the previous year, going from the record figure of 30.1 billion dollars to 27.2 billion. New York is the world’s leading commercial center for high-value works, making it particularly sensitive to changes in this price category.
The “fall” of London
Also the United Kingdom, whose capital, London, is the second most important city for sales of high-value works, recorded a notable decline. And, unlike the United States, it is doing worse than it did before the pandemic. Last year, the overall market fell 8% to $10.9 billion, below 2019 levels and 15% below 2013. In particular, the $10 million-plus category , the UK’s trade suffered a staggering 42% decline in value and 35% volume, helping it slip from second to third place in global market share, behind China (the two countries regularly exchange these positions). Imports of art and antiques into the UK fell by 16%, from $2.8 billion in 2022 to $2.3 billion in 2023, 20% below levels recorded in 2019.Clare McAndrew. Photo Art BaselThe UK’s poor performance is attributed to both the above-mentioned reasons and “persistent Brexit issues”, says the report’s author, Clare McAndrewwhich conducts the survey through its research firm Arts Economics. France, the world’s fourth-largest market, also saw a 7% decline from the previous year, with a 10% decline in auction sales and a 3% decline in sales reported by dealers.
What kept the global market from falling further was post-pandemic spending in the first half of 2023 in China and Hong Kong, where zero-Covid measures were abandoned at the end of 2022. Sales increased 9% from the previous year to $12.2 billion. However, the collapse of the Chinese real estate market and other signs of economic malaise affected the second half of the year and will likely continue into 2024. «The real estate crisis in mainland China is real: the market is more difficult“, he claims Noah Horowitz, general director of Art Basel. But «the market is substantially large and dynamic. We’ll see how it looks for sales starting with Art Basel in Hong Kong this month (March 28-30) and the city’s March auctions». Other Asian art market hubs reported year-on-year declines, including Japan, Singapore and South Korea.Noah Horowitz photographed in 2002 in Basel by Noé CotterA look at the past and the future
The global art market regularly experiences contractions. Looking at the graph provided in the survey of the last 15 years of sales growth by value, there were declines in 2020, 2019, 2016, 2015 and 2012, some of which were much larger than the 4% decline in 2023. According to McAndrew, what distinguishes the current year is the «decline in sales of high-value products». The spending reserve of the “ultra-rich” who buy works in the highest price range is more pronounced than in other lean years. According to the report, «concerns about wealth creation and its stability” they have “distracted the attention of ultra-rich collectors».
The continued increase in collectors turning to credit to finance art purchases has meant that economic factors such as interest rates influence spending more than they have previously. However, the forecasts are not entirely negative. Global trading volume increased in 2023: Galleries with turnover under $500,000 saw the largest increase in sales, at 11%. While this suggests good news for mid-range galleries, which are increasingly at risk of being taken over by larger businesses, McAndrew is keen to highlight the dangerous effects of rising costs that dealers face in all industry levels. According to McAndrew, an “overwhelming” number of respondents expressed concern about rising business expenses. «It will take more than a year to level the playing field“, he claims.
Online sales channels, although down from their peak in 2021, are still nearly doubled compared to 2019, which suggests they are here to stay. Overall, the report paints a worrying, if not hopeless, picture. While 36% of dealers surveyed were positive about sales for 2024, compared to 45% the previous year, they also expect «a decline in interest rates and a weakening of inflation”. What is certain is that 2023 has underlined that the art and luxury sectors «they are not immune to disruptive financial, social, or political changes».
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