A gallery worker looks at Andy Warhol’s collaboration with Jean-Michel Basquiat, 1982-1985, during Christie’s 20th/21st Century Evening Sale in London, England. Year, Valuation £1,000,000 – £1,500,000 6 October 2023.
Viktor Szymanovich | Future Publishing | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up To receive future editions delivered directly to your inbox.
The global art market is expected to decline for a second consecutive year as demand for top-quality works weakens and a new generation of buyers favor lower-priced works, a new survey shows.
Auction sales at auction houses Christie’s, Sotheby’s, Phillips and Bonhams in the first six months were down 26% from 2023, according to data from Art Basel and the UBS Global Collection Survey. The peak dropped by 36%. Among wealthy collectors surveyed, the number planning to buy art in the next year dropped to 43% from more than half in 2023. More likely than buyers.
“For those who are spending the most, their spending has slowed or slowed,” said Paul Donovan, chief economist at UBS Global Wealth Management. “They are taking a more thoughtful approach.”
As the art world prepares for major auctions in New York in November and Art Basel in Miami Beach in December, dealers, galleries and auctioneers are hoping for a post-election rebound.
There are some highlights. The survey shows that the vast majority (91%) of wealthy collectors are “optimistic” about the performance of the global art market in the next six months, up from 77% at the end of 2023. This proportion is higher than our optimistic forecast for the stock market (88%). Only 3% of high-net-worth collectors are pessimistic about the short-term prospects of the art market.
The survey showed that wealthy collectors’ median art spending remained stable at about $50,000 per year. More than three-quarters of wealthy collectors surveyed purchased a painting in 2023 and the first half of 2024.
However, a wide range of indicators – from buyer interest to online sales – point to another year of declining sales, or at best, being flat. Dealers and auction experts say geopolitical concerns, particularly in the Middle East and Ukraine, and economic weakness in Europe and China are eroding buyer confidence. Higher interest rates also increase the opportunity cost of buying art, as wealthy collectors can easily earn 5% or more on cash and Treasury bonds.
as in classic car marketThe art market is undergoing a generational shift, creating a mismatch between supply and demand. Older collectors are downsizing their collections by selling expensive but not masterpiece-quality works. Younger collectors, mainly Generation X and Millennials, are entering the market to replace them, but they are buying more affordable, modern works from galleries and art fairs.
“2024 suggests that, unlike supply-driven value booms that may occur in other years, the trend toward increased sales may primarily affect sales volume, with collectors tending to sell collections from the bottom, selling more but lower-value works, according to Advisers are reportedly focused on “simplifying client collections” and disposing of more unwanted or irrelevant art rather than trying to capture price appreciation,” the UBS report said.
Dealers say the different paths of the generations have led to a glut of seven- and eight-figure Impressionist and abstract works. The survey shows that the high-end art market, defined as works priced at $10 million or more, is strongest until 2022.
“Gen X, and to a lesser extent younger generations, they’re not necessarily going out and buying the most expensive art,” Donovan said. “They are more committed, but may also face more budget constraints. People who have traditionally bought high-priced art are slowing down their purchases of these artists.”
In fact, Gen X has quickly become the most important generation for collectibles. According to the UBS survey, Gen Generation Z and more than twice as many respondents as Generation Z.
Overall, wealthy collectors are reducing their exposure to art. Although the role of art as an “asset” is hotly debated, the report said the average allocation to art in 2024 will be 15%, down from 22% in 2021 portfolios. Increase. However, this decline suggests that many collectors have paused their purchases.
The ultra-rich have the highest exposure to art. On average, 25% of the assets of those worth $50 million or more are in art, down from 29% last year. About 12% of millionaires are worth less than $5 million.
Collectors who have been active in the market for decades have amassed large collections that must either be sold, passed down to family members, or bequeathed to museums or nonprofit organizations. The survey shows that wealthy collectors around the world own an average of 44 works. Gen Z collectors own an average of 33 works, while collectors who have purchased for more than 20 years own an average of 110 works.
When asked about their biggest concerns about the art market, the largest number of people (52%) cited “obstacles to the free flow of art internationally.” The second biggest concern is “the rise of legal issues in the art trade,” such as restitution cases, forgeries and forgeries, and “ethical considerations regarding artists,” such as how to be compensated and promoted. “Art market volatility” ranked fourth.
this great wealth transferwhich may lead to the transfer of tens of trillions of dollars of wealth from the older generation to the younger generation, and may also usher in a great artistic transfer. Surveys show that 91% of wealthy collectors have works in their collections inherited or gifted through wills or other bequests.
Although families are expected to sell their inherited art, 72% of respondents retained at least some of their inherited art. Those selling inherited art are more likely to cite lack of display space or taxes as reasons rather than taste.
“There’s always been an assumption that as art is passed down one generation, the younger generations will have different tastes,” Donovan said. “But it’s a mistake to think that this will lead to a wholesale dismantling or sale of collections. Art is a Stuff that inspires emotion, certain pieces of art that might connect with your parents.”
