High-End Buyers’ Caution Causes Global Art Sales to Drop by 4% to $65 Billion

Global sales of art and antiquities fell 4% to an estimated US$65 billion last year due to economic and geopolitical realities, according to the annual art market study released on Wednesday by Art Basel and UBS.

Though the market fell as interest rates and inflation rose and conflicts erupted around the world, the total—which includes sales at auction houses, galleries, and art fairs—is relatively robust given the market’s headwinds, remaining slightly higher than a pre-pandemic level of $64.4 billion in 2019.

According to the research, a 4% increase in transaction volume, driven by lower-priced object sales, gave some market buoyancy.

This is a stark contrast to the preceding two years, when the market—particularly at large auction houses—was dominated by high-ticket items. In 2023, the number of auction lots selling for more over US$10 million fell by 25%, while houses enjoyed “low, positive growth” for lots worth under US$50,000.

At the same time, sales at the largest dealers and galleries—those reporting turnover of at least US$10 million annually—dropped 7% by value on average, the research noted.

Despite the headwinds, “collectors are still very eager to spend and to engage in the market,” Clare McAndrew, creator of Art Economics in Ireland, and author of the report, said in a taped chat about the findings. “We are seeing a slightly more careful and cautious approach to several of their acquisitions. Some of them may be taking fewer risks, which is understandable, but they are still actively supporting the market.”

Sales in the United States fell 10% from the previous year to US$27.2 billion, but the country remained the global art trade’s focal point. China surpassed the United Kingdom to grab the No. 2 slot, with sales rising 9% to US$12.2 billion, boosted by first-half sales of auction inventories held back amid severe pandemic lockdowns in 2022. The Chinese market, however, slowed in the second part of the year as the country’s economy faltered.

The decline in high-ticket works harmed the UK market, which serves as a hub for such sales. Overall, sales fell 8% to US$10.9 billion last year, down 11% from US$12.2 billion in 2019, pre-pandemic.

According to the analysis, last year’s market slump was preceded by a year of inconsistent and modest growth. This marked a significant shift from 2021, when sales increased by 29% due to worldwide demand following the pandemic’s early phase. Of course, that came after a 22% drop in 2022. The market’s highest total was obtained in 2014, when sales reached US$68.2 billion.

The totals mentioned in the report are estimates obtained from auctions and dealers. Global public auction sales declined 7% in 2022 to US$25.1 billion, while private sales increased 2% to US$3.9 billion, according to the research. Meanwhile, dealer sales are expected to fall 3% to around $36.1 billion. Art fairs accounted for 29% of overall sales, down 6% from the previous year.

Although public auction results are very simple to calculate (the report relies on data from five sources), dealer transactions are not. Art Economics conducts annual surveys to estimate sales at privately held enterprises, which were disseminated to 60 regional and national markets in December this year. The company received over 1,600 answers from a global sector that it believes contains 300,000 enterprises, ranging from one-person shops to multinational corporations. The report stated that the responses are unlikely to include many smaller firms who perform lower-value sales.

The most significant story in the dealer sector was an increase in sales volume for smaller enterprises. Sales for those with an annual turnover of less than US$500,000 increased by 11% last year. Still, more than half of dealers with annual sales of $10 million or more are positive about the coming year, with only 8% forecasting a dip in sales, according to the research.

Last year, inflation weighed on retailers’ rent and payroll expenditures, reducing earnings while sales fell. According to the poll results, 40% of businesses reported lower profitability last year, an increase of 8% from the previous year, while 29% reported higher profitability, a 10% decrease from the year before.

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