The Art Market Is All About the 0.1%
The art market is starting to look like a painting that has too much of the action crammed into one corner.
Artworks worth an estimated $67.8 billion were sold globally in 2022, according to a report this week from art-show organizer Art Basel and
UBS.
Although the industry had already made a full recovery from the pandemic by 2021, it seems to be cooling. Last year’s 3% growth was lower than expected.
Sales were split between dealers with about 55% and auction houses with 45%. Dealers did better than auction houses last year, despite the $1.6 billion sale of late
Microsoft
co-founder
Paul Allen’s
art collection at Christie’s in November—the highest-ever haul for a single auction. A shift to dealers could be a sign that confidence in the market is shaky. A painting that doesn’t sell at auction leaves a public record, while a deal that fails behind closed doors won’t.
What is clear is that the last three years have made the art world more dependent on the super rich. In 2022, works that sold for more than $1 million represented 60% of the value of auction sales, up from 55% in 2019 and 45% a decade ago. These more expensive works are only a tiny share of what goes under the hammer—1% of total lots.
The industry’s performance is becoming more closely tied to how a small group of around 2,600 global billionaires are faring. In 2020, this cluster increased their wealth by almost a third, as tech stocks went on a tear in the early days of the Covid-19 crisis. This contributed to a surge in sales at the top of the art market. In 2022, spending on artworks worth more than $10 million was 177% higher than in 2020. Demand for less expensive art hasn’t been as exuberant, maybe because layoffs have hit well-paid professionals in sectors like tech the hardest.
Divergence between the top and bottom of the art world isn’t new and may be another unintended consequence of ultralow interest rates. Last year sales of works valued at more than $10 million were 700% above 2009 levels, compared with a 10% increase for art priced below $50,000.
For now, a Rolodex of billionaire clients is a nice problem to have. Wealthy collectors are insulating the art world from problems that have hit alternative investments like cryptocurrencies. Europe’s luxury brands are also benefiting from this defensive trait. Very wealthy shoppers are still spending lavishly at the most expensive labels, such as Louis Vuitton.
But there are downsides for smaller dealers that cater to affluent but not necessarily rich clients. Their sales fell 3% in 2022 as demand thinned out and buyers became more cautious. And although the market has bobbed around from year to year, art sales have barely grown over the last decade. That suggests the industry hasn’t done a good job of attracting a more diverse set of buyers in the way luxury brands have. New diversified art funds such as one set up by artwork certification expert Artory and Winston are trying to widen art’s appeal as an investment class.
Billionaires’ selective taste in art means they tend to compete for the same works. This can cause prices to skyrocket in narrow corners of the market. In 2022, a group of only 20 artists accounted for 56% of total sales in contemporary art, which is the largest category at auction. This includes so-called blue-chip artists like Francis Bacon, Mark Rothko and Andy Warhol, whose works tend to increase in value over time. Warhol’s Shot Sage Blue Marilyn fetched $195 million last year, making it the second-most expensive work ever sold at auction.
The lumpy art market is merely reflecting growing disparities in how global wealth is shared. It isn’t a pretty picture for dealers at the bottom.
Write to Carol Ryan at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The art market is starting to look like a painting that has too much of the action crammed into one corner.
Artworks worth an estimated $67.8 billion were sold globally in 2022, according to a report this week from art-show organizer Art Basel and
UBS.
Although the industry had already made a full recovery from the pandemic by 2021, it seems to be cooling. Last year’s 3% growth was lower than expected.
Sales were split between dealers with about 55% and auction houses with 45%. Dealers did better than auction houses last year, despite the $1.6 billion sale of late
Microsoft
co-founder
Paul Allen’s
art collection at Christie’s in November—the highest-ever haul for a single auction. A shift to dealers could be a sign that confidence in the market is shaky. A painting that doesn’t sell at auction leaves a public record, while a deal that fails behind closed doors won’t.
What is clear is that the last three years have made the art world more dependent on the super rich. In 2022, works that sold for more than $1 million represented 60% of the value of auction sales, up from 55% in 2019 and 45% a decade ago. These more expensive works are only a tiny share of what goes under the hammer—1% of total lots.
The industry’s performance is becoming more closely tied to how a small group of around 2,600 global billionaires are faring. In 2020, this cluster increased their wealth by almost a third, as tech stocks went on a tear in the early days of the Covid-19 crisis. This contributed to a surge in sales at the top of the art market. In 2022, spending on artworks worth more than $10 million was 177% higher than in 2020. Demand for less expensive art hasn’t been as exuberant, maybe because layoffs have hit well-paid professionals in sectors like tech the hardest.
Divergence between the top and bottom of the art world isn’t new and may be another unintended consequence of ultralow interest rates. Last year sales of works valued at more than $10 million were 700% above 2009 levels, compared with a 10% increase for art priced below $50,000.
For now, a Rolodex of billionaire clients is a nice problem to have. Wealthy collectors are insulating the art world from problems that have hit alternative investments like cryptocurrencies. Europe’s luxury brands are also benefiting from this defensive trait. Very wealthy shoppers are still spending lavishly at the most expensive labels, such as Louis Vuitton.
But there are downsides for smaller dealers that cater to affluent but not necessarily rich clients. Their sales fell 3% in 2022 as demand thinned out and buyers became more cautious. And although the market has bobbed around from year to year, art sales have barely grown over the last decade. That suggests the industry hasn’t done a good job of attracting a more diverse set of buyers in the way luxury brands have. New diversified art funds such as one set up by artwork certification expert Artory and Winston are trying to widen art’s appeal as an investment class.
Billionaires’ selective taste in art means they tend to compete for the same works. This can cause prices to skyrocket in narrow corners of the market. In 2022, a group of only 20 artists accounted for 56% of total sales in contemporary art, which is the largest category at auction. This includes so-called blue-chip artists like Francis Bacon, Mark Rothko and Andy Warhol, whose works tend to increase in value over time. Warhol’s Shot Sage Blue Marilyn fetched $195 million last year, making it the second-most expensive work ever sold at auction.
The lumpy art market is merely reflecting growing disparities in how global wealth is shared. It isn’t a pretty picture for dealers at the bottom.
Write to Carol Ryan at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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