The Current State of the Art Market:
A Report by Mariia Kashchenko
As with many sectors, the pandemic resulted in significant disruption to the art market globally. Rolling lockdowns and restrictions on gatherings made galleries and auction houses close their doors and in person auctions did not begin in a limited capacity again until as late as summer 2021 in some countries. However, with some returning sense of normality the art market has been revitalised and sales volume has quickly returned to the pre-pandemic levels. Art galleries and auction houses have seen record prices in post pandemic sales and regular exhibitions featuring new and emerging, as well as established artists have brought with them traditional buyers as well as newcomers to the art market. Furthermore, the pandemic accelerated the growth of online sales platforms, auctions and new methods of entering the art market such as NFTs and buying shares in art. While the current market closely resembles that of the pre-pandemic world, important issues still exist, most importantly the impact of the Russian war in Ukraine on the art world, and the impact of global inflation on the prices and market for valuable artworks.
ART GALLERIES AND AUCTION HOUSES
Art galleries and auction houses were significantly impacted during the pandemic during the lockdowns. Yet, the first half of 2022 proved that the art market has at last firmly recovered from the crises of the past two years.
- Galleries and auction houses have adapted to the ‘new normal’; ‘Dealers and auction houses successfully adjusted to a new two-tier system of online and offline sales and events.’ says Dr. Clare McAndrew in the sixth edition of the Art Basel and UBS Global Art Market report. Furthermore, this ‘new normal’ has helped galleries and auction houses in achieving new price records, attract new buyers and engage wider audiences.
- Auction houses firmly bounced back to the pre-pandemic results, as sales of fine and decorative art and antiques increased of 47% in 2020. (Artnet, 2022).
- Artsy reports on the rise of competition on the new artists on London’s March sales in 2022. Artists who have previously experienced primary market success have seen record prices 10 times more than their estimates. The same trend was present at the April ‘New Now’ sale in Philips Auction House that featured works of young emerging artists, with some of the lots reaching multiples of their estimates, like Untitled by Aboudia, which was sold for £81,900 while its estimate was at £20,000-25,000.
- Clare McAndrew in her UBS & Art Basel Art Market Report of 2022 outlines that dealers and galleries who are active in the contemporary art sector have grown significantly more than those operating in Modern art or Old Masters sector. This evidences the trend for new and emerging artists amongst the buyers. The market for them is becoming stronger and more stable.
- Art Fairs continue to struggle, as most of 2021 and beginning of 2022 saw reduced number of fairs and the number of art fairs is below pre-pandemic level. (Clare McAndrew, Art Basel & UBS Global Art Market Report, 2022). However, dealers remain positive and predict a growth in art fair sales in the next 12 months.
- The Art Market became more open to new buyers due to the hybrid business models of offline and online being merged together. The growth and development of the online art market allows buyers easier access and greater flexibility.
- As the world reopened post pandemic the art market has seen a rapid growth of galleries opening new spaces and introducing new exhibition programmes. Galleries opening in new locations that quickly become rising art hubs and attract new audiences.
- In their art market update, Bank of America says that, the art market is likely to outperform expectations, as NFTs, luxury goods and collectibles are creating new markets for auction houses, given the supply-constrained and niche traditional fine art market.
- Public auction sales of fine and decorative arts and antiques rose by 47% compared to 2020, reaching an estimated $26.3 billion. (2022)
- The ratio of lots offered to lots sold—was 73.4%, higher than in any other year examined except 2021. (Artnet, 2022)
Online platforms grew significantly during the pandemic due to a combination of the closure of galleries and auction houses and increased disposable income of young professionals due to working from home and the limited options for spending money. The online market has been developing steadily before the pandemic, in 2020 the online art market boomed with virtual exhibitions, online viewing rooms, online art fairs, and of course, NFTs. The online art market continued expanding last year, online sales accounted for 20% of sales in the art market in 2021. (Clare McAndrew, Art Basel & UBS Global Art Market Report, 2022). The growth of online art market has slowed down in 2022 yet it is evident that it has become a vital segment of the global art market that is not going anywhere. The development of the art market helps in making the global art market more accessible, Anders Petterson, ArtTactic’s founder, says that: ‘It has opened channels to a whole new demographic.’
- Online galleries and auction houses continued growing, and now often offer a hybrid model of pop-up offline exhibitions and events alongside all services provided online. This development of the online art market has also helped in pushing the boundaries of the art market that is often perceived as elitist and hard to enter. It has helped in reaching wider audiences, as more and more people can ‘visit’ a gallery show and buy artworks without having to leave their home.
- NFTs, or Non Fungible Tokens have been around since 2014, yet it was the last two years that made this medium secure its place in the art world. Major auction houses like Sotheby’s and Christie’s as well as top tier galleries had sold NFTs in their sales. NFTs are one of the other ways to democratise the ‘intimidating’ art world.
Just like galleries, art fairs were affected greatly by the 2020 Covid pandemic. With travelling restrictions, limitations in terms of social gathering and other rules, art fairs were greatly disrupted up until Spring 2022.
- Similarly to other segments of the art market, art fairs made an effort in adapting to the shift online, with virtual viewing rooms and online art fairs. These include Art Basel, FIAC, London Art Fair, Frieze and others.
- Art fairs returned to their normal schedule in 2022 and their results proved the strength of the art market. Brian P. Kelly in his article on Art Basel for Artsy (2022) says: ‘Buyers will continue selling out noteworthy art.’
- In the Art Basel 2022 closing report, David Zwirner wrote: ‘Sales were strong, and the atmosphere in the opening hours was just like the good old pre-pandemic days. Decisions came quickly, with the competition for the best works brisk.’ (2022)
- As this years fair season has shown, collectors are enthusiastic and are eager to discover and purchase art. After a long break in art fairs, the business has recovered and come back in full strength.
ART MARKET STATE
While the art market is currently not experiencing significant post pandemic detriment, there are new challenges which threaten to impact the market and its stability.
- Russia’s war in Ukraine is damaging the market for Russian and Eastern art, mixed with a growing importance of Ukrainian art as mentioned by Ben Quinn in his March 2022 article in The Guardian, while also seeing a rise in interest for contemporary Ukrainian art. However, the longevity of this change remains unknown.
- Global inflation is also likely to have a significant impact on art markets, and prices are likely to increase significantly, especially for established and mid career artist’s works which have traditionally been seen as the safest investment.
- The pandemic is still having its effect on the global art market as some regions remain under a certain level of travel restrictions and quarantine rules. The market’s shift online certainly helps in being able to reach wider audiences and make the market more democratic and open.
- The pandemic proved that online tools, such as social media, online marketing and virtual exhibitions being are effective tools in connecting people across the globe. The art market’s response to the pandemic and other challenges made a positive impact for the community and made the global art market stronger and more functional.
- Anders Petterson, ArtTactic’s founder, said that similarly to post 2008 financial crisis, there is an investment element to acquisitions by ultra-high net worth individuals: ‘People want to put their money into tangible assets.’
- In Artnet Intelligence Report Spring 2022, Morgan Stanley and Artnet confirm that there is one segment of the art market is growing faster than all the rest: ultra-contemporary art.
In her article for The Guardian, Harriet Sherwood says that despite geopolitical uncertainty, soaring inflation and falling stock prices, the art market is thriving. Sherwood (2022) explains the explosion of the art market as being due to a combination of ‘an unusual number of highly desirable works becoming available, and an increase in those who can afford to buy them.’
Overall, the art market faced significant challenges during the pandemic, but has returned to its former strength and has shown a great level of resilience and ability to adapt, while introducing new formats which has expanded its customer base. The online art market continues to grow, and the global art market continues to show its flexibility and willingness to adapt. New forms of art are being introduced, as well as new forms of selling art. The art market became more open and ‘welcoming’ to new audiences and new buyers, which has helped in regaining the market’s pre-pandemic strength.