1- The global Art market in 2020
The global sales of art and antiques generated approximately $64.1 billion in 2019, signifying a drop of 5% year on year compared to 2018. As always, the three major art hubs continue to be the US, the UK and China which generate around 82% of sales.
A- The US
The US continues to be the largest market in the art world accounting for 44% of the sales generated in terms of value. This year was the second highest level of sales generated in history. The US positioned itself as one of the pioneers in the art world and have kept its position as market leader over the last 50 years (thanks in part to the largest bases of HNWI and a well developed cultural infrastructure). Furthermore, the US positions itself as one of the most important centers for art trading. The increase of protectionism due to the Trump administration and trade wars (not only China) caused rippled on the market and had a negative effect on consumer confidence, which in turn has played a role in damaging the Art world’s growth on an international scale while not impacting the domestic market (e.g. tariffs imposed on import of art and antiques from markets such as China and Europe). However, it is important to note that these tariff restrictions remain very narrow and the general impact was caused mostly from a lack of confidence in the regulatory framework.
B- The UK & France
With the rollout of Brexit, the UK market declined by 9% in 2019 accounting for only 20% of the value generated. It maintained its second place as a global art leader. Although a no-deal Brexit could have had a greater impact on the market, the formal decision of the UK to leave Europe brought some kind of stability. However, the new regulations are still unclear, and this has created a generalised feeling of uncertainty for art businesses. France appears to be one of the only markets to have a positive growth in 2019 with a market share of 7% globally (reaching $4.2 billion). For context, in the early 1900s France was the center of the art world. Only a few decades later, by the end of the 1920s, a combination of economic and political events (e.g. stock market crash, the Great Depression, devaluation of the French franc) caused many art businesses to go bankrupt and thus created a true momentum for the US and the UK. It is only in the mid 50s that Paris experienced a revival of its market supported by international collectors. However, post 50s, France didn’t adapt its regulatory framework (e.g. tax system with rigid fees 40% to art sale Vs. 10%-15% in the UK ) driving buyers and sellers toward more liberal economies. The UK’s decision to leave Europe has now opened a window of opportunity for France to position itself as a key market leader in Europe. In 2019, we have seen that many international blue-chip galleries have opened branches in Paris e.g. David Zwirner...
China incurred a loss of 10% in 2019, with a second year of declining sales, mainly due to the auction sector diminishing in terms of result during the last two years. When looking a bit closer at this industry, we see that the decline in the auction market can be associated with two causes; 1) External economic factors bringing a more cautious behaviour from collectors and investors and, 2) Lack of high quality work in terms of supply. In addition to this, Hong Kong - which was for a long time a crucial art hub in Asia due to its business friendly, tax incentive environment and political stability - was completely shaken by political events. The political escalation had many impacts on the island’s art sector, with a decline of 25% in sales generation since 2017.
2- Dealer Sales
In the gallery and dealer sector, sales was estimated to reach $36.8 billion with a growth of 2% year-on-year. What is interesting about the current trends is that mid-market galleries (generating between $250k-500k of sales) are growing exponentially at a rate of 17% whereas blue-chip galleries (turnover between $500k and $1M) are experiencing one of the biggest decline in the history of the art world (-9%).
B- Buying patterns
The year 2019 saw a mix of performance from different segments ranging from contemporary art to old masters and antiques. Although we see a decline in global sales, Modern Art had the highest median sales. Old Masters, 19th century and pre-modern works of art experienced one of the largest declines year on year with a decrease of 32% in average sales results. Regarding Decorative art and antiques segments, 2019 was a relatively stable year.
Similar to last year, the market is still constructed with the same logic. Meaning that within the dealer sector a small number of businesses are making high profits, whereas a large number of actors are continuously struggling to break even. With rising cost and high volatility in terms of cash flow, many actors are experiencing difficulty to survive. Access to financing in this sector remains extremely niche and difficult due to the lack of collaterals (an interesting fact mentioned in the report is that a big part of the dealers do sell on consignment hence they don’t own any inventory or proper assets making them less eligible to any kind of loans from public institutions). On a side note, finding new buyers remains one of the biggest challenges of the Art world. If we deep dive and look at the data collected in this report, we see that 70% of dealers' sales are done to private collectors and only 15% via international/domestics museums or private institutions. Finally an interesting number provided by this report is that the primary market represents on average 56% of the sales, whereas the secondary only 44% in terms of volume. Secondary market obviously dominates in terms of value as by definition it offers more established artists that are validated by the industry.
3- Auction Sales
A- Market dynamic
Although the three largest auction hubs (the US, the UK and China) maintained their position in 2019, they have experienced a decline compared to 2018. The French market positions itself again as one of the most resilient with a growth of 2% yoy. Linking this data to market knowledge, we see that in the past year large investments have been made by major auction houses to offer a more diversified offering of auctions (e.g. African Art) as well as higher value lots.
In 2019, Public auctions reached a total of $24.2 billion with a decline of 17% yoy. Private auction sales on the contrary increased to reach over $1.8 billion of value generation at Christie’s and Sotheby’s. Christie’s is continuing to position itself as a market leader in the auction industry. The top five auction houses by value of sales are: Christie’s, Sotheby’s, Phillips, China Guardian, and Poly Auction. They accounted for 77% of the value of sales while selling only 18% of the number of lots.
Similar to a Pareto distribution, works that are sold for more than $1 Million account for 55% of the value generation while representing 1% in terms of volume for fine art - this has also declined compared to last year with fewer lots being sold. Post war and Contemporary art remain the largest sector in 2019 with a market share of 53%. Sales reached around $6.1 billion this year. The highest selling artist at auction in Contemporary Art was Zao Wou-Ki (as was the case in 2018), along with Andy Warhol, Wu Guanzhong, David Hockney,and Jean-Michel Basquiat… These five artists generated around 14% of total sales values!
4- Art fairs
Art fair sales represented $16.6 billion in 2019 with 64% of the lots being sold at the fair. Art fairs are an essential part of the art world ecosystem, accounting for 30% of sales for mid-range dealers and 47% for blue-chips galleries. Collectors assist to 39 art-related events a year on average. The global pandemic that we are currently experiencing required art fairs to rethink their business model with huge investments being made in technology to ensure “business as usual” (read more here).