Cultural Economist Dr Clare McAndrew on the key findings of the Art Basel and UBS Global Art Market Report, the definitive macro-level analysis of key trends in the international art market
The global art market saw a welcome return to growth in 2017, according to the Art Basel and UBS Global Art Market Report released in March. Bringing together various strands of research and authored by longstanding authority in the field of cultural economics Dr Clare McAndrew, the comprehensive report sheds light on a complex and often opaque market.
Finding an overall growth of 12% year on year, Dr McAndrew offered a generally positive assessment, with the market having “turned a corner” following two years of decline. However, she also struck a more cautious note in drawing attention to the “continuing concern” of weaker performance away from the premium segment, stressing that “to maximize its economic impact, the market needs to be functioning well at all levels."
Here are five key takeaways from the report that make essential reading for investors, commentators and art lovers.
1. Chinese art market now larger than that of the UK, with further gains likely
Narrowly overtaking the UK to become the world's second largest art market, China accounted for 21% of the year's total sales by value compared to the UK’s 20%, though both still lag considerably behind the USA which continues its stronghold with a 42% share. Together the three largest markets continue to dominate, comprising over 80% of the total market.
China may be set to further outpace Britain in the near future, as continued uncertainty mars the UK’s economic outlook while indicators point to ongoing growth in high-end Asian wealth. Recent research by UBS and PwC suggests that Asian billionaire wealth may be set to outstrip that of the US in as little as four years, with Asian billionaires already outnumbering their US counterparts and private museums in the continent booming.
2. Auctions lead the way in a healthy year of growth
2017 saw an estimated $63.7 billion in total sales across the global art market. Driving the strong performance in large part was a 27% increase in the overall value of auction trade. Though still representing the majority of all sales at 53%, dealer sales meanwhile grew by a more subdued 4%.
3. Strongest gains seen at the ultra-premium end of the market, sparking concern over top-heavy growth
The biggest increases in both auction and dealer figures came at the very top of the market. At auction, 2017 saw a 125% increase in sales value from the over $10 million bracket, reversing the previous year's steep 53% fall. Simultaneously, the strongest growth in dealer sales was generated in the segment above $50 million.
The shift may be attributed to wider economic trends, with robust growth in high-end global wealth and stronger consumer confidence combining to create a more favourable environment that is in turn coaxing more ultra-premium works onto the public market – notably including Leonardo da Vinci's 'Salvator Mundi’ sold by Christie's last year for a record $450 million.
This positive news however masks a less rosy picture at the medium and lower end of the spectrum, raising questions over the sustainability of increasingly top-heavy growth, with pressure felt on many businesses beneath the upper tier.
4. Online sales accelerate, but art fairs remain pivotal
The online art market was another of the report's winners, having seen a sizeable 72% increase over the past five years to reach an estimated $5.4 billion in 2017.
However art fairs remain a central bastion of the international art trade, continuing from a position of growth last year to command aggregate sales in the region of $15.5 billion – an estimated 46% of all dealers.
5. Fresh insights into buying behaviours of US-based high net worth individuals
Among the report's sources was an extensive survey of the collecting behaviours and motivations of US-based high net worth individuals, offering valuable new analysis of some of the drivers powering the world's largest art market.
Of the substantial 35% of those surveyed active in the art and collectibles markets, 43% stated that they preferred to buy directly through a gallery or at an art fair, and only a small proportion – just 8% – used an art advisor. Correlating with this data was further insight suggesting an inclination to be led by personal and philanthropic factors, with 73% reporting that a passion for collecting art was an expression of their personality and 63% (rising to 71% amongst women) driven by a desire to support arts and culture, especially at the local and national level. Perhaps unsurprisingly then, the vast majority of respondents reported that they had never sold a work from their collection, with just 14% having parted with any of their art purchases.