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After two years of recovery growth from the Covid-19 pandemic, the global art market shrank last year by 4%, from $67.8bn to $65bn, according to the eighth annual Global Art Market Report, released today. Published by UBS/Art Basel, it surveys 1,600 galleries and independent art dealers and more than 500 auction houses, analysing their turnover for 2023 and exploring wider questions about the trade.

The global market has now returned to near the $64.4bn level recorded in 2019, when adjusting for inflation. A key reason for this contraction is the decline in sales of the most expensive works—those priced at $10m upwards. The report situates this against “a backdrop of increasing interest rates, stubbornly high inflation, wars and political instability [that] filtered down into more selective and cautious buying at the high-end of the market”. Those high-end sales had been “pivotal” to the post-pandemic growth of 2021 and 2022.

Overall, auction sales fell by a greater degree than dealer sales, by 7% compared to 3%. The largest private dealers, with annual turnover of more than $10m, reported an average decline in sales of 7%.

The US continues to dominate the global market, though its 42% share is down 3% from its peak last year. Its domestic art market has contracted 10% year-on-year, from a record $30.1bn to $27.2bn. New York is the world’s leading trading centre for high value works, making it particularly susceptible to shifts in this price category.

London falling

The UK—whose capital, London, is the second-most important city for sales of high value works—also saw a noticeable decline. And, unlike the US, it is doing worse than it was pre-pandemic. Its total market fell last year by 8% to $10.9bn, below 2019 levels and 15% lower than in 2013. Specifically for the $10m-plus category, the UK’s trade dropped a staggering 42% by value and 35% by volume, contributing to it slipping from second to third place in global market share, behind China (the two regularly swap between these positions). Imports of fine art and antiques to the UK fell by 16%, from $2.8bn in 2022 to $2.3bn in 2023—26% lower than the levels recorded in 2019. The UK’s poor performance is attributed both to those reasons aforementioned and “persisting issues of Brexit”, says the report’s author, Clare McAndrew, who conducts the survey through her research firm Arts Economics.

France, the world’s fourth-biggest market, also saw a 7% year-on-year drop, with a 10% fall in auction sales and a 3% drop in reported dealer sales.

What stopped the global market from falling further was post-pandemic spending in the first half of 2023 in China and Hong Kong, where zero-Covid measures were dropped at the end of 2022. Sales were up 9% year on year, to $12.2bn. However, a cratering Chinese property market and other signs of economic malaise affected the second half of the year and will likely last well into 2024. “The property crisis in mainland China is real—there is a more challenging market environment,” says Art Basel’s chief executive, Noah Horowitz. He caveats that “the market is substantially large and dynamic. We’ll see what that looks like for sales starting with Art Basel in Hong Kong this month (28-30 March) and the city’s March auctions.”

Other Asian art market hubs experienced year-on-year declines, including Japan, Singapore and South Korea.

Looking back, and ahead

The global art market regularly experiences contractions. Observing a graph provided in the survey of the past 15 years of growth in sales by value, dips occurred in 2020, 2019, 2016, 2015 and 2012—some much greater than 2023’s 4% decline. What makes this year distinct, according to McAndrew, is the “drop in big ticket sales. The reservation of high net worth (HNW) spenders at the top end is more pronounced than in other dip years”.

According to the report, “concerns over wealth creation and its stability” have “distracted the focus” of HNW collectors. The continued rise in collectors using credit to finance art purchases has also meant that economic factors such as interest rates affect spending more than they did previously.

However, the forecast is not all gloomy. Global trading volume actually increased in 2023: galleries with turnovers of below $500,000 reported the largest increase in sales, at 11%. While this suggests good news for middle-tier galleries that are increasingly at risk of being subsumed by bigger business, McAndrew is keen to stress the perilous effects of rising costs facing dealers across all tiers of the sector. She says an “overwhelming” amount of respondents expressed concern over rising business expenses. “It will take more than one year to level the playing field,” she says.

Online sale channels, although down from their peak in 2021, are still almost double what they were in 2019, suggesting they are here to stay.

Overall, the report paints a sobering picture, though not one without hope. While 36% of dealers surveyed were positive about sales for 2024, compared to 45% the year before, there are also “expected declines in interest rates, and weakening inflation”.

What is certain is that 2023 emphasised that the art and luxury sectors are “not immune to disruptive financial, social, or political changes”.

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