The second annual Art Basel and UBS Survey of Global Collecting offers a slightly mixed picture of the art market in the first half of 2023 (good for collectors and dealers, less so for auctioneers and art fairs), but then you’d hardly expect anything less complicated in the current circumstances. We have economic uncertainty, especially in the West; millions in the greater Horn of Africa are facing one of the worst droughts in recent decades, compounded by years of conflict and instability; there’s a hot war in Europe with one of the major energy suppliers on one side and one of the major grain suppliers on the other (and the report was prepared before the current Gaza crisis, which will also further destabilise international relations and the international economy).
In this scenario the art market can look almost irrelevant, but it’s still soaking up large amounts of cash. So it’s always useful as a barometer for capitalism, indicating where high-net-worth individuals are choosing to put their money; whether their numbers are growing or receding; and (by implication) how much dodgy money is being laundered into art assets.
As a result it’s worth studying the Survey of Global Collecting, especially as its own credentials are pretty well impeccable; it’s produced by the estimable Dr Clare McAndrew, the founder of Arts Economics and doyenne of arts economics. It’s also the largest survey of its kind to date, with qualified responses from more than 2,800 HNW collectors in 11 key markets – mainland China, Hong Kong, UK, USA, France, Germany, Italy, Japan, Singapore, Taiwan and Brazil.
The reports uses that data to assess trends in collector spending, motivations of their activities in the market, and how they interact with artists, galleries, institutions, and their environment. There’s an impressive amount of detail, but the top takeaways are clear: HNW individuals continued to build their collections in the first half of 2023. And they generally remain optimistic about the future of the art market (meaning essentially that they expect the value of their holdings to grow).
Drilling down:
1The global art trade continues to boom, perhaps still reflecting pent-up demand after the pandemic. The report says most international art markets saw double-digit net inflows of art by value – imports rose by 50 percent in Hong Kong, 38 percent in the UK, 15 percent in the US – and half way through the year those HNW collectors had already spent an average of $65,000 each. That’s the same as for the whole of 2022, itself a 19 percent increase on 2021.
2Auction markets are lagging, with aggregate sales at Christie’s, Sotheby’s, Phillips, and Bonham’s down by 16 percent. The numbers were still up on 2019, the year before the pandemic. Coincidentally there have been some key New York auctions in the past couple of weeks, and Christie’s for one fell well short of expectations for 21st century art – it hammered at $88.4 million across 42 lots, about $8 million short of its presale estimate. Sotheby’s Modern art evening auction a few days later also had a somewhat mixed night: the original presale estimate had a low end of around $200 million, but as a result of what ArtNets suspected was some “careful choreography” on the part of Sotheby’s a number of lots were withdrawn before the sale. in the hours leading up to the sale. A total of eight lots out of 41 were withdrawn before the sale. No one knows why, but the suspicion is that they might not have sold as well. In the event sales after fees totalled $223.4 million, with 31 lots sold and just two bought in (eight had been withdrawn). Excluding withdrawals, that was a sell-through rate of 94 percent – rather better that the 74 percent that would have transpired if the withdrawals had been included.
3Direct purchases are growing. Around three-quarters of respondents having bought at auction in the first half of 2023, but 86 percent purchased from a dealer – and of those, 84 percent bought in person from their gallery or premises (up from 73 percent the year before). Art fairs were down a bit: 58 percent of buyers made a purchase at an art fair, compared with 74 percent in 2022.
4China is where the money is. Some post-pandemic spending euphoria took the median spend on art by HNW collectors in mainland China to $241,000 for the first half of 2023, 19 percent up on the whole-year figure for 2022 and the highest of the 11 territories surveyed.
5Trad art beats digital. Painting remains the go-to medium for HNW collectors – 58 percent of their spend went on paintings, 13 percent on works on paper. NFTs and other digital artworks continue to lose their appeal, and so far in 2023 accounts for just 3 percent of collectors’ spending.
6It’s the middle-aged who are splashing the cash. Gen X collectors are generally outspending millennials for paintings – average $145,000 by Gen X against $108,000 for millennials, though the latter spent more on sculptures, installations, photography, and film or video art.
7Bigger bucks aren’t always better. The number of collectors who focus most commonly on works priced at $1 million or more dropped from 12 percent in 2021 to 4 percent in 2022 and hadn’t recovered by 2023, when it clocked 9 percent. The report talks of “possible buyer caution” and “an increasingly thin high-end” following the strong post-Covid bounceback in sales (meaning there aren’t so many big-ticket items around at the moment).
8Art loses out to other investments. On average the report’s respondents allocated 19 percent of their investment portfolio to art in 2023, compared with 24 percent the year before. The mix was skewed a bit – the wealthier the collector, the more they allocated to art. So those with assets under $5 million devoted an average of 15 percent of their stash to art, those rating above $50 million allocated almost double that.
9Collectors are feeling optimistic. Despite all the bad news in the world, or maybe because of it (disruption equals opportunity), thee quarters of collectors say they feel good about the performance of the art market over the next six months (slightly more than were optimistic about stock market investments). More than half are planning to buy art in the next year, the same figure as for the year before; only 26 percent of collectors were planning to sell works from their collection, down from 39 percent in 2022. Not to put too fine a point on it, the majority of respondents said they would hold off on selling “because they believed the prices of their artists’ work would improve in future”.
HNV collectors apparently don’t like to think of themselves as investors – 28 percent say “financial motivations” were the most important for them in purchasing a work of art, rather than “self-identity” and “personal pleasure” (37 percent of collectors). There again, nearly half are actively trading in and out of their holdings, so maybe some of the personal pleasure comes from making a profit.
In this context it’s interesting to read the forward by Christl Novakovic, chair of the UBS Art Board and head of Global Wealth Management EMEA for UBS. “It is essential to acknowledge the critical role that collectors play and the untiring commitment they show toward artists and the industry … Collecting art extends beyond merely an act of acquisition; it expresses the fundamental nature of the human spirit and identity … We believe that collectors can become agents of change, shaping the industry’s long-term trajectory and offering nurturing support to the creative community as a whole”. Good luck on that.
You can download the 2023 Art Basel and UBS Global Survey of Collecting at no charge here.
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