(Bloomberg) — The art market is approaching a tipping point, according to a new 2024 study of global collections from Art Basel and UBS.
Rich people are getting richer, but art represents a lower percentage of their net worth than in years past; Meanwhile, a core group of dedicated collectors report that they plan to attend fewer art-related events than before, even as they favor in-person purchases by a wide margin. On top of that, a slow tsunami of wealth is transferring art from the hands of an older generation to a new generation, even as the younger generation of collectors seems to be pulling out of the market.
Taken together, the report paints a picture of a gathering class in flux, whose changing behavior and taste could have serious implications for a market still recovering.
“When you look back over the last 10, 20 years, the market has hovered roughly in terms of sales around that $60 billion to $65 billion price point,” he says. Noah Horowitz, executive director of Art Basel. “But what is being sold in its composition has changed very meaningfully. And so I think the question for the future is: Is there a path to further growth in a world where these other dynamics are developing and changing?
The Good News
The findings are based on two surveys conducted this summer – one of 3,663 respondents who were active in the market from 2022 to 2024, and the second of more than 1,400 private collectors selected from Art Basel's VIP list.
The good news is that people still want to buy art, although the art they are buying is changing.
For example, more than half of respondents had bought works on paper in 2023, a category that tends to be cheaper than paintings – a sharp jump from the year before, when only 33% had bought art in that year. category. Similarly, more than half of high-net-worth respondents' spending in 2023 and 2024 was on new and emerging artists, who are likely to be cheaper than their more established peers; this is from 44% to a previous survey.
Women artists are the main beneficiaries of this change. The percentage of works by women in the collections of high net worth respondents rose to 44%, the highest level in seven years. Spending on the work of female artists also increased – respondents who spent the most on art (more than $10 million so far in 2024) devoted the largest share (52%) to works by women.
“Funnily enough, about 44% of sales were to female artists and about 45% of UBS's clients are women, a number that has increased by about 5 percentage points over the past few years,” he says. Paul Donovanchief economist at UBS Global Wealth Management. “So there's an interesting potential dynamic because it's certainly very possible that within 20 years women will own the majority of global wealth.”
Mixed news
In 2022, high net worth individuals allocated 24% of their wealth to art. That number has dropped to just 15% in 2024.
This is not necessarily because valuations have fallen or collectors have sold their holdings, Donovan explains, but because the art has potentially not kept pace with the rest of collectors' growing portfolios. “Art prices haven't gone up the way some other assets have,” he says. “And if you are (invested) in Magnificent sevenHonestly, nothing in the art world will really compete with that.”
And yet the fact that wealthy people have not continued to pour money into art at the same proportional rate may be a sign that the softness in the high-end blue goods market will continue.
“In the last year or so, we're seeing the base do better than the top of the pyramid, in terms of art sales,” he says. Clare McAndrewwho founded the research and consulting firm Arts Economics and prepared the report. “It's kind of thought of in a negative way, because you just see the headline figure going down for the big auction houses. But the base is getting bigger and that means more transactions are happening. They're just not very expensive, aftermarket.”
The report also highlights the multi-trillion dollar wealth transfer that will occur over the coming decades, providing a nuanced assessment of how this transfer may play out in the art market.
Specifically, the elderly rich are passing on art to their heirs. About 91% of high net worth individuals owned inherited or gifted works (so much for do-it-yourself collectors); but of these respondents, about three-quarters planned to sell at least some of the work they received.
In that group of sellers, roughly half planned to sell a piece of inherited art due to lack of space; a similar percentage planned to use the sale proceeds to help pay off property taxes. The transfer of wealth can translate into more young people being able to buy art, in other words, but it can also represent significant amounts of unwanted legacy inventory hitting the market, which can depress prices.
The bad news
In 2023, as an art market it started to fall Seriously, millennials cut their average spending on art by up to 50%, according to the report. This overturns earlier narratives about the growing dominance of young collectors in the head.
“It's always been the millennials and the younger collectors that really drive the higher spenders, and they were the ones that calmed down last year,” says McAndrew, noting that spending by older Gen X collectors stayed roughly even from 2022 to 2023.
But it's not just millennials. Only 43% of high-net-worth individuals said they planned to buy a work of art in the next 12 months (up from about 50% in 2022 and 2023), and those hoping to sell works jumped to 55%.
Among Art Basel VIPs, the numbers were more encouraging – 97% planned to buy an artwork of some kind in the next 12 months – but even among the brave there were some warning signs. They planned to attend even fewer gallery shows and fewer art fairs in 2024 than in pre-Covid 2019, even though nearly 90% of VIP respondents said they “strongly favored” buying art in person, meaning potentially more little opportunity to transact art. .
Overall, the report paints a picture of a fairly flat art market supported by a collector base on the precipice of serious change.
“The art industry as a whole is still doing relatively well,” says Donovan. “The volume of transactions has not decreased, but there are just different transactions happening now.” It is, he continues, “a structural change”.
To contact the author of this story:
James Tarmy in New York at (email protected)