FAB Market Insights

With the world in and out of lockdown over the past 18 months, it’s been a turbulent time for the art market. Sales have inevitably dropped, but both sellers and buyers have adapted to the enforced reality that most artworks have been offered online, with the result that sales have held up well. In 2020, during the worst period of the pandemic, global sales of art and antiques still reached over an estimated $50 billion — down just 22% on 2019 and 27% since 2018 — notes Dr. Clare McAndrew in the industry leading 2021 Art Basel UBS report. Sales of fine art at auction dropped by around 30% from 2019, but Sotheby’s and Christie’s both compensated by reporting at least a 50% increase in private sales.

Not surprisingly, the fallout from the pandemic also had a negative effect on aggregate dealer sales, with values declining by 20% to an estimated $29.3 billion. Art fairs were the hardest hit though, with the proportion of dealers’ overall revenue from fairs dropping to just 13%. However, dealers’ bottom line improved in many cases due to a dramatic reduction in costs, leaving many questioning the necessity of participating in so many fairs in the future.

The good news is that there’s been a strong positive shift in market sentiment over the past eight months. In July 2021, London-based analysts ArtTactic released their latest art market confidence report, which shows a ‘Confidence Indicator’ reading of 80.6, the highest level since January 2014. The survey is based on a poll of over 100 ‘art insiders’ — which includes collectors, auction house specialists, art dealers, advisors and analysts — and has been a leading industry benchmark since its launch in 2005. The latest reading is up from 44.6 in November 2020 and up a remarkable 89% from the pre-pandemic reading in September 2019.

Below, we outline key indicators that reveal how and why fine art market confidence is growing.

Buoyant auction market shows signs of recovery

Global auction sales from Christie’s, Sotheby’s and Phillips totaled $5.9 billion in the first half of 2021, up 230% from the first half in 2020, as confirmed by ArtTactic’s Lindsay Dewar. Combined sales of the three auction houses in the category of Impressionist, Modern, Post-War and Contemporary Art totaled around $3.6 billion in H1, an increase of 207% when compared to 2020 figures.

Encouragingly, 2021 has also seen a surge in big-ticket art sales. In January, Sandro Botticelli’s Renaissance portrait of a young man holding a roundel sold in New York for a record $92.2 million, the highest ever price achieved for an Old Master at Sotheby’s. A few months later, Picasso’s 1932 portrait of his muse and love Marie-Thérèse Walter sold at Christie’s in New York for $103 million, nearly double its presale estimate.

Basquiat’s IN THIS CASE from 1983 also soared above estimate when it sold for just over $93 million, while his 1982 Warrior became the most valuable western artwork ever to be offered in Asia, selling for $41.9 million via livestream from London to Hong Kong.

Uptick in HNW activity and strong influx of new buyers, and strong results in Asia

‘While experts predict it will take until at least 2023 for the economy to recover, American billionaires have seen their collective wealth grow by an estimated 40% since March 2020,’ reports Artnet’s 2021 Intelligence Report.

Such growth has encouraged sustained activity at the top end of the market. Indeed, 66% of the 2,569 high net worth (HNW) collectors surveyed by Arts Economics and UBS Investor Watch in 2020 reported that the pandemic had increased their interest in collecting.

What is perhaps more interesting is the strong influx of new buyers. According to the Art Basel UBS report, millennial HNW collectors were the highest spenders in 2020, with 30% having spent over $1 million versus 17% of Boomers. Christie’s have stated that in the first half of 2021 30% of all buyers were new to Christie’s, and 31% of these new buyers are millennials.

Auctions in the first half of the year also saw record participation from Asian buyers across all regions and many categories: Christie’s clients in Asia contributed 39% of the total value of sales in H1. (The $1.04 billion total in live and online purchases to date is the highest H1 spend in last 5 years). At Sotheby’s, Asian clients accounted for 50% of all bids by value in the first half of the year. As reported in its half year results, Phillips saw 34% of its buyers come from Asia, with four of the top lots sold this year going to Asian bidders.

“The notion of collecting art has long been considered part of a diversified investment portfolio. However, the proliferation of online platforms offering art of all types with secure methods of buying has extended the outreach to millions of potential new buyers,” notes Ray Waterhouse, Chairman of Fine Art Brokers. “Collecting art online at prices from $5,000 to over $5 million is a natural extension of the general lockdown buying mentality. New buyers can also seek advice from many experienced and reliable art advisors such as ourselves for just a small fee.”

Continued growth in online art market sales

Despite the contraction of sales overall in 2020, aggregate online sales for auctions reached a record high of $12.4 billion, doubling in value from 2019, reports McAndrew. The share accounted for by online sales expanded from 9% of total sales by value in 2019 to 25% in 2020.

According to Christie’s 2021 H1 results, online sales are up 178% USD on H1 2020 to £158.8 million (USD $222.7 million). This increase was no doubt buoyed by the landmark sale of Beeple’s Everydays, a digital collage with a unique NFT which sold for $69 million against a starting price of $100, setting the record for the most expensive work sold online.

Dealers also benefited from the art market’s shift to e-commerce or online art market. The Art Basel UBS report shows that the share of online sales for dealers, including art fair Online Viewing Rooms (OVRs), expanded threefold in 2020 to 39% from 13% in 2019. ‘Solo online-only presentations have yielded David Zwirner more than $20 million since April [2020],’ reports Elena Soboleva, online sales director at David Zwirner.

Increased online activity also triggered an embrace of price transparency, a positive step forward for the once notoriously opaque art market. “Having a price visible to all audiences, not just VIP collectors, who were the only ones privy to that information in the past, moves the art world into a more open direction,” Soboleva told Artnet News in October.

90% of HNW collectors visited an art fair or gallery Online Viewing Room in 2020, and 72% felt it ‘was important or essential to have a price posted when they were browsing works of art for sale online,’ confirms McAndrew.

Fizzy activity in the ultra-contemporary category

Artnet’s Intelligence report shows that the Impressionist and Modern art sector fared the worst in 2020, with auction sales for works valued at more than $10 million shrinking by 41% year on year. Auction sales of Old Masters and Post-War Art also took a tumble.

Much of the ultra-contemporary category, however, proved the exception to the rule. A case in point is Matthew Wong. The self-taught Canadian artist, who made his auction debut in 2020, brought in over $24 million at auction, with River at Dusk selling for a record $4.9 million at Phillips in December. (According to Artnet, the $24 million total sum is greater than the total sales generated by Rembrandt, Monet or Jackson Pollock in the same time period.) Adrian Ghenie, Jia Ail and Dana Schutz also enjoyed an uptick in market interest.

According to ArtTactic’s July 2021 Confidence survey, 51% of experts said that the market for established contemporary artists will continue to strengthen over the next six months. Among the artists expected to perform best over this period are Yoshitomo Nara, Cecily Brown and Mark Bradford, who enjoyed a solo show this summer at Hauser & Wirth’s new Menorca outpost.

In-person experiences return

The return of a packed autumn art fair calendar is another cause for optimism. Despite the creation of robust digital programmes and growth in e-commerce, in-person events remain a significant driver of new business.

“The whole art world is looking forward to reengaging on a personal level,” says Waterhouse. “All collectors want the possibility of seeing art again, to experience the physical pleasure of standing in front of a painting, sculpture or photograph. And many artists, dealers and auctioneers can’t wait to meet collectors and their peers again. I became an art dealer and advisor because of the interaction with art and all sorts of different people, and I’ve missed it so much.”

To lure collectors back, art fairs from London to New York are pulling out all the health and safety stops. In addition to masks, The Armory Show in New York in mid-September is requiring proof of full vaccination or proof of a negative Covid-19 test taken within 72 hours of entry. Frieze London and Frieze Masters will also be doing timed entry to allow for social distancing, while Art Basel will cap capacity at 20% less than in the past.

Happily, in-person activity is looking robust for fall activity. In September, New York’s Armory Show will welcome 212 exhibitors to its new home, the Javits Centre, and more than 7,500 confirmed VIPs. Across the pond, Switzerland’s Art Basel will welcome around 272 galleries, close to the 290 at its previous in-person edition in June 2019. A total of 276 galleries are due to show at Frieze London and Frieze Masters in October. And of course the return of auctions as we used to know them.

What the future holds

Despite economic uncertainties, continued trepidation among many collectors regarding travel and large-scale events, the fine art and luxury markets have recovered quickly and are strong going into the second half of 2021.

Looking ahead, experts predict a surge of post-lockdown activity, followed by a levelling off, and continued interest in digital innovations developed during the pandemic. “The current balance between real life and online collecting is likely to continue through 2022,” confirms Waterhouse. “We’ll also see more auction-art-fair hybrids and collaborations between fairs, dealers, auction houses and luxury brands.”

When it comes to investment opportunities, good deals can still be had in mid-range Impressionist and Modern categories, as well, of course, in the emerging artist arena, adds Waterhouse. “Artists to have on your radar include Salman Toor, Claire Tabouret, Kudzani-Violet Hwami, Dana Schutz and Amoako Boafo, all of whom enjoyed strong results at auction in 2020.” Opportunities abound for collectors but the old pitfalls remain as well as some new ones with online options, so as always we recommend a combination of buying what you like with an understanding of all the issues involved.

The Fine Art Brokers Team
New York, August 2021