5 Things We Learned from Art Basel and UBS’s Report “The Art Market 2023”

Stella McDaniel

Art Market

Arun Kakar

Installation view of Richard Koh Fine Art’s booth at Art Basel in Hong Kong, 2023. Courtesy of Art Basel.

“The Art Market 2023” report paints a “mixed picture” of the art market in 2022. The seventh annual report released by Art Basel and UBS, authored by cultural economist Dr. Clare McAndrew, gathers data from a range of sources, including dealers, auction houses, collectors, art fairs, and databases. Here, we share five key takeaways.

1. Growth in the art market is primarily at the top

According to McAndrew, the global art market grew by 3% as a whole in 2022, to an estimated $67.8 billion, exceeding its pre-pandemic level of $64.4 billion in 2019. However, the report describes 2022 overall as a “year of divergence,” with much of the art being sold worldwide concentrated to the most expensive end of the market.

At auction houses, the only segment to show an aggregate increase in sales year over year was works that sold for more than $10 million.

Christie’s, Sotheby’s, and Phillips each posted record-high revenues last year, which, when combined, totaled $17.7 billion. Overall, however, sales of fine art, decorative art, and antiques at public auction houses declined by 1% in 2022 to $26.8 billion. Some 30% of mid-tier auction houses (those below the top 10 auction houses) experienced a decline in sales last year, and 40% reported being less profitable than in 2021.

It was a similar picture for art dealers, too: “Those at the higher end performed significantly better than their peers in the lower tiers,” McAndrew reported. For dealers, sales in the $10 million–plus segment grew by 19%, while the sub-$250,000 segment declined by 3%. Some 24% of dealers overall reported a decline in sales, while 58% reported that sales have improved since 2019.

Dr. Clare McAndrew. Courtesy of Art Basel.

2. The U.K. art market retains momentum, while China takes a slide

The U.S. remains the largest art market by some distance, recording an 8% growth in sales year over year to reach its highest-ever total of $30.2 billion. The growth in sales resulted in the U.S.’s market share climbing an additional 2%, pushing it to 45% of the global art market.

Next is the U.K., which returned to second place after growing from 17% of market share last year to 18% this year. In third place is China, which now accounts for 17% of the global art market, a 3% decline from the year prior.

Despite Brexit worries and worse-than-expected economic performance, the U.K. art market’s return to second place comes after posting its lowest-ever share of the global market in 2021. But the picture is not all rosy for the U.K. The share of sales by value in the U.K. market has fallen by 7% between 2013 and 2022 (compared to a 46% rise for the U.S.). And while sales rose by 5% year over year to $11.9 billion, they still sit below pre-pandemic levels—$12.7 billion in 2019. Still, the increase in market share for the U.K. art market is welcome news.

The U.K.’s change in position also has much to do with China. Last year was one to forget for the Chinese art market, which saw sales decline by 14% year over year. Lockdown policies stalled activity in some regions, the report notes, and some major sales were canceled or cut short due to COVID-19 measures, such as in November when Shanghai fairs Art021 and West Bund Art & Design ended early.

The three countries at the top of the pyramid look unlikely to change. Taken together, the U.S., U.K., and China make up some 80% of the art market globally. France is in a distant fourth place with an 8% slice of the global market, 9% below China.

3. NFT sales declined dramatically, but the bottom hasn’t fallen out just yet

Sales in non-fungible tokens (NFTs) reached close to $2.9 billion in 2021, reflecting the feverish enthusiasm for a new, unexplored aspect of the market. Last year, however, the report finds that sales dropped by almost 50%, tumbling to $1.5 billion.

It’s a significant fall, but hardly the apocalyptic crash that many predicted during the coldest months of last year’s “NFT winter.” Sales of NFTs in 2022 were still 70 times their level in 2020, and the number of unique crypto wallets operating on NFT platforms rose by 26%, from 177,157 in 2021 to 222,470 in 2022.

As NFT-backed digital art receives growing institutional recognition and artists continue to work within the medium, it made up 5% of dealer sales in 2022, compared to 1% in 2021.

Secondary market activity for NFTs also continues to grow: Unique sellers rose year over year by 55% to 180,416 in 2022, and buyers by 14% to 174,764. Meanwhile, the number of participants buying and selling in the primary market fell by 12%.

Installation view of Art Basel in Hong Kong, 2023. Courtesy of Art Basel.

4. A mixed scorecard for art fairs

Last year saw art fairs return fully from the COVID-19 pandemic, with galleries surveyed in the report exhibiting at the same number of fairs on average as they did in 2019. There were 346 live events last year, an increase of a third compared to 2021, but still 62 fairs less than in 2019.

Sales from live events increased by 27% from 2021 and accounted for 35% of gallery sales overall (second to in-gallery sales at 47%). While this is a significant gain from last year, this share is 7% lower than in 2019.

Galleries turning over more than $10 million annually made 40% of their sales at fairs, compared with 27% for businesses with a turnover of between $250,00 and $500,000.

A continuing theme of the report is a factor not unique to the art world: rising costs. Art fairs are at the sharp end of this issue. Some dealers noted that they were spending a minimum of between 15% and 20% more on fairs and their related costs when compared to pre-pandemic times.

Just over half (51%) of dealers said that they predicted sales at art fairs would increase (compared to 65% who responded affirmatively in 2021), and 13% expected a decline. Unsurprisingly, dealers with turnovers of $10 million or more are planning to take part in more fairs in 2023 than any other segment, and they also have the most positive outlook, with 88% predicting that their sales from art fairs would rise in 2023.

Installation view of Art Basel in Hong Kong, 2023. Courtesy of Art Basel.

5. The general outlook is not positive—but it’s not overtly negative, either

Dealers and auction houses are not looking positively at 2023, but they’re not predicting disaster. Less than half of the dealers (45%) surveyed for the report said that they expected an improvement in sales for 2023.

Only in China and South America did a majority of dealers say that they expected an increase in sales for 2023. And interestingly, the dealers with less than $250,000 in turnover struck the most positive tone: Some 52% of the segment said that they expected an increase in sales for 2023. The most negative was the $250,000–$500,000 segment, where only 37% said the same.

Like dealers, less than half (48%) of mid-tier auction house employees expected an improvement in sales, but more worryingly, some 24% predicted a drop in their sales compared to 2022.

The good news is that a strong majority (77%) of high-net-worth collectors remain positive about the year ahead, and more than half (55%) plan on buying art in 2023. That figure rises to 65% when focused on collectors in the U.S.

“While signals of macro-economic volatility are a dominant talking point as we head into 2023, the data shows us a resilient art market bolstered by deep-pocketed collectors, particularly at the high end,” said Noah Horowitz, CEO of Art Basel, in the foreword to the report.

Arun Kakar

Arun Kakar is Artsy’s Art Market Editor.

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