According to the Art Basel and UBS Global Collecting Survey, there are more sellers than buyers in the global art market.1 The art market is undergoing a generational change, creating a mismatch between supply and demand. Dealers say the crossroads of various generations has created an oversupply of seven- and eight-figure Impressionist and abstract works.
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The global art market has suffered a second consecutive year of decline as demand for top trophy works wanes and a new generation of buyers prefers lower-priced works, according to new research.
Auction sales at Christie’s, Sotheby’s, Phillips and Bonhams in the first six months are down 26% from 2023 and 36% from the market peak in 2021, according to Art Basel and UBS Global Collecting Research. did. The number of wealthy collectors surveyed who plan to buy art in the next year has fallen to 43% from more than half in 2023. At the same time, the number of people planning to sell increased to 55%. This means that there are more sellers than buyers in the world. market.
“The companies with the highest spending are either holding back or slowing their spending,” said Paul Donovan, chief economist at UBS Global Wealth Management. “They’re taking a more cautious approach.”
Dealers, galleries and auctioneers are hoping for a post-election recovery as the art world prepares for big auctions in New York in November and Art Basel Miami Beach in December.
There are some bright spots as well. The survey found that the majority of wealthy collectors (91%) are “optimistic” about how the global art market will perform over the next six months, up from 77% at the end of 2023. This is higher than the percentage of respondents who have an optimistic view of the stock market (88%). Only 3% of wealthy collectors are pessimistic about the short-term future of the art market.
The median spending on art by wealthy collectors has remained stable at about $50,000 a year, according to the survey. More than three-quarters of wealthy collectors surveyed purchased paintings in both 2023 and the first half of 2024.
But a wide range of indicators, from buyer interest to online sales, suggest sales will be down or, at best, flat again this year. Dealers and auction experts say economic downturns in Europe and China, as well as geopolitical concerns, particularly in the Middle East and Ukraine, have eroded buyer confidence. Rising interest rates also raised the opportunity cost of buying art, as wealthy collectors could easily earn more than 5% on cash and government bonds.
Like the classic car market, the art market is undergoing a generational shift, creating a mismatch between supply and demand. Older collectors are shrinking their collections by selling off expensive but less than masterpiece pieces. They are being replaced by younger collectors, primarily Generation X and Millennials, who are buying more contemporary pieces at more affordable prices from galleries and art shows.
“In 2024, rather than creating a supply-driven value boom as in previous years, the trend toward more sales is likely to primarily impact sales volumes, with collectors selling off the bottom of their collections. “This suggests that they tend to unlock more access, but sell for lower prices.” Rather than trying to increase prices, advisers reportedly sell more unwanted art and other items. “The focus is on ‘rationalizing clients’ collections’ by disposing of non-essential artwork,” the UBS report said.
Dealers say the crossroads of various generations has created an oversupply of seven- and eight-figure Impressionist and abstract works. According to the study, the high-end art market, meaning works priced at $10 million or more, was the strongest before 2022, but is now the weakest.
“Gen “They’re more enthusiastic, but potentially also have more budget constraints. People who used to buy high-priced art are delaying buying those artists.”
In fact, Gen X quickly became the most important generation for collectibles. According to the UBS study, Gen This was more than double the number of respondents.
Overall, wealthy collectors have less exposure to art. While the role of art as an “asset” is hotly debated, the average allocation to art in 2024 is 15%, down from 22% of portfolios in 2021, according to the report. Stocks and other assets in your portfolio. However, this decline suggests that many collectors have paused their purchases.
The ultra-wealthy have the most exposure to art. People worth more than $50 million have an average of 25% of their wealth in art, down from 29% last year. Billionaires with assets worth less than $5 million hold about 12%.
Collectors who have been active in the market for decades have amassed large collections that they need to sell, pass on to family members, or bequeath to museums or non-profit organizations. According to the survey, the average number of works owned by wealthy collectors around the world is 44. Gen Z collectors own an average of 33 pieces, while collectors who have been purchasing for more than 20 years own an average of 110 pieces.
When asked about their biggest concern about the art market, most people (52%) cited “barriers to the free movement of art internationally.” The second biggest concern was the “increasing number of legal issues in the art industry,” such as compensation lawsuits and counterfeiting and counterfeiting, and “ethical considerations regarding artists,” such as how artists are compensated and promoted. 4th place was “Changes in the art market.”
The “great wealth transfer,” in which tens of trillions of dollars of wealth could be passed down from older generations to younger generations, could also be the precursor to a great art transfer. According to the survey, 91% of wealthy collectors had works in their collection that were inherited or gifted through a will or other bequest.
Even though they expected their families to sell their inherited works, 72% of those surveyed kept at least some of the art they inherited. Those selling inherited art were more likely to cite lack of exhibition space or taxes than taste.
“There was always this assumption that as art moves down the generations, younger generations have different tastes,” Donovan says. “However, it would be a mistake to think that this will lead to a wholesale dismantling or sale of collections. Art is emotionally evocative, and parents may relate to certain works of art.”
