Watch out 2024! It seems that 2023 was a tricky year for the art trade. Many big auction houses reported a cooling off in demand for art, as Christie’s claimed $3.2bn in global sales for the first six months of 2023, 23% down on the same period last year. Sotheby’s did not release its own half-year figures in July, suggesting its sales had also softened.
Despite 2 years of proven growth in the Art market in sales, Christie’s adapted to a different market in the first half of 2023, because of a "more challenging macro-environment.”
In May 2023, the Christie’s, Sotheby’s and Phillips marquee auctions of Modern and contemporary art in New York were noticeably lacking. Thanks to the combination of hiked interest rates and rising inflation, owners held back on putting art up for sale. The three houses grossed an aggregate $1.4bn (with fees), significantly lower than the $2.5bn achieved the previous May, according to data from Pi-eX.
In London, the excess of benefits was missing from what has been a particularly good resale auction market for “flipped” young art. In May 2022, Sotheby’s (NY) The Now sale of 23 recent scarce works by valued little-known names raised $72.9m. Just over a year later, Sotheby’s 14-lot London version of The Now format took £8.7m ($11m) this June. Demand was far more cautious, and Sotheby’s strategically spread out its sale with more mature art pieces by Förg. (Abstracts).
Hiscox, in collaboration with Art Tactic, a market analytics firm, recently released a report on the auction market conditions for what is referred to as “wet paint” works resold within two years of being made. In 2022 Christie’s, Sotheby’s and Phillips combined to sell 1,033 such lots, a 116% increase on the previous year, according to the report.
As in the case of luxury good - which rely on big successful brands like Coach, Gucci and LVMH to successfully market goods - that have prices almost compare to art works in the 4 to 5 figure range, it seems that brand has its uses and benefits. It seems art buyers are also driven by brand, as well as the usual motives for owning art.
People want a reliable brand. Established names are a safe bet. But many other art and auction businesses have also seen brisk business in some places.
“Branding is the future of the art market. It’s the inevitable conclusion,” says Michael Short, the Berlin-based adviser. It seems that the reassurance of branding "replaces the cultural conversation.” People, consumers - including art consumers are prone to cultural conversation since artists are part of the very continuum of cultural conversation. Artists are to the conversation as journalists are contributors to the news cycle.
A highlight in Christie’s first-half results was the luxury category, where sales jumped to $590m, a 43% increase over the equivalent period of 2022 and the company’s best ever financial performance first-half total in this area. Asian clients, renowned for their enthusiasm for Western luxury brands, contributed 38% of luxury-auction sales revenue, despite slow growth in the Chinese economy. Clearly something is moving the sales of art.
But for all the talk of an influx of new buyers into the global art market, since 2011, estimated annual sales have stayed between $68bn and $63bn, according to the Art Basel & UBS Art Market report. Here is shocker news update - last year, LVMH, the world’s leading luxury goods group, achieved revenue of $85.9bn, an increase of 23% on 2021. Are your eyes watering yet? Fashion / Luxury brands can do what big art gallery names and auction houses struggle to achieve. That key is the word BRAND.
Where uncertainty and doubt hangs in a market, the reassurance of strong established brands can turn things around. That a single luxury company could manage to turn over more in a year than the entire global art market can do, and achieve double-digit growth really puts things in to place. This shows that with much consolidation and mergers happening in the general art world, it is now all about big brands.
Despite the financial issues with high interest and inflation (which is showing signs of falling in some markets), it looks like some things are helping artists and galleries after all. It just means that we all have to adjust our peripherals in response to the new market conditions in a never-ending cycle of up-down art sales, or better still - down-up market conditions, which are much more preferable. Below is a basic set of takeaway points from this front page article.