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A review of the Art Basel and UBS Global Art Market Report 2023
2022 has impacted us all. Russia’s ongoing war against Ukraine has brought back conflict to Europe and brought into our living rooms appalling images one had imagined were consigned to history. One of the many by-products of the war has been high inflation, fuelled by the dramatic increase in energy costs.
"If ‘resilience’ was a keyword of the performance of the 2021 international art market, to 2022 should also be added ‘recovery’."
The Art Basel & UBS Art Market Report 20231 reports that global art sales increased by 3% to an estimated $67.8bn, taking the market above its pre-pandemic level in 2019.
At face value, this headline performance is remarkable. For the art market to have grown despite unprecedented and ongoing global economic uncertainty, demonstrates once again its ability to counter traditional financial models.
Delve a little deeper into the Art Basel report, however, and the picture is more nuanced. The leading auction houses of Christie’s, Sotheby’s, and Phillips each reported record-high revenues, totalling $17.7bn. Overall, however, sales in the public auction sector were down 1% at $26.8bn. As in previous years of economic turbulence, the high end of the market remained strong with buyers seeking sanctuary in works of museum quality by artists perceived to be of lower investment risk. This was a key driver in growth achieved in 2022 with works priced at over $10m being the only segment to increase in value (up 12%). The dealer sector reflected a similar pattern. This sector grew by 7% to $37.2bn buoyed by sales for those operating at the higher end of the market outperforming their peers.
80% of global sales came from the US, China and the UK
The three major hubs of the US, China and the UK continued their market dominance with a combined 80% share of art sales, unchanged from the previous year. The US remained the strongest performing market with its share of sales by value increasing to 45% ($30.2bn up 2% on 2021). The UK regained second position with 18% of sales (up 5%) while China slipped to third with 17% ($11.2bn down 3%).
Where the US recovery in 2022 was driven by significant growth in the high-end auction sector and positive dealer sales figures, China faired markedly worse as the ongoing impact of their government’s strict zero-COVID policy led to some major auctions, fairs and events being cancelled or curtailed.
The UK market’s performance outstripped expectations against the backdrop of global economic pressures and the legacy of both the pandemic and Brexit. Sales in the UK built upon the recovery of 2021 with a further rise of 5% to reach $11.9bn in 2022 – an encouraging result, although still below the pre-pandemic level of $12.2bn in 2019. While Brexit had impacted European trade, the Art Basel report found that the UK was the most international of markets with 60% of dealer sales made to overseas buyers including 22% to the EU and 24% to the US.
Great expectations for recovery in 2022
Following two years of disruption caused by the global pandemic, anticipation was high that the art market would continue its recovery during 2022. At the start of the year, predictions of a significant year for art sales appeared realistic as a more normalised calendar of international arts fairs and auctions resumed.
"A notable factor in assisting the market’s recovery was significant demand at the upper end of the market from wealthy collectors which was matched by several renowned private collections being brought to auction."
For auctions at the headline-grabbing highest level of the market, the comparison with the pandemic-impacted year of 2020 is stark. In 2020 no artwork sold at auction reached the coveted $100m threshold, and only two works sold for excess of $50m. In 2022, 24 artworks sold at auction above $50m of which an unprecedented six lots sold above $100m.2
The first half of the year was marked by strong auction sales, with a number of record prices for artists achieved, and buoyant fairs and exhibitions. However, as the year progressed the impact of the war with Ukraine, coupled with high inflation and the threat of global recession, led to a distinct cooling of the market.
The full impact of the market slow-down was mitigated by the remarkable sale in November of the painting and sculpture collection of billionaire Microsoft co-founder Paul Allen, who passed away in 2018. Arranged via Christie’s New York, the sale saw 155 works from Allen’s collection auctioned over two days reach an extraordinary $1.62bn. This eclipsed the previous auction record for a single-owner sale - that of real estate tycoon Harry Macklowe and his wife Linda’s collection which realised $922.2m over two sales at Sotheby’s New York in November 2021 and June 2022.
The sale set 27 new auction records for renowned artists including Georges Seurat, Paul Cézanne, Vincent Van Gogh, Paul Gauguin and Gustav Klimt. Five works from the Allen collection each surpassed $100m, with six of the top ten 2022 auction results being achieved from the sale.
The highest valued work was George Seurat’s Les Poseuses, Ensemble (Petite version) (1888) which features three nude models at rest in the artist’s studio beside his masterpiece A Sunday Afternoon on the Island of La Grande Jatte (1884-1886). The painting which realised $149.2m was an auction record for Seurat and for a Post-Impressionist work.
Despite the notable individual and collective records achieved by the Allen sale, it did not include the highest painting sold at auction during 2022. This was achieved by Andy Warhol’s portrait of Marilyn Monroe Shot Sage Blue Marilyn (1964) which realised a monumental $195.0m at Christie’s New York in May. The painting came from the sale of the estate of the Swiss siblings and art dealers Thomas and Doris Ammann. The entire collection sale totalled $359.2m, with Warhol’s iconic image becoming the second-highest work ever sold at auction, behind the infamous Leonardo Salvator Mundi (c1499-1510) which realised $450.3m in 2017 but continues to remain out of public view.
Art online reduced
The staggering growth in e-commerce was one of the most significant developments in the art market in the COVID impacted years of 2020 and 2021. A market which for decades had seemed impervious to change, with its over-reliance on face-to-face interactions and international travel, was compelled to explore the wider potential of online trading.
With the notable exception of China, 2022 marked the end of many of the pandemic restrictions and a return to the traditional annual art market cycle of in person fairs, exhibitions, and live auctions. Unsurprisingly, therefore, both dealers and auction houses reported a reduction in the share of e-commerce during the year. Online-only sales reduced to $11.0bn down from its peak in 2021 of $13.3bn, but still 85% higher than in 2019.
Although they remain important in attracting new buyers to the market, this contraction in online-only sales was reflected in the figures of Christie’s, Sotheby’s, and Phillips. In 2022 these accounted for 7% of total auction sales, down 4%, although still 2% higher than 2019.
"Taken collectively however with live sales, online bidding has emerged as the dominant method of accessing auction sales accounting for 91% of bids at Sotheby’s (up from 18% in 2012) and 75% at Christie’s (up from 45% in 2018) in 2022."
Future outlook for 2023 looks mixed
Coming off the back of COVID-19, there can be no doubt that Russia’s invasion of Ukraine, high inflation and the threat of recession impacted the recovery of the art market in 2022 – as it did for several financial sectors. With these factors continuing, the outlook for 2023 looks mixed.
"The desire to return to the familiar market pattern of live events has already been thrown into doubt. The cancellations of the 2023 London Masterpiece fairs and the summer edition of Art & Antiques Fair Olympia, suggest that the post-Brexit and post-pandemic ‘normal’ is not the same as before."
2022 produced some incredible auction results with a record top 50 lots all realising amounts in excess of $30m.2 The market was undoubtedly swelled by a number of high-quality artworks brought to market through high-profile collector sales. Particularly gratifying was that some of these, including the two highest selling single-owner auctions of the year, had charitable or philanthropic purposes. In accordance with Paul Allen’s wishes, the Allen Estate donated proceeds from the sale to unnamed charities, while the newly founded Thomas and Doris Ammann Foundation committed proceeds to improving the lives of children worldwide.
The recently published ‘Value of Giving 2022 Report’ produced by the Benefact Group, estimated that the average value of charitable donations in the UK fell to £4.3bn in 2022, down sharply from £9.3bn in the previous year – another indicator of the wide-reaching impact of the economic uncertainty. The report provides a fascinating insight into the wider socio-economic impact of charitable giving and volunteering – a figure it estimated totalled £23bn, representing 0.8% of total UK gross domestic product (GDP). High-profile and headline-grabbing sales like those of the Allen and Ammann collections provide an edifying wider context of the potential for art to stimulate the economy and simultaneously achieve a greater good for society.
1 Unless stated otherwise all figures quoted are from the Art Basel & UBS Art Market Report 2023
2 Artnet Price Database Fine Art and Design