We’re living in the golden era of unevenly distributed global wealth creation, which, for the art market, means business is booming. As the economist Clare McAndrew outlines in The Art Market | 2018, released Tuesday by UBS and Art Basel, the global art economy grew for the first time since 2014 with $63.7 billion in total global sales, a rise of 12% from 2016.

The 2018 edition of the annual study is a 347-page exploration of a market that’s finally rising after two straight years of decline. McAndrew’s findings provide fascinating insight into how the explosion of global wealth has allowed the top end of the market to carry the industry toward new heights, even as mid-level sectors struggle to keep up.

“In 2017, despite remaining political volatility in many regions, robust growth in global wealth, particularly at the high end, improved economic performance, accelerating financial market returns, stronger consumer confidence and increased supply led to a much more favorable environment for sales,” McAndrew writes in the report.

To research her findings, McAndrew’s research firm Arts Economics conducted a survey of 6,500 dealers from various parts of the world—though only 14%, or about 910 dealers, actually responded, underscoring the difficulty in extracting data from the heart of the art market. There was support from dealers’ associations and interviews with dealers from different sectors, but no names are divulged, and it’s unclear how many came from prominent galleries. McAndrew also used auction data from resources such as Auction Club, and the Art Market Monitor of Artron (AMMA)’s database of 5.6 million auction results in China. She and UBS also conducted a survey of thousands of wealthy individuals to ascertain habits of art collectors, and she used as secondary sources reports compiled by Merrill Lynch, Credit Suisse, and the IMF World Economic Outlook.

The figures can make one woozy. The combined wealth of High Net Worth Individuals (HNWIs)—that is, anyone with more than $1 million in the bank—is a staggering $63.5 trillion, the highest point in world history, and is up nearly 50% from 2010.

And many have wall space they’re looking to fill: Arts Economics teamed with UBS to survey 2,245 American millionaires and billionaires (the kinds of people who don’t usually like to fill out surveys), and found that 35% of them collected art and antiques in 2017.

Unfortunately, not all of this wealth is trickling down to the middle and lower echelons of the art market. Many middle-tier art dealers don’t have the resources to access these newly rich entry-level collectors, or to hold onto artists once they finally start making them money. Additionally, many of these galleries can’t stay in the black long enough to deal with collectors who notoriously take as long as they want to pay, creating cash-flow issues that can be more extreme than in other industries.

These handshake-deal norms of the art world hurt young galleries and artists the most, and may be a factor behind the falling rate of new galleries opening, which dropped by 87% from 2007 to 2017. A decade ago, five galleries opened to every gallery that closed. Now, the rate is lower than one to one—for the first time since the website Artfacts.net started tracking gallery closures in 2007, more galleries shutter than open each year.

But the whole report is chock full of intriguing findings, weird facts, and a smattering of delightful color-coded graphs. Let’s dive in, shall we?

The market is back up after years of decline

Right off the bat, there’s confirmation of what we all suspected: The art market is back. The global art bazaar brought in total sales of $63.7 billion in 2017, which is up from what was reported as a $56.6 billion haul in last year’s report (though that figure has been revised in the new report and listed as $56.9 billion, an upward revision of $300 million). However, it has yet to recover back to the level of sales in 2014, which reached $68.2 billion. Of the major areas for selling art, the auction sector saw the biggest boost as sales rose 27%, following a dip of a similar magnitude in 2016—last year’s report indicated that auction sales had dropped 31%. Auction sale growth was largely due to a handful of works at the very high end. Sales of work at more than $10 million exploded in 2017, increasing by 125%.

And while only 0.2% of artists have work that sells for more than $10 million, such sales accounted for 32% of all sales by value.

Post-war and contemporary was the largest of the auction sectors in 2017, with a 46% share of the market by sales, as it has been every year since 2011. It is followed by modern art, which accounts for 27% of sales, up from 23% in 2016. European Old Masters have, since the rise of the contemporary and modern sectors in the late 2000s, been a small enough sector of the market (7% in 2017, roughly steady over the past 10 years) that an entire year’s worth of auctions can be shaken up by a single cannonball of a sale: The $450 million Leonardo da Vinci painting that sold last November at Christie’s helped boost the sector by 64%; without it, sales of European Old Masters would have been down 11% year-over-year.

In the dealer sales sector, which accounted for 53% of sales by value in 2017, overall sales rose by 4% year-over-year, but the growth was unevenly distributed. Dealers who had sales of more than $50 million over the course of the year said their businesses rose 10%.

Asia reigns supreme

The number of billionaires in Asia is rising faster than anywhere in the world—in 2010, it had 24% of the world’s share, and now it has 41%, more than North America (at 33%) and Europe (at 21%).  

China is manufacturing these billionaires at nearly the clip at which it turns out sneakers and iPhones. The country had 26% of the world’s billionaires in 2017, up from 6% in 2010. Thanks to a robust slice of global auction sales—33%, right behind the United States’s 35%—China accounted for 21% of global art market sales to seize second place, edging out the United Kingdom, which had 20% of global art sales in 2017. McAndrew thinks that the market could increase there in lock step with wealth expansion. According to Arts Economics’s findings using data from Credit Suisse, the next five years will bring approximately 205 new Chinese billionaires, over twice as many as expected from all of Europe.

No new ideas at museums

The plentiful graphs throughout the report show ups and downs between 2007 and 2017, with fluctuations due to the recession and bull markets. But one chart that shows little deviation is the list of the top 20 most exhibited artists—Andy Warhol was number one in 2007, 2012, and 2017, with Pablo Picasso after him each year, while Bruce Nauman and Gerhard Richter switched it up for the third spot. Fourteen of the artists in the 2017 list were on the 2007 list.

McAndrew also points out that, even if there’s a lack of deviation at the top across a decade, those artists make up just a small fraction of the entire museum landscape—the top 20 artists accounted for 4% of all solo exhibitions in 2017.

That looks rather diversified compared to the equivalent on the auction side—the top 20 auction artists account for 26% of all sales by value.

Gallery opening freeze

Some of the more intriguing findings are mined from the data on Artfacts.net, which has tracked openings and closings among 5,000 top galleries since 2007 (the criteria for inclusion is participation in a major art fair in the last 11 years). There’s been much ink spilled over the fact that galleries are closing, and McAndrew observes that more than 20 notable galleries shut their doors in 2017—but the issue is larger than simply the number of galleries that close each year. In 2007, five galleries opened to every gallery closing, and Artfacts.net counted a total of 275 galleries worldwide that opened that year; in 2017, less than 50 new galleries opened their doors. The reasons as to why galleries are dying in droves has been documented—high rent prices, exorbitant fees levied by art fairs, art-going habits shifting toward event-driven Instagram spectacles—but McAndrew singles out the way in which mega-galleries poach young talent before they can make money for the small gallery that has supported them.

“Although this development is nothing new, its prevalence is becoming increasingly problematic to a wider range of dealers, with the very top dealers encroaching on both classic mid-level dealers and also those who would otherwise be thought of as near the top end,” McAndrew writes. “This has further cemented the superior market position of a very small number of dealers at the very highest level.”

The vast majority of collectors interviewed say “I’ve never sold a work”

No one wants to admit to being a flipper. Of the 791 active art buyers who were interviewed in the Arts Economics/UBS survey, a whopping 86% claim to have never once sold a work from their collection.

A separate UBS survey of HNWIs, referred to in the report, found that “almost 40% could not estimate the value of their own collection and the majority had not discussed their collections with a financial advisor,” and that “the vast majority (81%) [was] planning to leave their collections to their heirs when they passed away.”

What fair fatigue?

Despite a long-simmering backlash toward art fair proliferation—Jose Freire’s Team Gallery is the latest to quit the whole expo business, and Gavin Brown’s Enterprise isn’t doing any New York fairs this year—dealers made more money on fairs in 2017 than the year prior. Dealer sales at art fairs  were $15.5 billion, up 17% from 2016, and dealers said they made 46% of all their sales at fairs, a figure that was up by 5%. And while fairs will continue to grow like weeds on every corner of every continent—there were about 55 art fairs around the globe in 2000, and now there are 260, according to the report—galleries, on average, participated in five fairs in 2017, the same as the year before. However, dealers also reported that their spending on fair participation rose by 15% in 2017.

Speaking of art fairs, people really like bringing Alex Katz works to them

Alex Katz is not in the top 20 list of sales by living artists, nor is he in the top 20 list of artists with the most solo exhibitions. But in the list of most-exhibited artists at fairs, Katz is number two, appearing with at least one work at 35 of the top 68 fairs around the world. (The late Warhol is number one, with 43 fair appearances.) Undoubtedly, a big Katz painting of a beach on a sunny day brightens up an art fair booth.

The twilight years of grand old galleries

There’s one reason for galleries closing that isn’t often talked about: people retire, or die. The titans of SoHo’s 1980s rise, such as Paula Cooper, Barbara Gladstone, and Mary Boone, are getting up in their years, and in the next decade, retirements are inevitable, leaving the future of their businesses in flux. “Unlike the auction sector where large brands dominate, most dealer businesses, even at the high end, are identified strongly with key individuals,” McAndrew writes. “When a dealer moves on or retires, the business itself also often comes to an end, versus the brands and corporate identities in the auction sector.”

Larry Gagosian addressed this issue during a recent talk at the 92nd Street Y, and didn’t have a concrete answer as to what will happen to his eponymous gallery. “I don’t have children, and that’s usually how these legacies are established,” he said. One anonymous dealer quoted in the report was a little more blunt: “When I retire or leave, there will be no company to sell,” they said. “The business is based on me, my network of contacts and a little bit of inventory. It’s the same in bigger galleries, if one person leaves that can mean the end. While there are some businesses that are successfully handed down through generations,” continued the dealer, “they’re not common.”

The total sales in the art industry are still dwarfed by big tech…for now

At one point, McAndrew reminds us that Google alone generated $110 billion in revenue in 2017, making the $63.7 billion generated by approximately 310,685 different businesses in the art world seem a bit paltry. But look for that number to increase as wealthy people get wealthier. “By 2025, forecasts are that [the combined wealth of all HNWIs] may reach as high as $106 trillion,” McAndrew writes. “If as low a portion as 0.1% of that increase in investable wealth were to be invested in works of art over the eight-year period, this alone could add a further $40 billion to art sales, bringing the market well in excess of $100 billion.”