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