Potential Future Trends in the Art Market
Air is Thin at the Top
The art market in recent years has seen a decline in sales at the high end due to a shift in buyer preferences. While sales of lower-priced artworks have increased in volume, multi-million dollar sales have decreased. This trend has led to a growing base and a smaller market summit. This shift may make the market more stable but less appealing to those who were drawn to the high-value sales. Additionally, buyers are taking their time when purchasing art and are favoring private sales over public auctions. This change in buyer behavior may impact the traditional dynamics of the art market, where large presales and VIP art fair days were once common.
The Great Wealth Transfer and a (Possibly) Flush Market
The art market is anticipated to experience a significant influx of artworks as a result of the transfer of wealth from older generations to younger ones. With up to trillion expected to pass down in the next two decades, younger high net-worth individuals will inherit artworks. Surprisingly, survey data suggests that younger collectors are interested in preserving inherited artworks and are keeping them in their collections. However, practical reasons such as limited storage space and inheritance taxes may lead to the sale of these inherited artworks. As governments look to increase revenue, there may be a rise in wealth and inheritance taxes, further incentivizing the sale of artworks to cover these expenses.
Where’s the Party?
The post-pandemic art market has witnessed a desire among high net-worth individuals to attend art-related events. While online art buying has become normalized during the pandemic, in-person events such as gallery exhibitions and art fairs have experienced a welcomed recovery. However, certain event types such as studio visits, live auctions, biennales, and large arts festivals have seen a decline in attendance. HNWIs have adapted their travel patterns, attending more local events in 2024. This shift towards regionality could have an impact on the dynamics of art fairs, with Art Basel becoming more regionally focused. It is also important to note that while the broader high-net-worth public prefers online art purchases, the smaller subset of highly engaged VIP collectors prioritizes in-person interactions and buying experiences.
Predictions and Recommendations for the Art Industry
The future trends in the art market present both challenges and opportunities for the industry. To navigate these changes and thrive in the evolving market, the following predictions and recommendations can be considered:
- Focus on the middle market: With a decline in sales at the high end, galleries and art professionals should concentrate their efforts on the middle market. This segment is experiencing growth in sales volume and presents an opportunity for galleries to cater to a wider range of collectors.
- Embrace online platforms: While in-person events are making a comeback, online art buying has become a norm for many collectors. Galleries should invest in robust online platforms and enhance their digital presence to cater to the preferences of the wider art-buying public.
- Adapt to regional preferences: As the art market becomes more regionally focused, galleries and art fairs should tailor their offerings to the specific preferences and interests of their local audience. Understanding the regional art scene and cultivating relationships with local collectors can lead to greater success.
- Provide value beyond art: Given the practical reasons for selling inherited artworks, galleries can offer additional services such as art storage solutions and assistance with inheritance tax planning. By providing value beyond selling artworks, galleries can attract collectors looking for comprehensive art management solutions.
- Collaborate with wealth management firms: As the wealth transfer progresses, galleries can forge partnerships with wealth management firms to better understand the needs and motivations of young collectors. By working together, galleries and wealth management firms can develop tailored strategies to preserve and grow art collections.
Overall, while the art market may be going through a challenging period, there are opportunities for growth and adaptation. By understanding the shifting dynamics of the market and aligning strategies with emerging trends, the art industry can navigate the future successfully.
References:
- Art Basel and UBS Survey of Global Collecting, 2024
- ARTnews: “Art Basel CEO Noah Horowitz on the Art Market’s Shape and Future”
- Wealth-X: “New Wealth Transfer Report”