The global art market is experiencing its second year of decline, with a noticeable dip in demand for prestigious artworks. A recent study indicates that a younger generation of collectors is leaning towards lower-priced pieces.
Sales at major auction houses—Christie’s, Sotheby’s, Phillips, and Bonhams—plummeted by 26% in the first half of this year compared to 2023, and by 36% from the peak levels seen in 2021, as per findings by Art Basel and UBS Global Collecting Research. The survey revealed that only 43% of affluent collectors intend to purchase art in the coming year, a significant drop from over 50% the previous year. Conversely, 55% of collectors plan to sell, highlighting an imbalance in the market, with more sellers than buyers.
Paul Donovan, chief economist at UBS Global Wealth Management, noted, “The highest spenders are either cutting back or moderating their expenditures,” emphasizing a more cautious strategy among collectors.
Amid these challenges, dealers, galleries, and auction houses are hopeful for a rebound following upcoming major auctions in New York this November and Art Basel Miami Beach in December.
On a positive note, the survey found that 91% of wealthy collectors are feeling “optimistic” about the future of the global art market over the next six months, up from 77% at the end of 2023. This optimism exceeds the 88% of respondents who feel the same about the stock market, with only 3% expressing pessimism about the short-term outlook for the art sector.
The average annual spending on art by affluent collectors has remained steady at approximately $50,000. Notably, over three-quarters of the surveyed collectors acquired paintings during both 2023 and the early part of 2024.
However, various indicators, including buyer interest and online sales, suggest that overall sales may be stagnant or even decline again this year. Experts point to economic slowdowns in Europe and China, along with geopolitical tensions in places like the Middle East and Ukraine, as factors undermining buyer confidence. Furthermore, rising interest rates have made cash or treasury investments more appealing, compelling affluent collectors to reconsider art purchases.
The art market is also seeing a generational shift akin to that of the classic car market, creating an imbalance between supply and demand. Older collectors are reducing their inventory by selling off less significant works, while younger generations, particularly Generation X and Millennials, are opting for more modern, affordable pieces from galleries and art fairs.
According to the UBS study, instead of seeing a dramatic increase in high-value sales, 2024 may witness a more significant emphasis on volume with older collectors selling off less desirable pieces. The focus has shifted from achieving higher prices to rationalizing collections by offloading art that no longer has relevance, as noted in the UBS report.
Dealers report that the convergence of different generations has led to an oversupply of Impressionist and abstract pieces priced in the seven and eight figures. The high-end art sector, described as works valued over $10 million, was exceptionally strong prior to 2022 but has since become weak.
Younger generations are noted to be more strategic in their purchases, albeit potentially limited by budget constraints, as those accustomed to purchasing high-priced art are deferring their buys.
Generation X is rapidly becoming a key demographic in the collectibles market, with the UBS study indicating they are over twice as engaged in this area.
Overall, affluent collectors are allocating less of their wealth to art. While the debate about art as an “asset” continues, the average portion of portfolios dedicated to art in 2024 is at 15%, a decline from 22% in 2021. This drop could partially be the result of the appreciation in value of other portfolio assets, such as stocks. However, it also reflects a pause in many collectors’ purchasing activities.
The ultra-wealthy remain the most involved in the art market, with individuals possessing over $50 million typically dedicating around 25% of their wealth to artworks, down from 29% last year. Conversely, billionaires with assets under $5 million allocate about 12% to art.
Veteran collectors are facing significant decisions regarding their substantial collections—whether to sell pieces, pass them to family, or donate them to museums or nonprofit entities. The survey indicated that the average affluent collector owns 44 artworks, while Gen Z collectors possess an average of 33 pieces, in contrast to those with over two decades in the market who average 110 pieces.
When considering their primary concerns in the art market, 52% of respondents highlighted “barriers to the international movement of art,” followed closely by “increasing legal issues related to art transactions” and ethical dilemmas surrounding artist compensation and rights, with “changes in the art market” landing in fourth place.
This massive intergenerational wealth transfer—potentially involving tens of trillions of dollars—may also signal significant changes for the art sector. The survey showed that 91% of affluent collectors possess artworks that have been inherited or received through bequests.
Despite many expecting their families to sell inherited pieces, 72% of respondents indicated they would retain at least some inherited artwork. Sellers often cite space limitations or tax concerns rather than personal taste as the primary reasons for selling.
“There’s a common belief that younger generations will drastically change the landscape of art ownership,” Donovan observes. “However, it would be unwise to assume that this will lead to the dismantling of collections. Art holds an emotional significance that connects descendants to the works their parents cherished.”
