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Global Art Sales Rise As New Billionaires Help Fuel Buying, Study Says

Tom Burroughes, Group Editor , 11 March 2019

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Art sales rose last year and the Swiss bank reckons the rise in numbers of Chinese billionaires, along with other forces, is helping to drive the market.

Art sales rose by 6 per cent in 2018 from a year before reaching an estimated $67.4 billion, the highest level in 10 years and up by 9 per cent in the decade since the crisis year of 2008, according to UBS and Art Basel in an annual temperature check on the market. 

While only a minority holding in the portfolios of many HNW and ultra-HNW clients, fine art as an investment area – as well as for its aesthetic enjoyment – continues to thrive, encouraging wealth management organisations such as UBS and Deutsche Bank, for example, to advise clients.

To some extent the state of the market indicates wealthy persons’ appetites for spending more generally. Art is sometimes touted as a diversifier of risk, although in the financial crisis of 2008, even the art market could not avoid the fallout. 

"The art market is a fascinating reflection of economic developments and trends in wealth creation. Most notable is the growth of billionaire and Millennial spending power, particularly in Asian markets. As ever, passion remains the market’s lifeblood and drives the best collectors who value quality pieces that provide pleasure and cultural enrichment,” Mark Haefele, chief investment officer, UBS Global Wealth Management, said.

The US retained its position as the largest market worldwide, accounting for 44 per cent of sales by value. Sales in the US reached $29.9 billion, the highest recorded level to date. Despite political uncertainty surrounding Brexit, the UK had a relatively strong year of sales in 2018, with the value of sales to and from the UK art market currently dominated by non-EU trade. With values rising by 8 per cent to just under $14 billion, the UK regained its place as the second largest market at 21 per cent. Sales in China, the third largest market at 19 per cent reached $12.9 billion in 2018, a decline of 3 per cent year-on-year. 

Digital
The online art market reached an estimated new high of $6 billion in 2018, up by 11 per cent year-on-year. At 9 per cent of the value of global sales, this is slightly lower than the global online retail sector, where e-commerce represented 12 per cent of total retail sales in 2018. The UBS and Art Economics survey of HNW collectors in five markets, showed that the majority (72 per cent) had not exceeded a price of $50,000 online. 

However, there is evidence that some collectors are increasingly willing to pay high prices online, UBS said. Some 17 per cent of the sample had bought a work of art or object for $100,000 or more and 4 per cent had spent $1 million or higher on a work of art online.

Sales at public auction of fine and decorative art and antiques reached $29.1 billion in 2018, up by 3 per cent year-on-year, and up by nearly 30 per cent on 2016. Works of art selling at prices in excess of $1 million accounted for 61 per cent of total sales value in the fine art auction market in just 1 per cent of lots. Auction sales in the US had the strongest growth, increasing by 18 per cent to $11.8 billion. 

As far as dealer figures are concerned, sales in the dealer sector increased by 7 per cent year-on-year to an estimated $35.9 billion. The advance in sales continued to be driven by the high end of the market. Art fairs continue to be a central part of the global art market, with aggregate sales estimated to have reached $16.5 billion in 2018, up by 6 per cent year-on-year. The share of the total value of global dealer sales made at art fairs was 46 per cent in 2018.

To coincide with International Women’s Day late last week, the report said that according to data from Artfacts.net, the share of women in global exhibitions has grown from 25 per cent in 2000, up to 33 per cent in 2018. For those galleries working in the primary market, 36 per cent of the artists they represented in 2018 were female artists, which accounted for an average of 32 per cent of their sales.

The report draws on two additional strands of UBS research. For example, UBS Evidence Lab's research on luxury expenditure in Greater China Visiting the Great Mall, revealed that Millennials are more confident than older consumers, with women being the “most resilient spenders”. 

The research found that Millennial luxury consumers have the highest current average transaction values and were considerably more confident about the future compared with more cautious older consumers, having high disposable incomes, property and little experience of economic recession.

In its Billionaires report, co-authored with PricewaterhouseCoopers issued last year, UBS noted that the number of billionaires is expanding rapidly in countries such as China, and therefore fuelling new art spending.

Clare McAndrew, founder, Arts Economics said: "While we’ve seen another strong year of aggregate sales, the mood of the market in 2018 was generally less optimistic, as many wider economic and political issues continued to weigh heavily on sentiment. This drove some risk-averse buyers and sellers towards private sales in the dealer market, which saw strong sales overall.”

“The auction market also maintained pace but with wide variations between countries and price segments. Countering this, a very positive finding of the research this year was the dynamism in collecting by global Millennials. New research on global HNW collectors showed that the Millennial generation were considerably more active buyers in all sectors of the art market than other generations, and accounted for about half of those collectors regularly spending at the level of $1 million or higher,” McAndrew continued.

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