Report Highlights of Art Market Update: A New Equilibrium (Bank of America, 2023)

Dive into the post-Spring 2023 auction aftermath at Christie's, Sotheby's, and Phillips, where an 18% YoY downturn challenges the status quo. The turbulence of 2021 and 2022, with a surplus of supply, high demand, and liquidity, underpins this exploration.

Our Research Team have summarised the insights gained from Bank of America and Artnet Worldwide Corporation (data as of August 15, 2023) and has outlined the key numbers you need to know about this report.

1) Market Overview

• The Spring 2023 auctions saw sale totals at Christie’s, Sotheby’s, and Phillips down 18% year-over-year.
• 2021 and 2022 were outlier years for the art market due to a surplus of supply, high demand, and abundant liquidity.
• Despite potential economic challenges, collector sentiment in the art market remains optimistic long term.

2) Current Market Trends

• With stock market fluctuations and potential recession, sell-through rates at auction are still strong. Art prices are expected to stabilize, with some collecting fads from the past two years diminishing.
• Collectors are now focusing more on quality and curation, and less on speculation and trendiness.
• The S&P Global Luxury Index was up 22.6% in the first half of 2023. Christie’s reported $590 million in luxury sales during the first half of 2023, up 43% from last year.

3) Mergers and Acquisitions

• Key art world organizations, like Bonhams, Perrotin, and Frieze, are turning to mergers and acquisitions for growth.
• Frieze plans to double its footprint in the world's largest art market by holding four fairs yearly in the U.S.
• Growth through acquisitions and the resulting consolidation in the art industry will continue, as industry players and financial buyers remain bullish on the art fair model and the global contemporary art market.

4) The Wealth Transfer

• The last two years had an unprecedented supply in the art market due to large single-owner sales.
• The "great wealth transfer" of $84 trillion expected to pass to heirs by 2045 will drive high-quality supply to the art market.

5) Auction Houses

• Auction houses have seen less competitive bidding in Spring 2023.
• The benefit of house guarantees is attracting business, but there's a risk for auction houses. In May 2023, direct financial guarantees were made on numerous lots by major auction houses, but they secured irrevocable bids on most of them to reduce exposure. Auction houses are expected to decrease house guarantees and rely more on third-party backers.

6) Museums

• Museums previously focused on "wet paint" exhibitions are now revisiting canonical artists and broadening definitions of "canon."
• According to the American Alliance of Museums, only a third of museums returned to pre-pandemic attendance levels.
• To combat financial stress, some museums are increasing admission fees and revising gift acceptance policies. Rising expenses are observed as museum staff unionize, and more institutions update their storage and exhibition spaces.
• There's a push to engage younger donors who emphasize social and racial justice and favour sustainable and impact investments.

Whether you want to start your art journey, or you're a seasoned collector, the Maddox Team are on hand to help you with whatever your art needs are. Please explore our New Arrivals here or explore our Current Exhibitions page here.

Created by the Maddox Research Team on the 30th of November 2023.