Global Art Market News, Commentaries, and Critiques. A Column by Stefano Baia Curioni
A comparison of the 2019 and 2021 Art Basel and UBS Global Art Market Reports by Clare McAndrew may offer some interesting insights about the economic effect of the pandemic on the international art market.
Lockdown has had an extremely severe impact on art fairs: out of 365 fairs planned for 2020, 61% were cancelled, while some proceeded online. The percentage of art fair sales by dealers declined from 46% (2018) to just 13% (2020) of total sales revenue — a change that will have strong consequences for gallery business models.
The effect has been twofold: on the one hand there has been a huge overall reduction in sales (more than 20%), particularly for larger galleries (those with a yearly turnover of more than ten million dollars). On the other hand, drastically reduced operating costs due to the absence of fairs paradoxically allowed smaller galleries to achieve a positive economic result in 2020. Will this herald a paradigmatic shift in how galleries do business? The challenge of finding new collectors seems to be what is most at stake in terms of enduring the heavy price of international fairs.
At the same time, the downturn also took a toll on auction houses worldwide, which saw sales go from 29.1 billion dollars in 2018 to 17.6 billion dollars in 2020, a more than 30% decrease. That trend has been partially offset by the expansion of private sales — a reality that now challenges the overall auction house model — and by growing online auction results (from six to twelve billion dollars in sales).
What should we expect over the next few months?
Art market liquidity during the pandemic has been similar to that shown after the financial crisis of 2008: a quick reaction with a shortage of resources, and a symmetrical concentration of trading activity focused on blue-chip artists.
Unlike the 2008 crisis, which buffeted the world of finance and undermined the confidence of collectors, the pandemic did not have a huge negative outcome in terms of revenue levels for the social strata that is most intensely involved in art collecting.
Therefore, it is possible that recovery from the crisis will happen more quickly than the recovery after 2008, which took more than four years. Positive signals are already in the air at recent New York auctions, with some predicting a full recovery for fall 2021.
Another scenario to be taken in account — which might be relevant and positive for the future of the art market — is the potential for inflationary peaks generated by deficit spending intended to offset the economic impact of the epidemic.