31 March, 2022
Two days ago, Art Basel and UBS released their annual art market report, looking back on 2021, following what was the strongest recession the global art market has faced over the last decade. Our team at London Trade Art dives into the report to summarise key points for you.
The Art Market Strongly Recovered from the Shocks of the Pandemic
Arguably, the most positive point outlined in the report is that the art market has managed to strongly recover from the recession suffered during the pandemic. Positively, the report demonstrates that the art market recovered steadily in 2021, with aggregate sales of art and antiques reaching approximately $65.1 billion, up by 29% from 2020 and exceeding pre-pandemic levels of 2019.
Whilst the auction sector experienced the most growth, all sectors grew in 2022. The U.S. is still in first place when it comes to worldwide sales by value, sitting at 43%. However, suffering from the costs of Brexit, the UK has slipped back down to third place (17%), surpassed by Greater China (20%). Perhaps, also due to Brexit, France has had a strong uplift in sales, up by 50% year-on-year to $4.7 billion, marking their highest level in a decade.
A Return to More In-Person Events Has Led to a Slight Drop in Online Sales
As was expected, during breaks in lockdown restrictions, a larger return to in-person events led to a slight drop in online sales by 5%. However, overall, online sales continued to expand in 2021, growing by 7% to reach approximately $13.3 billion. This accounted for around 20% of sales in the art market, still more than double the level of 2019.
As the author of the report and cultural economist Clare McAndrew states, “a very significant outcome of the pandemic and the changes it brought to the market in the last two years is that it provided the impetus to force the art market, a previous laggard in terms of its adoption of e-commerce, to catch up with other retail industries.”
In terms of online strategies, most dealers believed direct or personal emails to existing clients, followed by social media and content production, to be the most effective.
Overall, online sales show no sign of slowing down in 2022, though dealers expecting a rise in sales from these seems to be less than reported in 2020.
Digital Art Continues to Gain Momentum
According to the report, interest in digital art continues to grow, especially when it comes to younger collectors. Of all HNW collectors surveyed, 56% expressed interest in purchasing digital art in 2022. Interest was the greatest amongst millennial collectors (61%) and within three specific markets: Taiwan (71%), Singapore (62%) and the UK (61%).
On that note, whilst millennials now represent a strong share of art collectors, it is interesting to highlight that “Gen Z collectors had the highest average share of wealth dedicated to art, with over a third having an allocation of more than 30%”. This underlines the important role art plays in the wealth portfolios of some young collectors.
Moreover, based on averages, younger collectors not only spent more than Boomers on digital art but also across all categories of fine art.
NFTs Continue to Rise, Especially in the Secondary Markets
For the first time ever, NFTs have been awarded a specific section in the Art Basel and UBS Art Market Report. Undoubtedly, they represented one of the most significant crazes in the art market in 2021, expanding over a hundredfold to reach $2.6 billion. Correspondingly, there has been a huge increase in the number of NFT buyers. Whilst active buyers totalled 1,370 in 2019, this number increased to 130,696 in 2021, including 64% who were active in the primary market and 76% who were active in both the primary and secondary markets.
Surprisingly, the report demonstrates that, on average, NFT art is owned for just around 33 days before being resold, resting in stark contrast to the average resale period of 25-30 years in the traditional art market. In 2020, most NFTs were related to primary sales, consisting of 75% of total values and around 79% of transactions. However, in 2021, resales made up 73% of the value of trading in NFT art, seeing primary sales fall to 27%.
According to Nonfungible.com, as cited in the report, around 82% of resales have been profitable to date. Total profits from these, which reached just over $1 billion in 2021, exceeded losses of $65.8 million.
Eagerness for NFTs shows no sign of abating, with 88% of HNW collectors expressing interest in purchasing NFT-based artworks in future.
The War in Ukraine Raises Doubts
Following the positive recovery of the art market in 2021, the start of 2022 has been marked by the uncertainties of the tragic war in Ukraine. It is still unclear how much the sanctions against Russian oligarchs will affect the industry. As McAndrew hints, surging oil prices and inflation will likely trickle down to the art market. One thing the last few years have shown us, however, is that this is a market driven by resilience.
Would you like to compare this summary with data from the last couple of years? Discover our previous market report summaries here.
*Please note that all graphs featured in the article were taken directly from the Art Basel and UBS Art Market Report 2022.
Clare McAndrew, ‘The Art Basel and UBS Global Art Market Report 2022’, Mar 2022