The art market can seem difficult to grasp, but with the right data and analysis, it becomes much easier to understand. Start-up based in Germany art trade dug into the Artnet Price Database to bring you five facts about how the art auction market is changing and what you, as an art investor, need to know to get the most out of it. this dynamic and rapidly changing industry.
1. The art market had its best year in 2021.
Total auction sales in 2021 reached $16.5 billion, making it the art market’s most lucrative year. The previous peak, in 2014, generated $16.3 billion in total sales. (Our numbers don’t take inflation into account.) Last year marked a remarkable recovery from the pandemic-era low, when the auction market crashed to $10.2 billion, a low over ten years. The startling 62% rebound can be attributed to a number of factors: the rise in the stock market, an influx of cash that the wealthy have rushed to hoard in collectibles, inflation anxiety and an almost unprecedented level of high-quality collections on the market.
Even in 2020, the art market has proven to be somewhat insulated from broader economic trends – total auctions have contracted by just under 25%, far less than some experts feared. given the consequences of the pandemic on other sectors.
The top of the art market also rebounded faster than other asset classes, according to Artnet’s Top 100 Artists Index. In 2021, the blue chip art market surpassed the S&P 500 and the MSCI World Index. (Artnet’s indices track changes in art prices over time based on the sales performance of paintings and works on paper by the top 100 selling artists in a given category over the past few years. three years prior.) Looking ahead, some suggest that art could also benefit from creeping inflation, which is reaching 40-year highs in the United States, as it can be seen as a safe store of value in times financial volatility.
2. Ultra-contemporary art is the fastest growing genre on the market.
No segment of the auction market is growing faster than ultra-contemporary art, our term referring to works by artists born in 1975 and later. Although there is still a small slice of the overall market – less than five percent – it is growing rapidly. The only genre that continued to grow during the pandemic, ultra-contemporary sales jumped another 190% between 2020 and 2021, reaching $739.4 million. Many attribute this expansion to the entry of a new class of young collectors into the market, particularly in Asia, where the demand for new art has been particularly strong. The best-selling artists in this genre combine figurative painting and new media. They are: Adrian Ghenie (born in 1977), Beeple (born in 1981), Jonas Wood (born in 1977), Matthew Wong (1984-2019) and Jia Aili (born in 1979).
This sector is also volatile. Consider that during the market’s previous peak, in 2013-2014, the ultra-contemporary art market was dominated by so-called “zombie formalists”, whose macho view of process-based abstraction reached extremes. prices up to 3,000 times their estimates – only to collapse two years later.
3. The growth of the contemporary sector is driven by volume.
Contemporary art, which we define as works by artists born between 1944 and 1975, also had its best year ever in 2021, bringing in a total of $2 billion at auction. That’s a 109% increase from 2020 and 40% from 2019 before the pandemic. Notably, the spike was less caused by an increase in assess of works offered (the average price of a contemporary artwork only increased by $333 compared to 2019, to $41,337) only by an increase in sales volume. The number of contemporary lots sold soared nearly 40% between 2019 and 2021, to 48,736. This is likely due to both an increase in supply from sellers and the growing capacity of auction houses. to unload material through a combination of online strategies they developed during the pandemic and live sales restored after the lockdown.
4. Containment is over, but online sales continue to climb.
Auction houses, which had been relatively slow to adapt to the internet revolution, quickly pivoted to the web in 2020. While IRL sales were limited or impossible, online transactions soared. Sotheby’s, Christie’s and Phillips sold $1 billion worth of artwork online in 2020, up 1,007% from 2019. Miraculously, a year spent in lockdown appears to have permanently changed the behavior of buyers (and sellers), meaning total online sales continued to grow even after the world began to emerge from lockdown. In 2021, the total value of artworks sold online by Sotheby’s, Christie’s and Phillips increased another 36%, to $1.4 billion. The industry as a whole has become more efficient, NFTs have taken the art world by storm and entirely new business models, like arttrade, which seeks to enable people to easily and indirectly invest in art. art, have evolved in this environment.
5. Art can compete with other asset classes.
While it is too early to tell how the current stock market volatility will affect the broader art and financial markets, it is clear that fine art is among the most volatile alternative investments, but also one most potentially lucrative, and can serve as an asset in a diversified portfolio.
Fine arts recorded a volatility score of 20%, on par with the DAX (Germany’s blue chip stock index), but higher than the S&P 500 (15%) and gold (15%), among others. In the short term, works by ultra-contemporary artists offer the highest return: the Emerging Art Index recorded a 36% annual return over 12 months, surpassed only by the 39% return of the American real estate. (Top-notch art of all eras and contemporary art both posted a 9% annual return over 12 months.)
Over a longer period, the growth of the ultra-contemporary slows down. The three categories we looked at – top art, contemporary art, and ultra-contemporary art – have settled into a compound annual growth rate of around 4% over 15 years. Individual performers, however, can significantly outperform the average.
In short, those with experience and good information can benefit from the booming art market in the short term, but as a long-term game, it’s a riskier proposition. Nevertheless, if you choose carefully and have the right timing, the art can offer a significant return.
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