The rich are living in a different economic world. You can see that from all the Dior handbags and Cartier watches they’re buying — but it becomes even clearer when you look at all the art they’re collecting.
Global art sales rose to $67.8 billion in 2022, according to art economist Clare McAndrew’s latest state-of-the-industry report for Art Basel and UBS Group AG. That marked a 3 percent increase from 2021, which saw a 31 percent rebound in sales from the pandemic-induced low point in 2020.
Although the US retained its premier position in the global ranks, it’s notable that the UK also strengthened. The British art market hasn’t quite recovered to pre-pandemic levels, but it is still attracting international buyers post-Brexit. The slump in sterling last autumn didn’t hurt either.
In contrast, stalled demand for lower-end works suggests that fear of recession, sky-high inflation and rising interest rates crimped the style of those merely affluent. The market began to cool in the final quarter of 2022.
After soaring stock markets and cryptocurrencies boosted wealth in 2021, more people, particularly in the US, discovered the joys of upmarket shopping. But with the slump in tech stocks and Bitcoin, as well as higher borrowing costs, luxury companies including Britain’s Burberry Group Plc and Gucci-owner Kering SA have noted that some younger, more aspirational buyers, are reining in their extravagant purchases.
In art, this is glaringly evident when it comes to non-fungible tokens, digital certificates of authenticity that run on blockchain technology. With crypto bros spending their gains on NFTs alongside Audemars Piguet watches, sales of art-related tokens surged to $2.9 billion in in 2021, from $20 million in the year earlier, according to Arts Economics, with data from Nonfungible.com. The boom was best exemplified by Beeple’s “Everydays: the First 5000 Days,” which sold for $69.3 million two years ago.
After peaking in August 2021, demand for art-related NFTs cooled as the price of Ethereum — the cryptocurrency of choice for trading the tokens — fell. Art-related NFT sales roughly halved in 2022 from the year earlier, though sales of collectibles NFTs have continued to expand.
The question now is: How will the recent banking turmoil affect the art market? In troubled times, art can be seen as a tangible store of value. But stock market volatility and layoffs in the tech sector and beyond can hurt demand. External crises can also deter sellers of valuable works from bringing them to market, another important factor in determining the strength of art sales.
Either way, with the US cooling, China now holds the key to transforming both art and luxury.
For sellers of creations by Balenciaga and Basquiat, Chinese shoppers unleashing another wave of revenge spending can’t come too soon.
Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Views are personal and do not represent the stand of this publication.
Credit: Bloomberg
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