After two years of growth, global art market sales have slowed down, found the eighth edition of the, published in March 2024. In 2023, the global value of sales came to $65bn, falling 4% from $67.8bn in 2022. This figure, however, was still higher than the $64.4bn of sales seen in 2019, just before the outbreak of the covid-19 pandemic.

2023 a “complex year” marked by rising costs

The year 2023 was “quite a complex year, politically and economically, and we did see some of those complexities filter down into the art market in various ways--some directly and indirectly--and these did affect some of the trends we saw last year,” noted Arts Economics founder Clare McAndrew during a explaining the major findings from the report.

Growth in sales slowed after reaching near record highs in 2022, she noted. “I think we probably had a pretty good run for a couple of years in the recovery from the pandemic.”

A key point to keep in mind is that “even some of the businesses that did okay on paper in terms of sales still found themselves struggling a little bit in terms of costs,” said McAndrew. “These issues of inflation and rising cost are in every kind of business, but I think in this very event-driven marketplace--and especially when sales start to slow a little bit--they become a little bit more visible, these issues. A lot of businesses were kind of reflecting on what they were doing and how they could maybe do things a little bit better.”

Divergence by region, China surpasses UK

One reason for the “flatter growth” was the divergence seen between different regions, said McAndrew. Nearly all markets fell in 2020, but recovered “fairly well” in 2021.

“Then we saw this split starting to happen in 2022.” In 2022, the US, UK and France were doing well while China--“in full pandemic mode”--was doing “significantly worse.”

But last year, the situation “turned itself on its head,” she continued. “It was the UK and US that slowed down, and China was actually the one sort of bright spot, really, in terms of the major markets.” China became the second-largest art market, accounting for 19% of sales and overtaking the UK (17% of sales). Sales in China “increased by 9% to $12.2bn.”

“And it’s a complete kind of reversal, as I was saying, from the previous year, where we had these very strict lockdowns in China and sales were canceled, fairs were closed, that kind of thing. But when the economy reopened in January 2023, we saw this kind of injection of life and activity in the first half of the year,” said McAndrew. “The second half of the year was a little bit slower, but there was enough activity to boost the year.”

The US remained the biggest market, with 42% of the share of sales by value. It reached its highest-ever total of sales--close to $30bn--in 2022, but things slowed in 2023, dropping 10% to just over $27bn, said McAndrew. “It’s still very much the key centre for those super high priced works of art, and it was the fact that they were a little bit thinner on the ground that pulled the sales value down.” Sales in the UK slowed for much of the same reason.

Dealer sector fell 3%, but variation in the market

The report also looks at gallery, dealer and auction sales. “There was pretty mixed performance between the different segments, with the dealer sector doing slightly better than the auction sector, but both dropping slightly,” said McAndrew. “The dealer sector fell about 3% to about just over $36bn.”

“But as always, there’s a huge amount of variation in what’s happening within each part of the market, and it was interesting that we saw this kind of reversal in the trend that we’ve seen recently.” Over the last few years, “it was the high-end dealers--the $10m+ dealers--that were really driving the recovery. And they actually saw the weakest performance last year.” Sales cooled off in that segment. Dealers at the high end said that sales were “thinner” at the top end of the market, with buyers more cautious when it came to spending larger sums of money compared to 2021 and 2022.

On the other hand, “dealers with turnover of less than $500,000--so, the kind of lower end of the market--saw the biggest boost in sales.”

“A huge issue that came out of the research--and that I mentioned at the outset--was costs. I think a lot of businesses are focusing more on profitability than how sales are doing. So even if some dealers did fairly well last year, [they] were not necessarily making more money.” There was a “huge drop” in sales during the pandemic, but costs also decreased as people were not travelling or organising live fairs and shows. The past few years, moreover, have also seen an increase in inflation.

“We saw more businesses reporting declining profitability. Forty percent of businesses were less profitable than they were in 2022, and it was just about a third when we surveyed them the previous year.”

Upward trend continues in online sales

Another metric tracked in the report is the different channels that sales are made in. “We’ve seen some kind of fascinating changes over the past few years in how dealers make their sales. It’s really interesting because it just kind of keeps evolving.”

In 2023, the gallery channel remained key. Forty-four percent of sales made by dealers were through an in-person gallery and 20% through an online gallery. In-person art fairs accounted for 29% of sales.

The covid-19 pandemic in 2020 caused a “really big shakeup” with the shift from in-person to online. But in 2021 and 2022, “we saw the art fair calendar kind of kicking back in and live shows coming back,” said McAndrew. “It sort of reignited this debate as to whether we would just go back to the way things were, and was this just a knee-jerk reaction to what had happened during 2023?”

“I think it’s very clear in 2023 that that is not the case. We’re really operating in quite a different mode within the dealer sector, of this kind of dual online and offline.” Online sales were a “bright spot” last year, with roughly a quarter (23%) of sales in 2023 happening online--20% were through dealers’ own online channels, such as their own website or their own platform.

Decline in $10m+ segment in auction sector

2023 wasn’t the best year ever for the auction sector, said McAndrew, but the $1.6bn Paul Allen sale in 2022 is a hard act to follow. “Public auction sales fell by 7% to just over $25bn,” dragged down by a decline in the $10m+ segment, though some of the middle segments of the market continued to grow.

“The $10m+ segment was actually the only segment that grew in 2022. And then last year, a completely different picture. We saw the number of lots sold for over $10m dropped by 25%, and the value in that segment dropped by 40%. That’s what brought the market down.”

“Each crisis is unique”

When it comes to recovery from crises, “I think we’re kind of getting out of the hole much quicker than we used to,” argued McAndrew. Looking back to the “very abrupt collapse of sales in 1991, the market lost about 65% of its value, and it took 14-15 years for it to even get to that level again.”

Following the last global financial crisis and the covid-19 pandemic, “the recovery seemed much stronger and it’s been much quicker.” The diversification and fragmentation of the market have actually helped to protect it. “2023 felt a little bit more like the usual ups and downs. It wasn’t an unusual decline; it wasn’t a particularly large decline.”

“Each crisis we’ve been through is quite unique, and the market emerges in very different ways. But we certainly kind of, you know, got out of the hole much quicker than we had 20 or 30 years ago.”

General mood of the market

For Art Basel CEO Noah Horowitz, “although there are degrees of uncertainty in the market--given the geopolitical situation, an interest rate environment that still remains higher than it has been for years--the fact of the matter is that financial markets overarchingly in the west performed solidly last year.”

“I think a lot of folks that were expecting a downturn of note in the fourth quarter didn’t get it. There’s a baseline of resonance support very clearly in the market that manifested at the marquee auctions in New York in November,” noted Horowitz. “Having said that, I think one of the trends in the market is one of more spottiness.” Collectors--in particular at the higher end--are “more discerning” and there’s greater focus on pricing.

“The global nature of the market is extraordinary,” he said. There are a number of “new collectors coming into the market, supporting from different directions--not just in the European and American centres of old, but in Asia, the Middle East, Africa, South America and really all over.”

“We have today a truly global imprint with resonant and tremendous interest in contemporary art especially, but also Old Masters paintings--one of the areas that actually was up last year.”

Top selling artists

The report found that Qi Baishi was the highest-selling artist in the Impressionist and Post-Impressionist sector in 2023, with sales of $217m. That pushed Claude Monet into second place, with almost $195m of sales. “Along with Gustav Klimt, Paul Cézanne and Vassily Kandinsky, the top five artists accounted for 43% of the market's value, down from 50% in 2022.”

In the modern art sector, Pablo Picasso was the highest-selling artist for the sixth consecutive year, with sales of $603m. Picasso, together with Zhang Daqian, René Magritte, Fu Baoshi and Marc Chagall, accounted for 42% of the sector by value.

And in the post-war and contemporary sector, the highest-selling artist at auction was Gerhard Richter ($252m of sales), followed by Jean-Michel Basquiat ($238m), Andy Warhol ($191m), Yayoi Kusama and Joan Mitchell. Together, this group of five artists made up 15% of sales in the sector, down from 19% in 2022.

Pricing: no “crystal ball”

Will prices come down in 2024?

“We’re seeing prices drop, clearly, at the highest end, as Clare mapped, last year,” said Horowitz. “I don’t have a crystal ball, so it’s not easy to tell exactly what that’s going to look like this year. But I think we can expect price sensitivity and prices to re-align overall on the market, certainly for many of the artists whose prices had been skyrocketing.”

That being said, at Christie’s 20th and 21st century and “The Art of the Surreal” sales in early March, an artwork by Jadé Fadojutimi was sold for $2m, “achieving a new record,” and a work by Hilary Pecis sold for six figures at Sotheby’s Iovine and Young Center for High School Education Benefit Auction in Los Angeles in late February.

“There is clearly demand for a lot of these artists, but equally, there’s a more sober market context that we’re all operating in, and I think the London auction [in March] was reflective of that, and some of the reports back from the fairs happening all over are indicative of that.”

“We’re confident the market continues to diversify, and the Asian context especially,” said Horowitz. “I think one truism that is as much the case today as it has been historically is that great pictures command real prices. And there is tremendous demand and interest for art on an ongoing basis.”

Find the full Art Market Report 2024 .

This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .