The art market in 2020: Uncertainty, but also opportunities for wise collectors

By Laure Henicz, Hottinger Art

The global art market may be weakening, but the Christmas season is only just beginning for bargain hunters. Here is a short overview of auction house trends and some clues as to collectors’ next moves.

After four years of consistent growth and some spectacular developments, – notably the Salvatore Mundi, which sold for $450 million in 2017, and the dazzling 2018 sale of the Rockefeller collection – the global art market began to slow down in 2019.

Brexit, the US-China trade war, issues in the Middle East and escalating tensions in Hong-Kong have created a great deal of economic and geopolitical uncertainty worldwide. With New York and London having been jostling for the top two auction hotspots and Hong-Kong having cemented its own position as the third hub, global auctions unsurprisingly recorded a decline of 20.3% in first half of 2019[1]. This trend has recently been confirmed domestically by a disappointing fall in 2019 auction sales at the UK’s three leading auction houses; Sotheby’s, Christie’s and Phillip’s, which were all a third smaller than last year and saw relatively few highs during the year[2].

With the art market expected to remain flat and historically procyclical, all signals paint a bleak picture of a definitively nervous and volatile environment where confidence in the primary and secondary market is deteriorating. In addition to declining auction sales and increasing numbers of unsold pieces, auction guarantee levels have also begun to fall, having more than doubled since 2016[3].

However, in such a volatile environment full of skittish sellers, the art market has revealed itself to be quite the playground for savvy bidders on the look-out for opportunities. Trophy buyers have temporarily stepped back and their influence on prices has therefore diminished.

In this regard, it is also interesting to note that the impressionist and modern art market has declined in 2019 (33.8% down from 2018)[4], notably due to a recent shift of focus by many Asian buyers from this, their traditional area of preference, to the post-war and contemporary sector[5]. The old masters art market has remained steady since 2008, whilst the post-war and contemporary art market climbed 2.7% in the first half 2019, accounting for 40.7% of total auction sales in the first half of the year (versus 27.5% of the art market for impressionist and modern art)[6].

At this particular point in time, Afro-American artists and above all artists from booming western and eastern Africa, where a significant number of female creators are now active[7], appear to be the next diamonds-in-the-rough just waiting to be found and polished. In spite of the fact that prices remain volatile, buyers’ appetite for these still-emerging segments should only get stronger as collectors and curators are expected to dive in and try to address gaps in their collections, seeking to achieve a better reflection of the world’s artistic diversity.

In summary, it would appear that the environment for collectibles has been as adversely affected by the current geopolitical and macroeconomic risks as traditional financial markets, as well as feeling the effects of the changing tastes of the Chinese consumer. Going into 2020, the opportunities in emerging markets seem to have moved back to the forefront of investor thinking amid fears of a weaker global environment in general.

Amid such a fragile and volatile art market, prudence and a passion for establishing meaningful, inspired and coherent collections remain the two golden rules to sail safely within the ocean that is the art market. It requires skill and nerve successfully to navigate more than 260 major art fairs each year[8] and to create lasting value in your fine art collection and art estate. But these uncertain times will also be times of opportunity for enlightened connoisseurs.

 

[1] Raw Facts. Auction Review. First Half 2019, an ArtTactic report, 2019, p. 3

[2]Bargain Hunters Rule the Art Market”, by Kelly Crow, The Wall Street Journal, November 17, 2019

[3] Art & Finance Report 2019, 6th edition, a Deloitte & ArtcTactic report, 2019, p. 57

[4] Contemporary Art Market Confidence Report – September 2019, an ArtTactic report, 2019, p. 4

[5]Bargain Hunters Rule the Art Market”, by Kelly Crow, The Wall Street Journal, November 17, 2019

[6] Contemporary Art Market Confidence Report – September 2019, an ArtTactic report, 2019, p. 4

[7] Modern & Contemporary African Artists. Auction Market 2016-2019, an ArtTactic report, 2019, p. 4

[8] Boom. Mad Money, Mega Dealers, and the Rise of the Contemporary Art, by Michael Shnayerson, Public Affairs, 2019, p. 363