The latest edition of the annual Art Basel and UBS Global Art Market Report provides some sobering, though not dire, insights amid the uncertainty that has pervaded the art market in recent months, even as art fairs and auctions have mostly roared back to their normal pace, post-pandemic.

“We saw everyone having a rough time in 2020 and then improving in 2021,” the report’s author, cultural economist Clare McAndrew, said in a phone interview. However, she went on, “a divide started in 2022 with China down and the U.S. and U.K. recovering pretty well.”

In 2023, global art market sales fell about 4 percent, from $67.8 million to an estimated $65 billion, according to the report. That figure is still above the market’s 2019 level (at least without factoring in inflation), when it stood at $64.4 billion.

High interest rates, political instability, and inflation contributed to slowing growth at the top end of the market. However, the volume of transactions was up, and there was “growth in buyer activity” within “lower price levels,” according to the report, which was released today.

As in many other industries, “rising costs were the key challenge for businesses in the art market in 2023, and profitability became a more closely monitored metric than sales,” McAndrew said. “The focus for many in 2024 has shifted from rapid expansion at all costs to finding ways to achieve sustainable and profitable growth and stability as they continue to navigate an uncertain economic and political future.”

The U.S. remained the dominant player in the global art market in 2023, with 42 percent of sales by value, though that was a drop of 3 percent from 2022. China surpassed the U.K. as the second-largest market, with its share rising to 19 percent. The U.K. fell to third place, with 17 percent share, and France held its fourth-largest slot, with 7 percent.

The report also has some intriguing statistics about dealers’ revenue sources with respect to sales at galleries, art fairs, and online sales.

For the last four decades, pre-pandemic, “art fairs had become increasingly central to the market,” with a rapid expansion in the number of events around the world as well as the share that they contributed to dealers’ bottom line, the report notes. However, those benefits came with high costs for dealers, squeezing smaller and mid-sized businesses.

Image courtesy Arts Economics.

Art fairs contributed less to dealers’ revenue, year-over-year, with sales from live events falling from 35 percent in 2022 to 29 percent in 2023. That is just a notch above the 27 percent reported in 2021 as the art-fair circuit worked to recover from the pandemic, and far below the 42-percent high of 2019.

However, there is a bit of good news in the fair sector: In a survey of dealers, 85 percent said that they expect art-fair sales to either increase or hold steady in 2024.

As was the case in the previous two years, transactions carried out in galleries still make up the largest share of sales by value for dealers, at 44 percent, though that was down slightly from 47 percent in 2021 and 2022. Last year, dealers made a greater proportion of their direct sales through their websites and other digital channels, rising from 12 percent in 2022 to an impressive 20 percent.

Image courtesy Arts Economics.

In a news release accompanying the report, Art Basel CEO Noah Horowitz highlighted some reasons for optimism. Despite the year-on-year drop in sales, “core collecting audiences remained actively engaged” and “helped support prices on balance—albeit through a more value-driven and quality-conscious lens,” he said.

The arrival of “new and often younger global buyers, in tandem with gains in the online sector, underscores some critical green shoots in the market with substantial future potential,” Horowitz added.

While dealers’ overall sales slowed in 2023 by 3 percent, to under $36.1 billion, smaller dealers (with an annual turnover of less than $500,000), experienced a 11 percent increase in average sales, while larger dealers (with sales turnover north of $10 million) saw a 7-percent decline.

With respect to auction totals, following a record-breaking year in 2022, public auction sales dropped by seven percent to $25.1 billion, according to the report, which is in its eighth edition. In the $10 million-and-over segment of the art-auction market, there “a substantial decrease in value,” even as certain section of the lower and mid-market continued to grow, per the report.