This week, MAD54 takes you on a deeper dive into the intricacies of the art market. Here are 5 takeaways we believe are, and will keep shaping the market in the future.
Vastly overlooked as a store of value, art represents a staggering $1.7 trillion market size. To put it in perspective, it is over half of all assets held by private equity. Deloitte expects ultra high net worth individuals alone to hold $2.7 trillion in art and collectible wealth by 2026. Additionally, with central banks around the world injecting trillions of dollars into their economies (20% of all the money supply circulating in the US has been printed in 2020 alone), people are turning to art and other scarce assets as a hedge against inflation.
The sharp increase in global wealth is set to bring unprecedented attention to the art market, as younger ‘millennial’ collectors now represent over 69% of purchases over $1M, and amongst them, women outspending men.
This new generation of collectors will push the market towards a higher level of liquidity, through dynamic buying and selling. It is estimated that 97% of millennial collectors will acquire new artwork within the next year. Additionally, according to Art Basel and UBS, the highest frequency for resale was amongst millennials, averaging holding periods of less than 4 years for works being sold.
Buying art online might still be fraught upon for older collectors, Millennials and younger collectors have embraced this method, online auctions that saw record sales during the lockdowns as they snapped the likes of Amy Sherald’s ‘The Bathers’ at 30x its pre-sale estimate. The share of online sales from galleries rose from 10% of total sales in 2019 to 37% in the first half of 2020.
It is estimated that over 92% of millennial collectors bought artwork online.
The digitization of the Art market accelerated by the pandemic is transforming collectors’ expectations; 81% of them believe that it is important or essential to have prices posted when works are for sale online. In addition to that, non conventional platforms are increasingly occupying a larger share of sales; 32% of collectors had bought works directly through Instagram.
Smaller galleries are poised to gain from these trends as 35% of their online buyers had no prior relationship with them.