After misfiring for a couple of years, the gleaming machine that is the top end of the international art market has once again revved back into life. The upgraded 2026 model has one or two significant modifications.
The inaugural edition of a new Art Basel fair opened in natural gas-rich Qatar in February with a novel artist-curated format consisting of 87 dealers presenting focused, biennial-style displays by individual artists. The ruling Al Thani family, worth $200bn, toured the fair before it opened and reserved numerous works, leaving dealers to spend the next few days wondering if and when those reserves would convert into sales. Some did; some did not. Two El Anatsui bottle-foil hangings priced at around $2m each, a $14m Philip Guston painting and a $40m Jean-Michel Basquiat painting were among the objects that attracted their consideration.
Sotheby’s Financial Services arm (SFS) has announced a $900m securitisation, backed with loans collateralised against high-value art and classic cars. Sotheby’s has bundled together loans it has made to collectors and converted them into bonds to be sold to investors, thereby freeing up $900m for the auction house. These loans, which turn high-value collections into sophisticated financial instruments, have become a routine feature of collecting at the highest levels. The latest release of files relating to Jeffrey Epstein by the US Department of Justice reveals how the New York mega-collector Leon Black borrowed hundreds of millions of dollars during the 2010s using his art holdings worth more than $2bn as collateral.
The biggest of big money—what might, for convenience’s sake, be called the wealth of the billionaire class—continues to drive what is going on at the very top of the art market, the only segment that gets much in the way of media attention.
Mnuchin gallery announced its closure in February
Courtesy of Mnuchin gallery
Yet, as the data of the annual Art Basel and UBS global art market report points out year after year, this is a business in which sales have been broadly flatlining since the financial crisis of 2007-08. And galleries keep closing. Stephen Friedman and Mnuchin were notable casualties in February. The prominent New York-based collector Adam Lindemann, whose own gallery, Venus Over Manhattan, shuttered last July, opined in Artnet News that there is just too much art in the world. “The art market has been ballooning for a good while,” he said. “Collectors are full … tulip buying is over; it was fun while it lasted,” referring to Dutch tulip market bubble in the 17th century.
According to the New York-based author, teacher and entrepreneur Magnus Resch, the problem with the art world is that it “suffers from a lack of buyers who feel confident enough to participate”. Posting on LinkedIn from Davos in January, during the week of the World Economic Forum, Resch added that “people rarely buy what they do not understand”. This resulted in demand being concentrated at the extremes of “blue-chip names at the top and affordable works at the bottom”. Resch further argued that the future of the art market “will depend on whether we succeed in activating a new generation of collectors”.
At the Davos summit itself, Christine Lagarde, the president of the European Central Bank, warned delegates that “we are heading for real trouble” if they did not pay attention to how global wealth inequality was getting “bigger and deeper”. Kristalina Georgieva, the head of the International Monetary Fund, said in her speech that artificial intelligence (AI) would be a “tsunami hitting the labour market” over the next few years, with the young worst affected.
The economist Gabriel Zucman, who has lobbied (so far unsuccessfully) for a 2% wealth tax in France, has compiled data that shows billionaire wealth in advanced economies such as France and the US has grown at an annual rate of up to 10% for the past four decades. By contrast, average wealth in these economies has grown by 4% annually—barely more than inflation—over that same period.
Given these statistics, and governments’ unwillingness to increase taxes for the wealthy, the art trade can happily assume that prices for the best works by the most desirable blue-chip names will continue to rise.
The widely recognised challenge, however, is to build that all-important “new generation” of buyers, most of whom will start with more affordable works at the lower end of the market.
Inheritance is one way
The Financial Times estimates that in the US alone around $16 trillion of wealth will be transferred from the boomer generation to their millennial and Gen X beneficiaries over the next decade.
“We’re seeing a new universe of aspiring new collectors, those that are increasingly discovering and buying art at more affordable price points,” says Andrew Wolff, the owner of Artnet and Artsy. “We’re seeing the very tip of the Great Wealth Transfer begin to appear, a demographic tailwind that will really accelerate in 2030 and peak in 2040-50. This transfer is seeding an emerging generation of art collectors.”
But how many of these legacy-enriched heirs will buy art at the same financial level as their forebears? Or any art? Perhaps they will in time. At the moment, the average transaction value on the Artsy site, which showcases works being offered by around 3,500 galleries, is $4,000, according to Wolff. This segment is widely characterised as the “affordable” lower end of the art market.
Fundamental disconnect
Yet data compiled by Resch, based on two million gallery asking prices over the past 15 years, shows that median primary market prices in Berlin, London and New York were $6,500, $8,300 and $14,000 respectively. This is not a direct oranges-to-oranges comparison (reliable data on the “primary” gallery market are notoriously hard to come by), as Resch’s figures include top-tier galleries that do not reveal prices to Artsy. However, it does suggest a fundamental disconnect between the prices galleries are asking and what people are prepared to pay. Why else are so many galleries closing?
In the current precarious economic climate, in which income inequality is widening and extreme wealth is concentrated in a tiny percentage of the population, is the art market suffering its own affordability crisis? Is most art just too expensive for most people?
But what about prints, multiples and editions, the classic entry points for new collectors? Aren’t they more affordable? Last year they accounted for 23% of the lots at all art auctions with an average price of $2,600, according to Artprice.
France-based Artprice says prints have benefited more than any other category from “an impressive acceleration with the development of online sales”, with a healthy retail market driven by astutely run companies like Avant Arte, MyArtBroker and Heni. In February, Avant Arte sold a time-limited edition print by Katharina Grosse for €1,000.
“In the past, prints were used to disseminate art,” says Artprice’s website. “Today, they seem to have another role, notably to offer a type of artwork that corresponds particularly to the demand of what are sometimes called collector-investors.” Prints used to be a way for artists to reach a wider audience. Now they are another alternative asset class.
William Hogarth sold his prints, such as Gin Lane (1751, right), for a shilling apiece Public domain
The trouble is, if you are spending nearly half your salary on rent or a mortgage, you are having to pay off your student debt, inflation is running at 4% and you are worried about AI eliminating your job, you are probably not going to spend money on buying art. If you have a spare thousand, you will probably want to blow it on an enjoyable experience.
If the art market and artists are looking for a different way of doing things, they could do worse than study the career of William Hogarth. A painter and engraver who looked at the world and made art about what was wrong with it, Hogarth self-published his most famous prints, such as Gin Lane and The Four Stages of Cruelty (both 1751), in large unnumbered editions for just a shilling each, or around £14 in today’s money, so that as wide an audience as possible could buy them. Hogarth’s “modern moral subjects”, as his contemporary George Vertue described them, “captivated the Minds of most People, persons of all ranks & conditions from the greatest Quality to the meanest.”
Arguably Banksy was doing something similar in the early 2000s when he was selling his stencilled prints and even paintings for £250 each. Maybe we need some new Banksys or Hogarths, instead of yet more artists trying to get rich by selling yet more art to the super rich.
In today’s digital age, what is stopping major-name artists from releasing high quality prints in numbered editions of 5,000 at £50 a pop? After all, people rarely buy what they cannot afford.
