The News
The global art market is experiencing one of its toughest periods in recent years, in a downturn fueled by inflation, the high cost of borrowing money, and geopolitical instability.
Major auction houses like Sotheby’s and Christie’s have seen declining sales, with Sotheby’s reporting an 88% drop in earnings during the first half of 2024 and even delaying payments to staff and creditors, according to the Financial Times. The company has secured a $1 billion investment from Abu Dhabi’s ADQ, but concerns about its long-term financial health persist.
However, less well-known art markets, such as Brazil, seem to be relatively resilient, with the recent ArtRio fair’s success suggesting a growing interest in the region.
SIGNALS
Art trade acting as a global economic bellwether
The auction houses’ financial troubles echo the struggles of other companies navigating a tight global credit environment. The high cost of borrowing, inflated prices, and economic slowdowns, especially in China, have reverberated through global trade and the luxury goods market is no exception. The fine art market often functions as a hedge during economic boom times, but after years of paying ever-higher prices for art, buyers are unnerved. This is especially true for work by emerging artists whose future marketability is unproven. In turn, smaller galleries and dealers — who rely on big collectors lifting up emerging artists — may suffer most.
Geopolitical pressures in Asia, Europe add to market downturn
Political instability in major economies — ranging from the ongoing U.S.-China trade tensions to Russia’s invasion of Ukraine — has added a layer of complexity to global art markets. Sanctions and restrictions on high-value asset transfers have largely pushed Russian and Chinese collectors out of the market, exacerbating the slowdown. One art market analyst found that evening sales in Hong Kong in the first half of 2024 were down 40% year on year, their lowest since 2017, with a far lower number of high-end works on sale (art priced above $1.2 million or so) reflecting a trend also seen in London and New York, the Financial Times noted.
Shifting centers of gravity reveal pockets of resilience
The apparent resilience of Brazil’s art market, as showcased at the recent ArtRio fair, may point to a larger geopolitical shift in the market, ArtNews reported. As Western economies fight stagnation and Asia experiences lackluster growth, emerging markets in Latin America are seeing renewed interest. This reflects a broader economic trend, where wealthy collectors from the Global South are gaining prominence: “The main point is that Europe as a whole is being challenged as the centre of the art market,” Christie’s CEO told the South China Morning Post The shift from the traditionally Western dominated art world could offer clues for other luxury markets facing unpredictable global economic dynamics.