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In the midst of economic upheavals and global uncertainties, one might assume that the wealthy elite would be less inclined to invest in expensive artwork. However, recent surveys have shown that this is not the case. Despite ongoing crises such as Russia’s invasion of Ukraine and the COVID-19 pandemic, rich art collectors have not been deterred.
According to a survey conducted by Swiss bank UBS and Art Basel, wealthy art buyers actually increased their spending last year compared to pre-COVID times. Notably, there has been a rise in purchases of artwork priced at $1 million and above. The share of art buying in this price range has increased from 18% to 31%, with an even greater jump from 6% to 12% for purchases in the $10 million and above bracket.
The survey also revealed that collectors remain optimistic about the future of the global art market. A significant 77% of respondents expressed positivity regarding the outlook, while only 6% were pessimistic. It’s worth noting that the survey participants were active art buyers with a net worth (excluding property) of $1 million or more. This indicates that there is no lack of enthusiasm or funds among wealthy art collectors.
Although recent auction results have been solid rather than exceptional, there have been record-breaking prices achieved. For instance, Wassily Kandinsky’s “Murnau with Church II” sold for £37 million in March, setting a new record for the artist. This highlights the intense competition among billionaires and multimillionaires for the most valuable artworks. The scarcity of these highly sought-after pieces is a driving force behind the growth at the top end of the art market.
The increasing wealth worldwide has led to a rise in the number of collectors, who often focus on acquiring a small number of unique artworks. This creates a higher demand than supply, contributing to the strength of the market. While the rise of Chinese buyers has been a headline-grabbing phenomenon, the United States has consistently proven its ability to generate vast wealth, making it a significant contributor to the art market’s growth.
However, the question remains: how long can this trend continue? While the UBS/Art Basel report takes a positive tone, acknowledging the benefits for the bank and art fair if clients are optimistic, it also highlights potential factors that could impact the market’s future. Economic developments and wealth distribution within countries will play a role, and there is the looming threat of recessions and wealth taxes that could disrupt the art market. The number of billionaires saw a decline for the first time in more than a decade last year, indicating some potential shifts on the horizon.
Furthermore, the report emphasizes the challenge posed by increasing regulatory barriers and administrative burdens, particularly as a result of Brexit. This has complicated London’s role in the European art market, raising concerns for the future.
Lastly, collectors’ tastes evolve over time. The surge in purchases of contemporary art in the past two decades has overshadowed the popularity of previous market favorites, including the Impressionists. There is a growing interest in digital art and non-fungible tokens (NFTs), although it’s uncertain whether this trend will endure.
In conclusion, as long as there are wealthy individuals, there will always be a market for valuable artwork. This especially holds true for irreplaceable pieces like those created by Kandinsky. The world of Private Wealth continues to be an exciting and ever-evolving landscape, with philanthropy, entrepreneurs, family offices, as well as alternative and impact investment playing significant roles. Stay informed with FT Wealth, providing in-depth coverage in these areas.
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