Collectors are becoming increasingly cautious with their purchases, according to a new report put out by Art Basel and UBS.
The report, authored by cultural economist Clare McAndrew, surveyed 2,800 high-net-worth (HNW) art collectors and focuses on recent trends in the art market.
Noah Horowitz, CEO of Art Basel, said the conservative turn on the part of collectors can be related to “volatile” economic and geopolitical conditions impacting the world right now, including the conflict taking place in Israel and Gaza. Paul Donovan, UBS Global Wealth Management Chief Economist, said in the report that collectors are now more selective with their art acquisitions than they were in years past.
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The survey highlighted an increase in art spending among collectors based in mainland China, following a pandemic-era period of gallery closures. Overall, though, it indicated a decrease in transactions at the high end of the market compared to previous years.
Paintings, sculptures, and works in other mediums historically shown in institutions were favored over digital art, with paintings accounting for 58 percent of what collectors reported annual spending. Notably, there was a shift away from purchasing high-priced artworks compared to the previous year.
The report revealed that, in 2023, private collectors allocated fewer resources to art compared to other financial assets in their wealth portfolios, dropping to 19 percent in 2023 from the 24 percent recorded in 2022. The report’s authors noted that the dip suggests collectors are taking more time to make purchases and are potentially focusing on liquid financial assets.
Donovan emphasized that the behavior of collectors is closely watched by financial professionals.
Credit and loans as they impact art acquisitions were explored in the report. A significant number of collectors have resorted to borrowed funds to finance their collections, McAndrew wrote.
Despite an overarching optimism about the art market’s performance, the survey unveiled a conservative attitude toward selling art in the coming months. Fewer collectors expressed their intent to sell pieces from their holdings in the coming year, with only 26 percent indicating a plan to do so, marking a decline from the 39 percent reported in 2022. Many cited their belief in the potential for prices of the works by artists in their holdings to improve in the next year as their reason.
Reselling art was still prevalent among a large share of collectors,with a significant number parting with works from their collections between 2022 and 2023. Although only 10 percent of participants identified themselves as “investors” with financial motivations in art purchases, 38 percent of collectors reported reselling works during the mentioned period, signifying a decline from the previous years and hinting at a less active market environment for short-term financial gains. Around 60 percent of collectors reported resales in 2020 and 49 percent in 2021.
Notably, 47 percent of collectors driven by financial motives in their collecting participated in resales, as indicated by the survey.