Mar 12, 2017

Controversial TEFAF 2017 Art Market Report Review

Launched midst a flurry of controversy, what can we learn from one of the most anticipated art market reports of the year?
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Last week, one of the most anticipated art industry reports, the TEFAF Art Market Report, was released. The release was shrouded in controversy due to a change in the market estimation methodology that saw Professor Rachel Pownall (who this year prepared the TEFAF report for the first time) single-handedly slice off a third of the value of the global art market. Whether this brings us closer or further away to a proper understanding of the art market remains unknown, but certainly warranted industry debate.

It was a change that allowed the art market to simultaneously shrink and grow as the new report saw the value fall from $63.8 billion in TEFAF’s 2015 report to $45 billion in the 2016 report. Applying the new valuation methodology to the 2015 figure however would see the art market grow by 1.7%.

Confused yet? Well, controversy aside there were some solid findings that we can learn from.

The report noted that Europe remained the most significant continent, with sales exceeding $20.5bn, followed by the Americas ($14.5bn) and Asia (almost $10bn). In specific markets, the US totalled 29.5% of all sales, followed by the UK at 24% and China at 18%. Nothing new there then.

But what the report did reveal as its key insight was a dramatic shift in the art market away from auction sales and towards private/ gallery sales.

Specifically auction sales sank by 41% in the U.S, 13% in Europe, and 1.6% in Asia over the year.

In Europe the reduction was part of a long-term trend, with sales at auction at $5.2 billion in 2016, down for the second consecutive year from $6.0 billion in 2015 and $7.2 billion in 2014. Most of this drop came from the UK, which had experienced a 24% drop compared to Continental Europe, which had actually seen a growth of 3.6%.

Auctions are still however the largest part of the art market in Asia and account for 40.5% of the overall global auction market, with China now accounting for 90% of the Asian art market.

Within this large market sector in Asia there has been a huge shift away from antiques and towards paintings - antique markets have contracted by 23.3% across Asia whilst the market for paintings grew by 36%. Auction sales in Japan grew by 101.5% and in India by 110%.

Dealers, in contrast, now account for 63% of the world’s art market, a not-insignificant 20% increase over 2015.

So among that whirlwind of numbers, what did we learn? Well, it seems that outside of Asia, collectors are looking to the anonymity of private sales rather than the publicity of auctions. The recent private sale of Klimt’s ‘Portrait of Adele Bloch-Bauer II’ for $150 million is a prime example of that.

The online market is also growing the lower end of the private sales market, with 75% of online sales coming from works under $5,000. Despite this growth dealers are still looking to art fairs as their most effective way to connect with collectors and make sales.