Lending Insights

Our take on the news & trends of the art market

TPC Art Finance

Our mid 2023 market overview & what’s to come

As we begin the second half of 2023, we at TPC Art Finance are anticipating another solid six months of stability and resiliency. Some potential sellers of blue chip works may benefit from a wait-and-see approach since the market has not been as frenzied as in the past, but exceptional pieces will still sell at exceptional prices—as evidenced by the $108.4 million record set by Klimt’s ‘Lady With a Fan’ at the most recent June sales in London. Conversely, we believe a steady stream of new, younger, and motivated collectors will propel sales of contemporary and ultra-contemporary artists in the secondary market. Such enthusiasm may encourage more collectors to grow their collections and seek opportunities to take advantage of TPC’s lending services.

More Connections

Live events will see year-over-year growth in attendance as international travel restrictions expire in countries throughout Asia and the Pacific. However, the digital infrastructure created during the pandemic to allow secure online sales remains in place and will continue to provide a means through which artists, collectors, dealers, and gallery owners can interact and connect.

While activity on these platforms will likely be less robust than it was during the height of the pandemic, the hybrid art world is here to stay, and it will continue to have a democratizing effect. It will allow newer collectors a clear entryway into the market without the kind of gatekeeping that has characterized the art world for decades. It will also provide galleries and dealers with an opportunity to engage with new clients whose tastes and preferences will help shape the emerging market in coming years. These activities will also help drive revenue.

Additionally, blockchain technology has offered numerous solutions to improve transparency in the art market by assuring provenance while also providing new tools to support artists, dealers, and collectors. Meanwhile, the fractionalization of art allows investors with limited capital the opportunity to own a share of a particular work of art. These tools are presently active and will attract a specific subset of investors to the market, but their adoption has been slow, indicating that their potential to seriously disrupt the larger market remains low. 

More Diversity

Sales have continued to be steady throughout the year, building on the momentum seen in 2022. 2022 saw an estimated $67.8 billion in global art sales, which translates into a year-on-year increase of 3% and represents an improvement beyond pre-pandemic levels. Volume, however, only increased by 1% from 2021, suggesting that sales are strongest at the top of the market.

The first half of 2023 suggests that these trends will likely continue, and a brief review of Christie’s 20th and 21st Century sales from this spring can provide some more insight into more granular trends.

Over the course of one week in May, sales totaled just under $1 billion ($922,194,466), and among the 20th Century Evening Sales, five artists set records. What this suggests is that collectors continue to be hungry for major works of the previous century, but that this appetite is less ravenous than it was just a few years ago. That each work in the S.I. Newhouse collection auction from May 11 was guaranteed also suggests a more timid market.

However, during the 21st Century Evening Sale, nine artists set records and the evening as a whole saw a 123% hammer against the low estimate. In addition to being a strong evening, the 21st Century Evening Sale included more than 50% works by female artists, suggesting that the highest end of the contemporary market is becoming more diverse (at least by gender) as collectors compete more assiduously to acquire works by women.

Our interpretation is that great works of art of the 20th century will remain important to established and burgeoning collectors. However, new voices are rising to prominence, especially if their social commentary speaks more fluently to Millennials or better reflects their tastes. Millennials will want to collect works by living artists and their increased buying power will fuel strong growth in the contemporary and ultra-contemporary markets for the foreseeable future.

Reasons for Continued Optimism

According to surveys published in the Art Basel and UBS Art Market Report 2023, 45% of dealers expected an improvement in sales in 2023. The report also found that the majority of high-net-worth individuals across the world were optimistic about the global art market, whether they were based in the U.S. (84%), the U.K. (71%), France (92%), China (73%), Singapore (78%), or Brazil (85%).

What’s important to note is that these surveys were conducted at the end of 2022, and that little has changed with respect to the major macroeconomic headwinds around the world. This is not to dismiss the effects of the war in Ukraine, high interest rates in Europe and the U.S., or persistent inflation. Rather, one should acknowledge that these factors have been coloring collectors’ moods for over a year, and that trends have not changed.

We believe that continued optimism is warranted and that the second half of 2023 will be defined by steady growth overall and exceptional performances by a more diverse group of emerging artists.

Lending in 2023

From a lending perspective, we believe that the market will remain steady and resilient for works from the 20th/21st centuries and other collecting categories. Consequently, collectors may want to hold works by established artists and those artists who are on the rise, which opens the potential to use these works as collateral for a loan with TPC. The loan can then be used to finance other projects, investments, or art acquisitions.

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