2023 Third Quarter Report: The Global Art Market Is in a Recession

Collectors are increasingly cautious about purchasing art, and the art market has officially entered a recession, according to an analysis. According to the “Art Market Report, 3Q 2023” released by Korea Art Authentication & Application Inc. (KAAAI), the total sale of Hong Kong auctions conducted by Sotheby’s and Phillips from October 5 to 6, 2023 reached HKD 1.06 billion. This figure decreased 5.45% from the same period last year and plunged 28.11% compared to this spring’s auction season. It was lower than the spring and fall of 2019, before the COVID-19 pandemic.

The highlight of the 2023 third quarter auction season was Amedeo Modigliani’s Paulette Jourdain. The work, which sold for USD 34.9 million at Sotheby’s, was initially estimated at $45 million. Previously, it sold for $42.81 million at a 2015 Sotheby’s auction in New York, meaning that the seller sold it at a loss.

This result is notable because collectors are cautious about purchasing art. According to a survey of 2,800 high-value asset owners published in the Art Basel and UBS reports released in November, individual collectors have lowered the proportion of funds spent on artworks from 24% last year to 19% this year. In addition, 26% of collectors expressed their intention to sell their collections due to conservative attitudes in art sales, down from last year (39%).

“The art market seems to be holding its breath waiting for opportunities to return, both new and existing demands,” KAAAI said. “There are many cases where works that were traded in competition a few years ago are sold or fail-in bid at the lower limit, and if this continues, the downturn will accelerate.” In this case, the seller will adjust the price and sell the work, and the price of the work may fall sharply after that, according to KAAAI.

Korea’s art auction market in 2023’s third quarter also fell sharply. The total winning bid was about $19.9 million, down 13.5% from the same period last year. The number of works sold (414 points) and the winning bid rate (65.51%) fell 14.67% and 10.23%, respectively. A total of five works sold for over $770,000, of which three were antique works, and Ufan Lee and Yayoi Kusama each had one.

KAAAI described the current situation as a return from abnormal to normal, and said, “In this calm period, the art world will be able to face a second opportunity if it prepares for the following through analysis and interpretation of the factors that have rattled the market.”

Comments on recent art fairs were also added to the report. Frieze Seoul, held in September, attracted more than 70,000 visitors, and the number of visitors to Kiaf increased by 15 percent year-on-year to about 80,000. The figure was higher than that of Singapore ArtSG (43,000) and Tokyo Gendai (20,000), and similar to that of Art Basel Hong Kong (86,000). The KAAAI emphasized that in order for audiences to purchase artworks, they need competitiveness in infrastructure such as transportation, storage and transportation along with tax policy.