State of the Market: NFTs, Art Basel’s Revamped Viewing Rooms, and the Slow Return to Live Events

2021’s first quarter yielded record-setting auction results, cautious optimism for in-person events, and the explosion of NFTs. These trends point to both gradual and sudden shifts in the art world, particularly as sellers adapt to the COVID-19 pandemic. Auction Daily checks on the state of the market after an eventful start to the year.

Art Market Reports

In late March, art analysts started to consider the state of the market. The Global Art Market Report, co-sponsored by Art Basel and UBS, revealed a pandemic-related decline in art sales through 2020. Clare McAndrew, the report’s author, found that international art revenue fell to 2009 recession levels. A dramatic rise in digital sales combatted the downward trend, passing retail revenue for the first time. “The fall in sales was inevitable,” McAndrew said in an interview. “But the crisis also provided the impetus for change and restructuring, the most fundamental shift being the rollout of digital strategies and online sales.”

The Art Basel and UBS report found similar trends specifically in the auction industry. Public auction sales declined by 30% during 2020, finishing at USD 17.6 billion (excluding private transactions). Additionally, the Greater China auction market hub surpassed the United States in 2020. Recent auction results reflect this trend, particularly in Hong Kong. Online auction sales also doubled from 2019 to 2020, now making up 22% of fine art lots.

Artnet also released its spring Intelligence Report in late March, focusing on digital trends affecting the state of the market. The authors found that the pandemic affected the art world unequally. The major auction houses emerged with stronger sales than smaller companies despite a major drop in supply. China’s art auction revenues declined by a modest 0.1% compared to a more dramatic 35% in the United States, contributing to the differing market sizes.

Despite these numbers, some maintain hope for the 2021 art market. Writing in the Artnet report, Eileen Kinsella suggests that “there is a whole lot more room to innovate in a post-lockdown world than there was before.”

NFT Frenzy Starts to Subside

Non-fungible tokens (NFTs) entered popular culture in early 2021. Everything from GIFs to articles in The New York Times started to sell as digital assets. Sophia, a humanoid robot created by Hanson Robotics, also jumped on the trend by auctioning its digital self-portraits. Christie’s drew attention to the rising NFT wave with its record-setting Beeple auction in early March. However, Beeple and NFTs are not entirely new to the art world. Cryptocurrency NFT markets have existed for years. Their recent shift into the mainstream drew excited bidding at auction, despite rising concern about the NFT market’s stability.

In mid-March, prices for NFTs started to slip. Both artists and analysts have noted similarities between the NFT craze and other art market bubbles. Some attribute this to overexcitement and expect a quick crash, while others are not so sure. “It’s not meaningful to characterize a concept as a financial bubble,” Chris Wilmer of the University of Pittsburgh told Bloomberg. “‘NFTs’ aren’t in a bubble any more than ‘cryptocurrency’ is a bubble. There will be manias and irrational exuberance, but cryptocurrency is clearly here to stay with us for the long term and NFTs probably are too.”

Online Viewing Rooms at Art Basel

Art Basel spent 2020 perfecting its Online Viewing Rooms (OVRs). Designed to compensate for canceled in-person art fairs, the OVRs experienced mixed reception at their launch. However, the first OVRs of 2021 opened to better success. Galleries report a robust collector response to OVR: Pioneers, which ran through March 27th. Art Basel changed its approach for this round of viewing rooms, encouraging focused presentations from a limited number of galleries. “Most galleries have been quite thorough in selecting artists that are real pioneers,” Florence Bonnefous of Air de Paris reported to Artnet. “Limiting the selection of participants is also a good idea in light of the onset of digital fatigue.” 

VIP collectors benefited from an improved online platform and an easy-to-navigate format. Many galleries also had a positive experience. Sales were steady throughout the event, with several standout results. Kavi Gupta Gallery brought in the fair’s highest reported price with a Deborah Kass silkscreen, which sold for $350,000.

Art Basel faced significant losses in 2020 after the COVID-19 pandemic halted in-person art fairs. As vaccine distribution continues, the company plans a tentative return to live events. Art Basel Hong Kong will open in May of 2021 with 104 exhibitors. The company still delayed its major Switzerland fair until September, citing safety concerns. OVRs will likely pick up the slack in the meantime.

Art Dubai & Return to Normalcy

Despite the slow-moving vaccine rollout, a return to normalcy seems to be on the horizon. The 14th annual Art Dubai fair ran in-person through early April. It incorporated the obligatory public health and safety measures, including COVID-19 testing, attendance caps, and a Zoom option. Still, Art Dubai yielded strong sales. Dealers report high prices for African diaspora artists, as well as emerging and contemporary creators. 

The event was “a good sign for Dubai as well as a positive omen for some of the bigger fairs globally,” said Mohammed Afkhami, a collector in attendance. “This is the way forward in a post-pandemic future.”

Want to learn more about the state of the market? Each month, Auction Daily surveys the major headlines from around the auction world. Check out our coverage from March of 2021.