Has Covid-19 really affected the art market?
Of all the ways you can invest your money, art is the most speculative. While other forms of investing have at least a few metrics that help define its current value and future growth, the value of a work of art is based on a multitude of factors, ranging from the invisible hand to galleries of art to the pure feeling of consumers. Therefore, some art investors advise buying art based on sentimental value rather than investment potential. For this reason, it would appear that the art market would suffer during disastrous global events like the COVID-19 pandemic, as discretionary and emotional shopping is put on hold. However, this might not be the case. Looking at auction data from Christie’s and Sotheby’s at the height of the pandemic as well as data from the 2020 global art market, we discovered how COVID-19 has affected this multibillion-dollar market.
- The Art Market experienced the largest drop in sales between March and May, where Christie’s recorded a 98% drop in monthly sales compared to the same period in 2019.
- Art auction houses have seen a strong rebound after May, with monthly sales in July and August surpassing 2019 figures and several artists setting personal bests at auctions
- Consumer preferences have not changed during the pandemic, with bidders still preferring contemporary and modern works over all other artistic genres
The effects of the pandemic have been dramatic but temporary
Once news of the pandemic hit and countries began to shut down, art auctions plummeted. The economic uncertainty associated with the closures and relocation of art fairs, galleries and auctions to online spaces has created upheaval in the art market. For example, in the first 7 months of 2020, Christie’s and Sotheby’s auctions fell 54% and 25%, respectively, compared to the same period in 2019.
At the height of the global shutdowns between March and May, Christie’s total sales are down 97-98% from sales for the same period in 2018-19, and the industry frequently sees multi-million dollar transactions has not seen any work sold for over $ 1 million. Sotheby’s also recorded a 7-figure drop in sales between March and April, with only a handful of works exceeding a benchmark of $ 1 million. This is similar to what happened with the primary art market, where contemporary artists who typically sold works for $ 500,000 had a difficult to sell beyond the $ 100,000 threshold.
However, the effects of the pandemic were quite temporary. As countries began to open up, we saw that Christie’s and Sotheby’s sales started to rebound with the reintroduction of live auctions. In July, Christie’s total auctions reached nearly $ 880 million, up more than 20,000% from April’s low of $ 4.3 million. Its July auctions were up 621% from the same period last year. Part of this rapid recovery can be attributed to innovative online auctions to make up for lost sales, like Christie’s ONE: A Global Sale of the 20th Century. It was a massive multi-city hybrid auction that set seven artist records and brought in total sales of $ 421 million, 14% more than the total number of sales in the first 6 months alone.
These figures suggest that while the art market suffered during the height of the pandemic, the reason for the decline in sales had less to do with the decline in demand for art, but more to do with the capacity of the offer to meet demand. For example, auction houses have had to change and adapt their auctions to online-only sales, which previously represented only a fraction of their total sales. In addition, some senders may not have wanted to put their works up for sale, believing that they would not get a high enough price. This hypothesis is further supported by the fact that most of the expensive lots sold during this period still sold well above the upper limit of their price estimates, indicating that wealthy art collectors had little been affected by the pandemic. Finally, while it is true that some art collectors may want to avoid buying art until the economy recovers, the possibility of getting a valuable work of art at higher prices. low due to a pandemic can actually boost demand when bargain hunters enter the market.
The pandemic hasn’t changed artistic preferences
In recent years, contemporary and post-war art (art made after 1910) has been the largest sector of the art auction market, representing 53% of the total value of the transaction. It’s a volatile art segment, but the potential to generate high returns has been a big factor in its growth. For example, works by living artists like KAWS and Jeff Koons have been constantly breaking records for their categories in auction houses in recent years.
In the first 7 months of 2020, we found that contemporary and modern art auctions accounted for the largest portion of sales at Christie’s, in line with historical trends. At the height of the pandemic, the March “Post-War to Present” and “Prints & Multiples” auctions recorded the highest total sales and together accounted for 43% of total auctions between March and May. Even at the Prints & Multiples auction, which featured 18th century prints, the top-selling lots were all by modern and contemporary artists like Andy Warhold, David Hockney, and Roy Lichtenstein.
What were the most expensive works of art sold during the pandemic?
The most expensive works sold at Christie’s and Sotheby’s during the pandemic were generally those of modern and contemporary artists. For example, at the height of the pandemic, notable works sold came from contemporary artists like Yoshitomo Nara, Lee Bontecou and Wayne Thiebaud and modern artists like René Magritte, Tamara de Lempicka and Alberto Giacometti. This is similar to auction results in 2019, when works by a mix of modern and contemporary artists like Jeff Koons, Andy Warhol and Amedeo Modigliani and Ed Ruscha sold for the highest prices.
most expensive works sold at Christie’s 2019 vs 1H 2020
The only difference we have seen regarding the most expensive works of art sold during the pandemic is the price. While the most expensive paintings auctioned at Christie’s in 2019 exceeded $ 30 million, the most expensive paintings during the peak period of the pandemic (February-June) were between $ 4 million and $ 20 million. However, this price drop did not last long. In July and August 2020, the most expensive works were selling for up to $ 30 million, closer to historical trends as shippers put more popular contemporary artists up for sale. Sotheby’s also experienced a return to exceptional auction results. At its Contemporary Art Evening auction in June, Francis Bacon’s Triptych inspired by the Oresty of Aeschylus sold for over $ 88.5 million, making it one of the most expensive pieces of art to auction off in the past 5-10 years.
How sensitive is the art market to global upheavals?
While the art market was hit during COVID-19, it was quite resilient and showed rapid signs of recovery. Even after the recession of 2009, the art market was able to rebound quickly. After having fallen by 36% compared to the previous year in 2008, the art market bounced to pre-recession levels of $ 64.5 billion just 2 years later. So while individual works of art are subject to volatility due to the ever-changing value and popularity of their artist or genre, the art market as a whole has been relatively stable.
The pandemic and technology are changing the way the rich buy art
What the pandemic has changed, however, is the way buyers approach art sales. For example, people accustomed to buying art in person at auctions or galleries have had to adapt to the adoption of technology. To capture these buyers, auction houses and art fairs have had to find ways to increase consumers’ confidence in the work of art they want to buy, whether through advice. tailor-made or the creation of a virtual reality showroom. This move towards online sales can further increase the stability of the art market due to increased accessibility. For example, Christie’s and Sotheby’s found H1 2020 online auctions have already surpassed their full year 2019 results for online sales, indicating that despite declining supply and live auctions, art collectors are ready to adapt to new methods of art acquisition.
Christie’s Annual Online Auctions
To see how COVID-19 affected art sales, we collected data on Christie’s and Sotheby’s auctions between 2015 and 2020. Using the 2020 sales figures, we were able to see the changes and trends brought by the pandemic through a variety of metrics ranging from the average lot price to the types of art that sold for the highest price. As we do not have access to data on private sales and art fairs, we did not include them in our analysis when calculating the totals. To standardize annual and monthly sales, we converted all figures to USD. For years prior to 2020 and 2019, we have used average annual exchange rates for GBP, CNY, CHF, EUR and others. For 2020 and 2019, we used the exchange rates used by Christie’s. Please note that the sales figures shown include the buyer’s premium net of any costs, but the estimates do not include the buyer’s premium.