Global Head, Art Advisory & Finance
April 2, 2020Posted InWealth Advisory
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Social distancing measures have closed galleries, auction houses, and museums worldwide. Technology, however, is ensuring that art lovers can continue to buy and appreciate art.
The COVID-19 pandemic is forcing drastic changes in almost every business and activity. The global art market is proving no exception to this. Around the world, art fairs have had to be postponed or even canceled as a result of travel restrictions, social distancing measures, and nationwide lockdowns. Art Basel in Hong Kong – which attracted almost 90,000 visitors last year – was an early and prominent casualty. Its Swiss edition has since been switched from June to September. Meanwhile, major auction sales in New York and London have been deferred until June at the earliest. But while gallery doors may be firmly sealed for now, the art market is still open for business – online.
While the art industry was initially slow to embrace digital technology, it has made considerable strides over recent years. Collectors, artists, museums, galleries, and auction houses worldwide are now more connected with one another than ever before. Increasingly, learning about up-and-coming-artists, interacting with dealers, and taking part in auctions and other sales is happening via smartphones, tablets or PCs. According to the Hiscox Online Art Trade Report 2019, online sales of art grew by 9.8% to an estimated $4.64 billion in 2018. The COVID-19 period could help accentuate this trend.
Following the cancellation of its physical event, Art Basel Hong Kong made the decision to hold a virtual fair instead. Art Basel Online Viewing Rooms opened its digital doors on 18 March 2020. Exhibitors are showing their artists’ work in virtual galleries, providing viewers with resources they don’t normally get on the floor of a fair. These include access to research and background information, the ability to zoom in on artworks, and, perhaps most strikingly, to obtain pricing information in many cases. The Citi Private Bank Art Advisory team has been impressed by the experience. In our view, the virtual art fair will change how art fairs are conducted in the future.
Similar patterns are in evidence in art auctions. A Sotheby’s auction of British art in London in mid-March saw a large increase in bids submitted online, with over half of winning bids coming from this source. 1 Further online sales are scheduled for the coming weeks. This marks a continuation of a trend that existed well before the outbreak of COVID-19. Christie’s reports that in 2019, over half of all bids placed were made online. Telephone bids constituted 41 percent of the winning bids made at live auctions, compared to just 18 percent made in the salesroom. 2 The data clearly suggests that collectors are already comfortable transacting from a distance.
An alternative to buying art at auctions or fairs is the auction houses’ private sales. Over the last few years, this option has seen significant growth. In previous episodes of uncertainty, collectors have often opted for the safety of private sales over public auctions. In 2019, Christie’s reported an increase in private sales of 24% to $811m (accounting for 15% of total sales).3 At Phillips, meanwhile, private sales grew 34% to $172m, accounting for 19% of the firm’s sales.3 Sotheby’s saw a slight drop from $1 billion to $990m (17% of total sales in 2019), but a 70% jump from 2016. 3
The COVID-19 pandemic has also forced museums around the world to lower the shutters for the time being. Like galleries and auctioneers, though, cultural institutions are making greater use of digital technology. Their current offering includes both virtual exhibition tours and other programing. For the art enthusiast under lockdown, taking up such opportunities could offer a rather more fulfilling alternative than endlessly streaming movies.
Of course, nothing quite beats the experience of appreciating art first hand. However, the art industry’s reaction to COVID-19 restrictions gives cause for optimism on various levels. The continued interest in buying art emphasizes the market’s durability, consistent with the market’s performance in past challenging periods. The increased uptake of technology bodes well for ongoing modernization of the market once the current crisis passes. Most importantly, cultural institutions’ use of technology means that more people than ever before are able to fuel their passion for art – even when housebound on the other side of the world.
1 Sotheby’s Press Release: “Post-Sale Results: ‘Made in Britain’ at Sotheby’s London”, March 17, 2020, https://www.sothebys.com/en/press/post-sale-results-made-in-britain-at-sothebys-london
2 Christie’s Press Release: “Experience Christie’s Online,” March 27, 2020, https://www.christies.com/about-us/press-archive/details?PressReleaseID=9591&lid=1
3 The Art Newspaper; “What is Sotheby’s Doing to Win Private Sales?, March 6, 2020, https://www.theartnewspaper.com/news/what-is-sotheby-s-doing-to-win-private-sales