Comparing Art Market Reports

The NY Times takes an interesting look at three art market reports, TEFAF, Art Basel and Artprice. As noted in the article, all are considered credible in many ways by collectors and art market professionals, yet the figures and findings show wide degrees of variance. For example TEFAF has the art market at $45 billion and up since the prior year, while Art Basel has it at $56.6 billion and down from the prior year. Artprice estimates auction sales at $12.45 billion, TEFAF at $16.9 billion and Art Basel at $22.1 billion. Certainly all rather large numbers, but with a great degree of variance from report to report based upon how data is collected and analysed.

The NY Times reports

LONDON — How big is the art market? Is it getting bigger or smaller? This is the time of year the art world’s number-crunchers release reports that try to answer these tricky questions, and a whole lot more.

According to the latest Tefaf art market report released by the European Fine Art Foundation in the Netherlands, the world’s auction and private sales in 2016 raised more than $45 billion, up 1.7 percent from the previous year. A new report commissioned by Art Basel and UBS estimated these same sales at $56.6 billion, down 11 percent from 2015.

Calculating worldwide fine art auction sales alone, the French website Artprice, working with the Chinese state-owned database Art Market Monitor of Artron, arrived at a figure of $12.45 billion for fine art auction sales alone in 2016, down 23 percent from the previous year. The Tefaf report estimated auction sales of art and antiques at $16.9 billion, while Art Basel and UBS released a figure of $22.1 billion.

Why are there such wide discrepancies in these reports, all of which aim to be regarded as industry standards?

The devil is, of course, in the data. The three reports used different sources for the auction results, and Art Basel and Tefaf, which released their figures this month to coincide with their fairs in Hong Kong and in Maastricht, the Netherlands, faced the challenge of trying to estimate the art and antique trade’s private sales. This shadowy realm is thought to represent more than half of the total value of the art market.

“These reports are useful to read, but the data is very incomplete,” said Hugo Nathan, a partner at Beaumont Nathan, an art advisory company based in London, who was in Hong Kong this week for the Art Basel fair. “They only see half the market. They collate the public auctions very well, but rely on self-reports from dealers, which are notoriously inaccurate.”

Rachel Pownall, an art economist at Maastricht University who prepared the revamped Tefaf report and whose new methodology reduced by almost a third its estimate of global art market sales, agreed that “the size of the dealer market is a contentious issue.”

“We are never going to get a perfect number for how big it is,” she added.

The Tefaf report, drawing on national statistics, company databases and dealer responses, estimated that there were at least $28 billion in private sales of art and antiques in 2016, overshadowing auction sales, estimated by Artnet to total $16.9 billion.

The Art Basel-UBS report, giving greater emphasis to contemporary art, said that there was an increase of 3 percent in dealer sales in 2016, for an estimated $32.5 billion. It said auction sales had fallen 26 percent from the previous year, reflecting the much-reported contraction of supply of Western artworks valued at more than $10 million.

“The market at the high end is dictated by the perceptions of a narrow band of players,” said Clare McAndrew, founder of the Dublin-based research and consultancy firm Arts Economics and author of the Art Basel-UBS report. “Sometimes they think that it’s a risky time to sell.”

She added, “The behavior of a small group can affect the aggregate figures a lot.”

Though Ms. McAndrew, who had compiled the Tefaf report from 2008 to 2016, acknowledged the approximate nature of estimates for private sales, she said she was encouraged by a response rate of 17 percent for the anonymous online survey of 6,500 dealers worldwide that she conducted for the new report. The equivalent survey of 7,000 dealers conducted by Tefaf drew a response rate of 5 percent.

But others remain skeptical that these reports accurately reflect the top end of the dealer market, particularly for powerhouse contemporary galleries such as Gagosian, Pace, David Zwirner and Hauser & Wirth, whose international sales figures remain undisclosed. The so-called Big Four are among the 242 exhibitors at Art Basel Hong Kong, which opened to the public on Thursday. Gagosian is offering a 2010 John Currin nude, “The Collaborator,” at $4.5 million, and Pace has a 1986 Robert Rauschenberg metal sculpture, “Carnival (Glut),” at $2 million.

“There’s still a huge research gap,” said Magnus Resch, the New York-based author of the “Global Art Gallery Report,” a survey of 8,000 galleries in the United States, Britain and Germany, that was published this month. “What is difficult is that the market is dominated by a handful of players and we don’t know what they’re making.”

Using findings from an anonymous online survey of 8,000 galleries, 16 percent of which responded, Mr. Resch’s report estimates that there are about 19,000 galleries worldwide. Of those that responded, 16 percent registered more than $1 million of annual sales, but 30 percent said they did not make a profit. A remarkable 49 percent of the galleries were founded since 2000, according to the report, which — tellingly — does not estimate total sales in the sector.

“If people knew the real numbers, then maybe they wouldn’t start a gallery,” Mr. Resch said.

Certain findings from the reports stand out. Detailed research by Ms. McAndrew for the Art Basel-UBS report estimated that about 33,000 high-net-worth Americans spent more than $1 million on art and antiques in the last two years. This explains, in part, why the United States remains the biggest regional market, generating 40 percent of all global sales, according to the Art Basel report. Tefaf said that an estimated 1.2 million artworks are being held in the “offshore” storage of Geneva Free Ports — billions of dollars in art hidden from tax inspectors and market surveys. In addition, auction sales of Andy Warhol in 2016 fell 68 percent.

There is general agreement that China was the biggest-grossing region for auction sales in 2016, though the reliability of the figures, which differ in the three reports, remains open to question. Data on auctions in Asia continues to be undermined by problems of nonpayment. The February overview from Artprice and Art Market Monitor of Artron ranked the Chinese artist Zhang Daqian (1899-1983) as the world’s biggest-seller at auction in 2016, with sales totaling $354.8 million.

“The wealth dynamics will play out,” said Ms. McAndrew, whose report noted that the most rapid growth in wealth was in Asia, where a billionaire is created every three days, according to UBS. “I think the market will become more dominated by Asian taste.”

Last year, five of the 10 most expensive auction lots sold at Sotheby’s were bought by Asian clients. This month, again at Christie’s in New York, we were reminded of the exceptional prices Asian buyers were prepared to pay — or at least to bid — for top-quality historic Chinese artifacts: The 13th-century scroll painting “Six Dragons,” by Chen Rong, raised $49 million, an auction high for a Chinese painting sold outside Asia. Consigned for sale by the Fujita Museum in Japan, it had been expected to sell for $1.2 million to $1.8 million.

The Art Basel art market report noted that the Chinese government had halved the import tax on artworks to 3 percent, effective Jan. 1 this year, to encourage the repatriation of Chinese artworks and to stimulate cross-border trade. In 2012, the tax was levied at 12 percent.

Despite the reports’ shortcomings, we at least have a general sense of what the global art market was worth in 2016. Splitting the difference between the Tefaf’s more conservative estimate of $45 billion and Art Basel’s more comprehensive $56.6 billion (which includes more data on auction sales of Chinese ceramics and works of art), we might say that last year about $50 billion of art was sold worldwide.

As for the details of what dealers contributed to this total, that remains any statistician’s guess.

Source: The NY Times