5 trends fueling the red-hot art market
$15+ billion. That’s how much the three major auction houses—Sotheby’s, Christie’s and Phillips—reported in sales in 2021.1,2 This is the highest annual sales turnover ever achieved collectively by the major houses.
Bullish buyers are supporting the art market, even in a backdrop of pandemic uncertainty and a recovering economy still hampered by supply chain issues. What lies behind the record-grabbing headlines? A combination of unique cultural and economic drivers has fueled interest in—and prices for—both innovative and blue-chip artists. Here are five trends that have fueled the strong market thus far, and will likely continue to shape the market throughout the coming year.
1. Luxury brand x art collaborations
A model first trailblazed in the 1930s and 1940s by Elsa Schiaperelli’s collaboration with Salvador Dali has become the norm in the 21st century. Now, luxury houses collaborate with artists on everything from handbags and couture to suitcases and cars.
When Marc Jacobs designed for LVMH in the 1990s, he had artist Steven Sprouse graffiti a Louis Vuitton handbag. Ever since, artists such as Yayoi Kusama, Takashi Murakami, Cindy Sherman and Urs Fischer have designed handbags for the French luxury company. While designing at Dior, designer Raf Simons converted artist Sterling Ruby’s paintings into textiles then into dresses; Current Dior designer Maria Grazia Chiuri has collaborated with Judy Chicago. Artist Alex Israel designs suitcases for Rimowa, and Jeff Koons and Frank Stella have designed cars for BMW.
These collaborations elevate already well-made objects to objets d’art. These projects are often limited editions, thereby increasing rarity and value. Active social media campaigns ensure the images are visible to those interested in the brand and the artist, multiplying many-fold the eyes and minds now in tune with the individual artist, luxury label and their joint collaboration.
2. Collectibles count, too
While a handful of collectors competed for a Frida Kahlo painting that ultimately sold for $34.9 million at Sothebys last year, there are hundreds who may bid on a Wayne Gretzky 1979 rookie card, or a first edition copy of J.K Rowling’s Harry Potter and the Philosopher’s Stone.3 Both recently sold for record prices—the book for $471,000 and the rookie card for $3.75 million at Heritage Auctions. The Dallas-based auctioneer also had a record year of $1.4 billion in sales of diverse collectibles such as comic books, rare books, coins, sports cards, Americana, decorative arts as well as paintings.4
Statistically speaking, more people collect coins and sports memorabilia than Picassos. These high volumes of collectibles selling to large numbers of people at more modest price points are also a multi-billion-dollar contribution to the arts and collectibles marketplace.
3. Economic incentives
Historically low interest rates can mean cash isn’t earning as much interest in the bank, so many investors are looking for places to invest that potentially offer more of a return. Some people seek to diversify their investments beyond the stock market and real estate, so art, wine and collector cars can become popular alternative investments.
There’s also the emerging intersection of the worlds of art and crypto. By the summer of 2021, the two major auction houses were accepting cryptocurrency on some lots, which helped draw in new crypto-millionaires looking for a place to spend their digital currency as well. (Editors’ note: As of this writing, cryptocurrency is not legally acknowledged currency in the US, and therefore can only be used to purchase limited items). Crypto and blockchain investors were the winning bidders behind some of the top lots of the year—such as Beeple’s Everydays NFT for $69 million at Christie’s and the $78.4 million Giacometti sculpture Le Nez at Sotheby’s. New crypto wealth and investors looking for alternatives were likely contributors to the fact that both houses had record numbers of new clients buying at the auction house last year: Sotheby’s noted 39% and Christie’s 34%.5,6
4. Bidding frenzy for emerging artists and art historical heavyweights
Both new and historically successful artists are of-the-moment in the art world. That is to say, new and old money is being spent on new and old artists.
One of the phenomena seen in 2021 was record prices for young and emerging artists. Emerging artists (loosely defined as artists who graduated from art school within the past 10 years, and/or have just transitioned from having gallery shows to being sold at auction) are a bit like emerging athletes—they show a lot of promise, but no one knows where the artist or athlete will be in a decade. We’ve seen eager teams and collectors, respectively, flock to them, hoping to find their winning lineup—or the artist whose work they can resell at a 500% profit.
The other end of the art market rubber band is acquiring an artwork by an artist already in the Art History books. Most of those artists are already in museums or private collections. Yet even private collectors may have to sell, and often these sales are fueled by one of the four “D”s signifying life events that commonly prompt sales—death, divorce, debt or downsizing. Such a life event can bring important rare works to market that demand high prices. This was the case this past November for the Macklowe collection sold at Sotheby’s and the Cox estate sold at Christie’s—two high-profile sales of collections that included works by many prominent artists.
Buyers with cash (and crypto) to spend bidding for rare high-quality work can create a perfect art market storm that results in top prices. Justin Sun, founder of cryptocurrency firm Tron, announced himself as the winning bidder of the Giacometti Le Nez sculpture at Sotheby’s.7 Meanwhile, the best-endowed museum in the world—the Getty—announced itself as the buyer of the Cox’s Gustave Caillebotte’s Jeune Homme a sa Fenetre for $53 million.8,9
5. Digital art rises
Artists have been working in digital media since the 1960s, yet there has not been a significant market, or clear way to “sell” digital art—until now. Non-fungible tokens (NFT) allow digital art, among other things, to be codified on the blockchain, thereby acquiring a digital identification code, and provenance. This makes the buying and selling of digital assets more transparent and creates a peer-to peer-marketplace that allows artists to sell directly to collectors. Recent reports estimate that $41 billion of NFTs were sold in 2021, though not all of these NFTs were art related.10
While auction houses dipped their toes into art NFT sales last year, the digital art marketplace boomed on specialty platforms such as SuperRare, Nifty Gateway and others. NFT platform OpenSea was just valued at $13.3 billion, underscoring the interest in new digital media ventures.11 Which artists will have long-term market power is still not known, yet it is clear the digital art market will continue to evolve in the coming years.
What lies ahead for the art market? It remains to be seen. The future will be digital and physical; blend the emerging with the established; intermingle art with retail, design and technology; and—for those of us watching closely—continue to be an exciting area on which to report in the months ahead.
Katja Zigerlig is Vice President of Art, Wine + Collectibles Advisory at Berkley One (a Berkley Company).