Rich Collectors Buy More Art Despite Shrinking Fortunes

A new survey by Art Basel and UBS paints a mixed picture with auction sales and fair attendance down but median expenditure up.

'Collectors continued to strongly engage in sales and events in 2023, alongside some evidence of more risk-averse approaches and less impulse buying,' said Dr Clare McAndrew, who authored The Survey of Global Collecting 2023.

The survey, published by Art Basel and UBS yesterday, includes responses from 2,828 collectors in 11 markets, all of whom have disposable financial assets over U.S. $1 million.

While the art market as a whole grew a modest 3% in 2022 to reach U.S. $67.8 billion, wealthy collectors' median spending on art rose to $65,000 in 2022, up 19% on 2021.

In the first half of 2023, median spending had already reached $65,000, suggesting those surveyed would spend significantly more than they did last year.

That result is especially surprising given that both the number of millionaires and their combined wealth declined in 2022. The number of millionaires worldwide fell from 62.5 million in 2021 to 59.4 million, and their combined wealth fell from $221.7 to $208.3 trillion.

Spending at the top end of the market was impacted, however, with the share of wealthy collectors focused on buying works over $1 million falling from 12% in 2021 to 4% in 2022, though that number bounced back to 9% in the first half of 2023.

When it comes to where they source their art, collectors are increasingly buying directly from dealers, with 84% having bought in person at their gallery or premises.

'They are spending not just their money, but also their time, delving deep into research to ensure their acquisitions truly resonate with their values and aspirations,' said Paul Donovan, UBS Global Wealth Management Chief Economist.

Only 58% bought from an art fair, down from 74% in 2022, as attendance at fairs continued to slide. Average attendance at art events fell from 41 in 2019 to just 32 in 2023 (including fairs they plan to attend in the remainder of this year).

Auction sales at Christie's, Sotheby's, Phillips, and Bonhams also fell, declining 16% in the first six months of 2023 compared to the same period in 2022.

For the first time, the report analysed collectors' use of credit to finance their art collecting.

'Though only a small minority of collectors consider themselves investors, many are highly aware of the financial impact of their collecting activities, actively using leverage and credit as well as reselling works from their collections,' McAndrew said.

She found that 43% of high net worth collectors had used credit or loans to finance art purchases, with 29% of their collections, on average, bought on credit.

Ultra-high-net-worth collectors (with wealth over $50 million) were even more likely to take on debt, with one third having financed half of their collections using credit.

Despite the persistence of high interest rates, wars being fought in Palestine and Ukraine, and declines in their average wealth, 77% of collectors surveyed remained confident about the art market's performance in the next six months.

54% are planning to purchase art over the next year, stable on last year. That number rises to 68% for collectors in Mainland China.

Only 26% of collectors planned to sell works from their collections over the next 12 months, down from 39% in 2022, with most expecting prices for their works to go up in the future.

The report noted that imports of art and antiques reached their highest level ever of $30.7 billion in 2022.

Its findings did little to assuage concerns over art's role in money laundering.

The top concern about the art market among rich collectors—well above gender disparities (25%), sustainability (24%), and the closure of galleries (18%)—was increased regulation and identification requirements (42%). —[O]