Slow but Steady Dynamics in the Art Market

The acceleration of recent economic and political developments around the world, combined with the revision of data coming from the art market, has made it necessary to provide an updated note on art-market sales and art investment activity.

A New Season Begins

In recent weeks, the Art SG fair in Singapore—despite showcasing significant works by major representatives of modern and contemporary art—remained overshadowed, as expected, by ongoing geopolitical and economic challenges. Following Hong Kong and Seoul, Singapore continues its effort to consolidate the art market within Asia by bringing together local and international galleries and artists; however, the reported sales figures do not indicate a stable market environment.

Beyond this, the market for Old Masters has begun shifting toward Paris due to both economic and financial drivers. Although the heart of contemporary art still beats in London and New York, recent auction results in Paris demonstrate rising interest in Old Masters. The UK’s planned tax increases for high-net-worth individuals, alongside France’s distinction of having Europe’s lowest art-import tax at 5.5%, signal a growing appeal of the Paris art market.

© The Art Basel and UBS Survey of Global Collecting 2024.

According to the most recent reports and auction-house data, all major houses recorded a significant decline in sales by the end of 2024 compared with 2023. As mentioned earlier, political, economic, and geopolitical risks appear to be pushing individuals toward investment instruments that promise stronger short-term returns. In particular, the Federal Reserve’s signal that it will slow down rate cuts in 2025—while adopting a more hawkish stance—has deepened the stagnation in art investments.

Hong Kong’s Rebound

Another striking point in the data is Hong Kong’s rapid rise to the forefront of the global art market. Several factors contribute to this momentum: the growing number of high-net-worth individuals in China; Hong Kong’s continued role as China’s gateway to the West; the city’s emergence as a major technology hub; and its comparatively greater growth potential relative to Europe. Auction houses analyzing these dynamics—international demand and evolving sales performance—have highlighted their strategic outlook for Asia by opening new regional headquarters in Hong Kong over the past two years.

As discussed in the previous article, the U.S. president’s planned tariffs on imports from other countries, especially China, and the resulting disruptions and emerging trends in global trade will significantly influence the investment behavior of collectors in China throughout 2025.

© The Art Basel and UBS Survey of Global Collecting 2024.

An Uncertain United Kingdom

In light of developments over the past month, the rise in 30-year Gilt yields, elevated levels of government borrowing, and the accelerating outflow of millionaires from the UK—along with the Chancellor’s announcement that existing tax policies and upcoming regulations for high-net-worth individuals will be reassessed—have done little to ease pressures in the art market. Despite the Bank of England injecting liquidity by implementing a rate cut in February, the country has entered its longest period of stagnation since the Second World War. These dynamics, much like their effects on other asset classes, have negatively impacted the art market as well.

© Trading Economics.

A Shock Theraphy in United States

In the U.S., the Federal Reserve’s increasingly hawkish signals—echoed by the banking sector—alongside the strengthening of the dollar against other major currencies, and Trump’s rapid implementation of shock-style economic measures, including new tariffs on high-volume trading partners such as Canada and Mexico, continue to create uncertainty in the world’s largest art market.

As some had anticipated, Trump is moving quickly to deliver his major pre-election promises, including steps toward tax reductions for the wealthy. If import tariffs on foreign goods and early tax cuts for UHNWI are enacted into law, the U.S. art market may enter a new upward trend. Even if international art trade slows, stronger domestic sales in the coming months could give the American art market a positive boost.

The Normalization of Uncertainty

As in the capital markets, uncertainty—and the pricing of uncertainty—plays a critical role in the art market. Yet the only factor more damaging than uncertainty itself is when major financial centres such as the United Kingdom and the United States sustain and even normalize this state of ambiguity through their policies. These economic and political conditions indicate that the coming period will likely be challenging for the art market and art investments, reducing the probability of a near-term recovery or an uptick in sales.

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*The views expressed in this article are solely personal opinions and should not be considered as investment advice.

*Disclaimer: Unless otherwise stated, all images featured in this article are AI-generated for illustrative purposes. They are not based on, affiliated with, or reproductions of any existing copyrighted images or artworks.

Cenk Usel

Art Market Professional