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Young HNWIs become big spenders in art market

More than half of wealthy investors believe the pandemic has increased their interest in collecting.

At a time when investment returns are not hitting the heights of yesteryear, investors have to think outside of the box to make money, and this includes collecting art.

Global wealth manager UBS and Art Basel surveyed 360 high net worth individuals across the US, UK and Hong Kong and found that 92% of collectors had purchased a work of art so far in 2020.

The value of spending was at a relatively high level across the three markets; a majority (56%) of collectors had spent over $100,000 in the first half of 2020, including 16% spending over $1m.

The millennial cohort had the largest share of high spenders, with 17% having spent over $1m in the six-month period to June, compared to just 4% of baby boomers.

Price transparency was one of the most highly valued features of these digital forums, with 81% of collectors reporting that it was important or essential to have a price posted when they were browsing works of art for sale online.

Physical encounters

UBS also found nearly all millennial collectors (99%) and most Gen X collectors (94%) reported that they were actively working with galleries during the crisis.

However, one-third of collectors chose to only buy works by artists they were familiar with, or had bought before.

A trend which, if continued, could reinforce the status quo, making it harder for younger artists and galleries to become established, and potentially impacting diversity in the market.

Many galleries noted that online forums did not come close to replicating the experience of physical fairs.

This was a sentiment shared by collectors, the majority of whom (70%) reported they prefer to view art for sale in person and placed a high or very high value on the sense of discovery and the opportunities for discussion and social contact afforded by offline events.

Looking ahead

The majority of galleries expected sales to continue to decrease in 2020, with only 21% expecting an uptick in the second half of the year.

There was more optimism about 2021, but even so, only 45% of galleries expected sales to increase from 2020.

However, HNW collectors had a relatively positive outlook, 59% felt that the Covid-19 pandemic has increased their interest in collecting; this boost was particularly strong among younger collectors.

Over the longer term, collector’s confidence in the art market is advancing in all markets.

Young and wealthier collectors appear to be most optimistic, with over 60% of millennial collectors being positive about its performance in the next six and 12 months versus 24% of baby boomers.

Continued drive

Christl Novakovic, chief executive of UBS Europe SE and head of wealth management Europe, said: “The pandemic disrupted economies and societies, and galleries worldwide had to adapt quickly to new behaviours and realities.

“Our survey of high net worth collectors illustrates a continued drive to support the market, as it migrates ever faster to online platforms.

“Digital platforms can increase price transparency and broaden the base of new buyers at different price levels. Strengthening this digital community globally may be essential for the health of the market in the future.”

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Part of Mark Allen.