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1、 The Art Market 2021 An Art Basel&UBS Report Prepared by Dr.Clare McAndrew Founder of Arts Economics Contents Tables and Figures 4 Acknowledgments 11 Directors Foreword 14 Foreword by UBS 15 Key Findings 17 1 The Global Art Market in 2020 Key Findings 28 1.1|Overview of Global Sales 30 1.2|Global Ma

2、rket Share 34 1.3|Regional Performance 35 2 Dealer Sales Key Findings 50 2.1|Dealers Surveyed in 2020 52 2.2|Dealer Sales 58 2.3|Dealer Margins 66 2.4|Buyers 74 2.5|Artist Representation 79 2.6|Artist Representation by Career Stage 82 2.7|Artists Gender and Representation 86 2.8|Outlook for the Deal

3、er Sector 90 3 Auction Sales Key Findings 102 3.1|Auction Sales in 2020 104 3.2|Price Segmentation in Fine Art Auctions 120 3.3|Fine Art Sectors 132 3.4|Post-War and Contemporary Art 136 3.5|Modern Art 148 3.6|Impressionism and Post-Impressionism 154 3.7|Old Masters and European Old Masters 160 3.8|

4、Conclusions 168 4 Art Fairs Key Findings 172 4.1|Art Fairs in 2020 174 4.2|Art Fair Calendar and Cancellations in 2020 175 4.3|Art Fair Survey 2020 180 4.4|Impact on Gallery Exhibitions in 2020 184 4.5|Art Fairs and HNW Collectors 196 4.6|Conclusions 205 5 Online Sales Key Findings 210 5.1|The Onlin

5、e Art Market 212 5.2|The Online Retail Market 216 5.3|Online Auctions 230 5.4|HNW Collectors and Buying Online 242 5.5|Website Traffic and Social Media 250 5.6|Conclusions 260 Global Wealth and 6 Collector Perspectives Key Findings 266 6.1|Global Wealth in 2020 268 6.2|Wealth Distribution and Millio

6、naires 272 6.3|Billionaires 277 6.4|Art Collectors Survey 281 6.5|Description of the Collector Sample 287 6.6|HNW Collections of Art 292 6.7|HNW Collectors Expenditure on Art in 2020 296 6.8|Buying Channels for HNW Collectors in 2020 306 6.9|Collector Motivations 318 6.10|Collectors Outlook 323 7 Ec

7、onomic Impact and Conclusions Key Findings 330 7.1|Employment in the Art Market in 2020 332 7.2|Dealer Sector Employment 333 7.3|Auction Sector Employment 338 7.4|Ancillary Economic Impact 340 7.5|Conclusions 343 Appendix Sources Used in The Art Market 2021 352 4 Tables and Figures 1 The Global Art

8、Market in 2020 Table 1.1|The Global Art Market:Value and Volume of Transactions 31 Figure 1.1|Sales in the Global Art Market 20092020 32 Figure 1.2|Growth in Sales in the Global Art and Antiques Market 33 Figure 1.3|Global Art Market Share by Value in 2020 34 Figure 1.4|Global Art Market Share of th

9、e US,UK,and Greater China 20112020 35 Figure 1.5|Sales in the Major Art Markets 20092020 41 2 Dealer Sales Figure 2.1|Annual Sales Turnover of Survey Respondents in 2020 53 Figure 2.2|Number of Years in Business 54 Figure 2.3|Gallery Operating Restrictions and Measures in December 2020 55 Figure 2.4

10、|Average Changes in Year-on-Year Turnover by Dealer Turnover Segment 20192020 59 Figure 2.5|Average Changes in Year-on-Year Turnover by Dealer Sector 20192020 60 Figure 2.6|Volume of Sales by Price Bracket in 2019 versus 2020 61 Figure 2.7|Dealers Outlook on Future Sales in 2021 62 Figure 2.8|Share

11、of Total Costs for Dealers in 2019 versus 2020 67 Figure 2.9|Debt Ratios in the Dealer Sector 69 Figure 2.10|Change in(Net)Profitability in 2019 versus 2020 70 Figure 2.11|Number of Unique Buyers in 2020 75 Figure 2.12|Share of Dealer Sales to Buyer Groups by Purchase History in 2020 76 Figure 2.13|

12、Share of Dealer Sales by Buyer Type in 2020 78 Figure 2.14|Number of Artists Represented by Dealers in 2020 80 Figure 2.15|Share of Artists Represented by Primary Market Dealers in 2020 83 Figure 2.16|Change in Sales 2019 to 2020 by Share of Artists(Primary Market Dealers)84 Figure 2.17|Share of Fem

13、ale versus Male Artists by Dealer Turnover 86 Figure 2.18|Share of Female Primary Market Artists Represented by Dealers 2018-2020 87 Figure 2.19|Share of Female Artists Represented by Dealers in 2020 88 5 Tables and Figures Figure 2.20|Change in Sales 20192020 by Share of Female Artists Represented

14、89 Figure 2.21|Perceptions of Level of Support Received by Dealers versus their National Peers 91 Figure 2.22|Perceptions of Level of Support Received by Dealers versus Same Size Global Peers 92 Figure 2.23|Dealers Perceptions of Performance in 2020 94 Figure 2.24|Dealers Outlook for Sales in 2021 9

15、6 Figure 2.25|Top Business Priorities for Dealers in 2019 and 2020 98 3 Auction Sales Table 3.1|Annual Growth and Share of Sales of Auction Sales by Price Segment 124 Table 3.2|Global Market Share:Old Masters Paintings in 2020 163 Figure 3.1|Global Public Auction Sales 20112020 105 Figure 3.2|Public

16、 Auction Market Global Share by Value in 2020 107 Figure 3.3|Share of Total Sales by Sales Channel(Second-Tier Auction Houses)113 Figure 3.4|Number of Buyers in 2020 by Second-Tier Auction House Turnover Level 114 Figure 3.5|Local versus Foreign Buyers:Number and Share of Sales in 2020 115 Figure 3.

17、6|Share of Sales by Buyer Type for Second-Tier Auction Houses in 2020 116 Figure 3.7|Share of Sales to Buyer Groups by Purchase History in 2020 117 Figure 3.8|Second-Tier Auction Houses Outlook for Sales in 2021 118 Figure 3.9|Share of Lots Sold and Total Value at Global Fine Art Auctions in 2020 by

18、 Price Bracket 121 Figure 3.10|Share of Global Fine Art Auction Sales by Price Bracket(Online versus Offline)122 Figure 3.11|Growth of Sales by Value in Auction Price Segments 20052020 127 Figure 3.12|Market Share of the Fine Art Auction Market by Price Segment in 2020 128 Figure 3.13|Share of the F

19、ine Art Auction Sales by Female Artists by Price Level in 2020 130 Figure 3.14|Market Share by Value of the Fine Art Auction Market:Selected Years 20002020 134 Figure 3.15|Market Share by Sector of the Fine Art Auction Market in 2020 135 Figure 3.16|The Post-War and Contemporary Art Sector:20092020

20、137 Figure 3.17|Market Share of the Post-War and Contemporary Sector in 2020 138 Figure 3.18|Sales in the Post-War and Contemporary Sector 20092020:Key Markets 139 Figure 3.19|Sales by Price Bracket in the Post-War and Contemporary Sector in 2020 140 6 Figure 3.20|Share of Sales by Living versus Dec

21、eased Post-War and Contemporary Artists in 2020 143 Figure 3.21|Share of Sales within the Post-War and Contemporary Sector:Living and Deceased Artists 144 Figure 3.22|Sales of Living Artists Works by Price Bracket in 2020 146 Figure 3.23|The Modern Art Sector:20092020 149 Figure 3.24|Market Share of

22、 the Modern Sector in 2020 150 Figure 3.25|Sales in the Modern Sector 20092020:Key Markets 151 Figure 3.26|Sales in the Modern Sector by Price Bracket in 2020 153 Figure 3.27|Impressionist and Post-Impressionist Auction Sales 20092020 155 Figure 3.28|Market Share of the Impressionist and Post-Impres

23、sionist Sector in 2020 156 Figure 3.29|Sales in the Impressionist and Post-Impressionist Sector 20092020:Key Markets 157 Figure 3.30|Sales by Price Bracket in the Impressionist and Post-Impressionist Sector in 2020 158 Figure 3.31|Old Masters Painting Sales 20092020 160 Figure 3.32|Sales in the Old

24、Masters Sector 20092020:Key Markets 165 Figure 3.33|Sales in the Old Masters Sector by Price Bracket in 2019 166 4 Art Fairs Figure 4.1|Share of Global Art Fairs(Live Events)Cancelled in 2020(365 Fairs)175 Figure 4.2|Fairs Held and Cancelled and Monthly Cancellation Rates in 2020(365 Fairs)176 Figur

25、e 4.3|Fairs Held and Cancelled and Cancellation Rates by Region in 2020(365 Fairs)177 Figure 4.4|Share of Art Fairs Holding Online Editions in 2020(365 Fairs)178 Figure 4.5|Share of Enquiries at Online-Only Artsy-Hosted Fairs(69 Fairs)179 Figure 4.6|Share of Works Offered on Art Fair OVRs in 2020(13

26、8 Fairs)181 Figure 4.7|Share of Works Offered on Art Fair OVRs by Price Segment 182 Figure 4.8|Art Fairs Future Plans for Live and Online Events in 2021 183 Figure 4.9|Average Number of Gallery Exhibitions in 2020 185 Figure 4.10|Average Number of Gallery Exhibitions in 2019,2020,and Planned in 2021

27、 186 Figure 4.11|Average Number of Art Fairs in 2020 188 Figure 4.12|Average Number of Art Fairs Attended/Planned in 2019,2020,and 2021 191 Figure 4.13|Share of Dealer Sales by Value by Sales Channel(Turnover-Weighted)193 7 Tables and Figures Figure 4.14|Share of Art Fair Sales by Dealers in 2019 ve

28、rsus 2020 194 Figure 4.15|Share of HNW Collectors Purchasing from Art Fairs in 2020 196 Figure 4.16|Exhibitions and Events Attended by HNW Collectors in 2019 versus 2020 198 Figure 4.17|Planned Attendance at Local and International Events in 2021 200 Figure 4.18|Earliest Date Collectors Plan to Atte

29、nd Gallery Exhibitions and Fairs in Next 12 Months 202 Figure 4.19|Dealers Views on Art Fair Sales for All Galleries in 2021 205 Figure 4.20|Dealers Views on the Future of their own Art Fair Sales 206 5 Online Sales Table 5.1|Website Metrics:Selected Companies in 2020 254 Figure 5.1|The Online Art a

30、nd Antiques Market 20132020 213 Figure 5.2|Share of Online Sales in the Art Market versus General Retail 20162020 214 Figure 5.3|Average Share of Dealer Sales made Online(2019 versus 2020)216 Figure 5.4|Average Share of Dealer Sales by Value Made Online in 2019 versus 2020 by Level of Turnover 218 F

31、igure 5.5|Share of Online Sales by Dealers by Buyer Category in 2020 220 Figure 5.6|Share of Online Sales by Buyer Category and Level of Dealer Turnover in 2020 221 Figure 5.7|Most Helpful Online Strategies for Dealers in 2020 and 2021 223 Figure 5.8|Growth in Online Metrics from March to December 2

32、020(Artlogic)224 Figure 5.9|Increase in Share of Online-Only Sales:Sothebys,Christies,and Phillips 231 Figure 5.10|Share of Online Sales by Second-Tier Auction House Annual Turnover in 2020 233 Figure 5.11|Share of Online Sales to Buyer Categories by Share of Auction House Online Sales 234 Figure 5.

33、12|Share of Online-Only Lots Sold(Fine Art Auctions)in 2020 236 Figure 5.13|Share of Online-Only Lots Sold(Fine Art Auctions)in 2020 by Price Segment 238 Figure 5.14|Share of Online Sales(via Invaluable)by Auction House Turnover Level in 2014,2019,and 2020 240 Figure 5.15|Share of Online Sales(via I

34、nvaluable)by Auction House Turnover Level 20172020 241 Figure 5.16|Share of Collectors Purchasing Online by Region 242 Figure 5.17|Share of Collectors Purchasing Online by Generation 243 Figure 5.18|Use of Online Platforms During 2020 244 8 Figure 5.19|Price Range Most Often Used to Purchase Art(Onl

35、ine versus Offline)in 2020 246 Figure 5.20|HNW Collectors Preferences for Viewing Art for Sale in 2020 247 Figure 5.21|Dealers Views on Growth of Online Sales(for All Dealers)in 2021 262 6 Global Wealth and Collector Perspectives Table 6.1|Outlook of HNW Art Collectors over the Short-,Medium-,and Lo

36、ng-term 324 Figure 6.1|Growth and Estimates in Regional and World GDP 20082023 269 Figure 6.2|The Distribution of World Wealth in 2020 272 Figure 6.3|Number and Wealth of Dollar Millionaires 20102020 273 Figure 6.4|Global Share of the Population of Dollar Millionaires in 2020 274 Figure 6.5|Global S

37、hare of the UHNW Population with Wealth Over$50m in 2020 274 Figure 6.6|Change in UHNW Population with Wealth Over$50m in H1 2019 to end of H1 2020 275 Figure 6.7|Number and Wealth of Billionaires 20082020 276 Figure 6.8|Global Share of Billionaires in 2020 277 Figure 6.9|Change in Billionaire Wealt

38、h March to December 2020 by Region 278 Figure 6.10|Change in Billionaire Wealth March to December 2020 by Sector 279 Figure 6.11|Survey Market Summaries 282 Figure 6.12|Age Profile of HNW Collectors Surveyed(All Markets)287 Figure 6.13|Wealth Level of HNW Collectors Surveyed(All Markets)288 Figure 6

39、.14|Length of Time Collecting(All Markets)289 Figure 6.15|HNW Collectors Allocation to Art in Overall Portfolio of Wealth 290 Figure 6.16|Size of HNW Collectors Collections(Number of Works)292 Figure 6.17|Collection Content:Share of Works Purchased by Artists Characteristics 295 Figure 6.18|Share of

40、 HNW Collectors Having Purchased Art and Luxury Assets in 2019 and 2020 296 Figure 6.19|HNW Collector Expenditure in 2019 versus 2020 298 Figure 6.20|Share of HNW Collectors by Expenditure Level in 2020 300 Figure 6.21|Median Expenditure in 2020 by Male versus Female HNW Collectors 302 Figure 6.22|M

41、ost Common Price Range for Purchasing Art in 2020(Share of Collectors)303 9 Tables and Figures Figure 6.23|Share of HNW Collectors Most Commonly Purchasing at$1 Million and Above in 2020 304 Figure 6.24|Sales Channels used for Purchasing in 2020 by HNW Collectors 307 Figure 6.25|Top Three Sales Chan

42、nels used for Purchasing in 2020 by Generation 308 Figure 6.26|HNW Collectors Preferences for Purchasing Art 309 Figure 6.27|Number of Galleries HNW Collectors Purchased from in 2020 310 Figure 6.28|Share of Local Galleries Versus Foreign Galleries that HNW Collectors Purchased From 312 Figure 6.29|

43、HNW Collectors Focus Regarding Galleries during 2020 314 Figure 6.30|HNW Collectors Focus Regarding Artists during 2020 316 Figure 6.31|HNW Collectors Motivations for Purchasing Art 318 Figure 6.32|Share of HNW Collectors Having Resold Works from Their Collections in 2020 320 Figure 6.33|Average Len

44、gth of Resale Period 321 Figure 6.34|HNW Collectors Motivations for Resales 322 Figure 6.35|HNW Collectors Intentions for Purchases and Sales of Art in 2021 326 7 Economic Impact and Conclusions Figure 7.1|Share of Dealers Downsizing Employment in 2020 334 Figure 7.2|Projected Change in Dealer Emplo

45、yment in 2021 336 Figure 7.3|Share of Second-Tier Auction Houses Downsizing in 2020 by Auction House Turnover 339 Figure 7.4|Share of Expenditure by the Global Art Trade on Ancillary Services in 2020 341 Figure 7.5|Ancillary Expenditure in 2019 versus 2020 342 Figure 7.6|Foot Traffic Index(UBS Evide

46、nce Lab)348 Appendix Figure 1|Geographical Distribution of Respondents in 2020 355 Figure 2|Share of Respondents by Reported Annual Turnover 356 11 Acknowledgments Acknowledgments The Art Market 2021 presents the results of research on the global art and antiques market in 2020.The report presents s

47、ome of the key high-level trends in the global art trade,analyzing the performance of different regions,sectors,and value segments of the market,and assessing the impact of the COVID-19 pandemic on sales.The information presented in this study is based on data gathered and analyzed directly by Arts

48、Economics()from dealers,auction houses,collectors,art fairs,art and financial databases,industry experts,and others involved in the art trade.(The Appendix offers an outline of some of the main data sources used in the report.)Chapter 1 provides an overview of the global market in 2020,reporting on

49、the value,volume,and regional distribution of sales of art and antiques.It gives a brief overview of sales in the largest art markets over a 10-year period.The chapter also includes commentary on the effects of the change in the US administration on the market and the impact of the 5th Anti-Money La

50、undering Directive on auction houses and dealers in Europe.Chapter 2 focuses on dealers and galleries,analyzing sales and other key indicators,assessing how the COVID-19 pandemic has impacted on different value segments and sectors of the market.This chapter looks at costs,margins,and debt in the se

51、ctor as well as artist representation.It also addresses the changing priorities and outlook for dealers in 2021.Chapter 3 looks at the auction sector,analyzing key trends in sales by region and value segment,and how they have been impacted by the pandemic in 2020.It presents a comprehensive analysis

52、 of some of the principal fine art auction sectors,describing their performance in terms of sales,regional market share,and price distribution.Chapter 4 provides an overview of art fairs,reporting on the dramatic changes to the art fair calendar in 2020 and the impact this has on art fairs,galleries

53、,and collectors.It assesses the outlook for 2021 given continuing uncertainties,presenting the results of surveys on high net worth(HNW)collectors,art fairs,and dealers.13 12Chapter 5 looks at the online art market,and the rapid evolution in sales in 2021.The chapter shows how the dealer sector shif

54、ted sales and strategies online in 2020,with commentary on the development of online viewing rooms(OVRs).It also shows the growth of online auctions,and the evolution of e-commerce in the top-and second-tier auction houses.It also provides insights into how HNW collectors have interacted with the ma

55、rket online and through social media,and their preferences in 2020 and for the future.Chapter 6 provides a brief overview of world wealth,showing some of the preliminary changes in the size and distribution of HNW wealth that have emerged in 2020.This chapter presents the results of a comprehensive

56、survey of HNW collectors,conducted in conjunction with UBS Investor Watch and covering the largest sample size and widest geographical area to date,including responses from 2,569 collectors in the US,the UK,France,Germany,Italy,Mainland China,Hong Kong,Taiwan,Singapore,and Mexico.Chapter 7 discusses

57、 the potential employment and economic effects of the pandemic on the art market,looking at its impact on employment as well as the range of ancillary and support industries connected to the art trade.It concludes the report by reviewing some of the key issues arising from the crisis in 2020 that ma

58、y continue to affect the market in 2021.A critical part of this research every year is the global survey of art and antique dealers.I would like to say a very special thanks once again to Erika Bochereau of CINOA(Confdration Internationale des Ngociants en Oeuvres dArt)for her continued support of t

59、his research,along with the presidents of the dealer associations around the world who promoted the survey among their members in 2020.Thanks also to Art Basel for helping to distribute the survey.The completion of this report would not have been possible without the help of all of the individual de

60、alers who took the time to support this research by completing the survey.I am extremely grateful to them all for their continued help and support.Special thanks also to all those dealers who shared their valuable insights on the art market through interviews and discussions during the year.Many tha

61、nks also to all of the top-and second-tier auction houses that also took part in the auction survey,and who offered their insights on the evolution of this sector in 2020.Thanks especially to Susan Miller(Christies),Simon Hogg(Sothebys),Jason Schulman(Phillips),and Eric Bradley(Heritage Auctions).Th

62、anks also to Neal Glazier from I for the use of their online auction data.I am very grateful to Tamsin Selby of UBS for her help with the HNW collector surveys,which expanded significantly this year,providing hugely valuable regional and demographic insights for the report.The primary fine art aucti

63、on data supplier for this report was Artory,and my sincerest thanks to Nanne Dekking along with Lindsay Moroney,Anna Bews,and Chad Scira for their hard work and dedication in putting together this very complex set of data.The auction data on China is supplied by AMMA(Art Market Monitor of Artron),an

64、d I am very grateful for their continued support of this research on the Chinese auction market.Many thanks also to Richard Zhang for his help researching the Chinese art market.I would like to thank Joe Elliot and the team at Artlogic for their valuable insights into the evolution of OVRs,and many

65、thanks also to Simon Warren and Alexander Forbes for the use of data from Artsy.Thank you to Diana Wierbicki of Withersworldwide for her expert contribution on US tax and regulations,and special thanks also to Rena Neville for her legal insights on the 5th EU Anti-Money Laundering Directive.Many tha

66、nks also to Matthew Israel for his commentary on the development of OVRs.I am very grateful to Anthony Browne for his help and Acknowledgments advice on parts of the report,and also to Taylor Whitten Brown(Duke University)for her help and insights with both of the dealer surveys.Finally,thanks to No

67、ah Horowitz and David Meier for their time and efforts in helping to coordinate the research.Dr.Clare McAndrew Arts Economics 15 14Directors Foreword The changes wrought on the global economy by the COVID-19 pandemic are sure to capture the imagination for years to come.Yet,it isnt too early to begi

68、n the heavy task of unpacking this complex terrain.We are honored to do so once again with Dr.Clare McAndrew,Founder of Arts Economics,as we publish this fifth edition of The Art Market in partnership with UBS.The merits of analytically-driven business intelligence in the art market have arguably ne

69、ver taken center stage as they do now,with this latest research providing a clear lens onto the newly configured landscape shaped by the shutdowns and disruptions of the past year and underscoring arts fundamental value through it all.The telltale finding of this years report is the tremendous ascen

70、t of online sales,which doubled in value from 2019 to 2020,accounting for one quarter of total sales.This precipitous rise was the dual product of both tireless digital innovation and sheer necessity.While the permanence of these changes remains to be seen,there is no disputing the roiling impact th

71、at the pandemic has had upon the trade.Virtually all market segments experienced declines last year,creating the biggest recession in the global art market since the financial crisis of 2009.The event-driven rhythm of fairs,gallery openings,and auctions were thrown off kilter,limiting sales opportun

72、ities and slowing the pace of consignments amid the uncertainty.But wealth gains at the highest end of the spectrum mapped in these pages via Dr.McAndrews extensive surveys of high net worth individuals,conducted in collaboration with UBS Investor Watch bolstered the market,especially as confidence

73、grew and global economies normalized in the second half of the year.Aggregate declines of 22%by value were therefore not as steep as might have been anticipated,as collectors continued to assiduously acquire art;as dealers pivoted by reigning in costs and reimagining their strategies,often via innov

74、ative collaborations and partnerships;as auction houses experimented with novel digital sales offerings,while amplifying their private sales channels;and as online businesses vastly expanded their scope and services.On behalf of Art Basel,I would like to thank Clare once again for her extraordinary

75、efforts in putting together this industry-leading study,as well as our counterparts at UBS who have been exemplary partners and whose vital contributions continue to grow year by year.Lastly,an earnest thanks to the gallerists,art market professionals,and our global team whose contributions make all

76、 of this possible.Noah Horowitz Director Americas,Art Basel Foreword by UBS In 2020,the COVID-19 pandemic overshadowed our economies and societies.While the global economy defied the most pessimistic predictions due largely to record monetary and fiscal interventions,many industries and activities s

77、uffered enormous pressure or shut down entirely.In the art market,overall sales dropped by 22%as in-person fairs,auctions,and exhibitions were cancelled by national lockdowns and global travel ground to a halt.Out of crisis,however,springs innovation.Many businesses have demonstrated resilience and

78、adaptability.New strategies and businesses developed rapidly while technological shifts already underway reached warp speed.New and incumbent digital platforms welded global markets together,accelerating long-anticipated transitions to a virtual economy.In the artworld,that resulted in the online ma

79、rket doubling in value within the year.Many transformations will stick once COVID-19 is brought under control.Theres no returning to the past.And there will be plenty of new opportunities.UBS Chief Investment Office believes that 2021 will be a year of renewal.It is a time to look afresh at industri

80、es and explore innovative new business models for the future.In times of crisis,we reflect on what we hold dear.Art brings us together and reminds us of our humanity.Our survey of over 2,500 high net worth collectors globally revealed unflinching dedication to support the arts to collect with purpos

81、e and a long-term plan.At UBS,we continue to acquire works for the Directors Foreword&Foreword by UBS UBS Art Collection,reinforcing our unbroken commitment as a supporter and collector of contemporary art for over 60 years.It is also encouraging to see the development of a new generation of art col

82、lectors,bolstering the market with increased confidence online.The shift to digital has brought welcome improvements in price transparency,and access to information and artists.Lowering barriers to entry for the market enables development of a broader base of new collectors at different price levels

83、.Once this crisis is over,we foresee a more dynamic market,where the discovery of great artworks can unfold again at the exhibitions and gatherings we all treasure,while a new and richer virtual world enhances the experience and our opportunities to learn.UBS is proud to be Lead Partner of Art Basel

84、 for nearly three decades.Since 2017,in addition,we have been delighted to co-present art market trends and information,a role ideally suited to our leading position worldwide in financial research and analysis.We hope this publication serves as a useful guide and leads to deeper insight into the po

85、tential of the art market today.Christl Novakovic CEO UBS Europe SE and Head Wealth Management Europe Chair of The UBS Art Board UBS,Lead Partner of Art Basel 17 Key Findings Key Findings Global 1.Global sales of art and antiques reached an estimated$50.1 billion in 2020,down 22%on 2019 and 27%since

86、 2018.2.Online sales of art and antiques reached a record high of$12.4 billion,doubling in value on the previous year,and accounting for a record share of 25%of the markets value.3.Although all three of the major art hubs,the US,the UK,and Greater China,experienced a decline in sales,they continued

87、to account for a majority of global sales by value in 2020,at 82%.The US retained its leading position with a share of 42%,with Greater China and the UK on par at 20%.4.Sales in the US art market fell by 24%in 2020 to$21.3 billion,but remained 76%above their level in the last recession in 2009.5.Gre

88、ater Chinas sales decreased by 12%in 2020 to$10.0 billion,the third year of falling sales values,although a less severe decline than its other major peers.6.Sales in the UK declined by 22%to$9.9 billion in 2020,their lowest level in a decade,but still 10%above the previous recession in 2009.18 19 De

89、alers 1.The fallout from the COVID-19 crisis had a negative effect on aggregate dealer sales,with values declining by 20%to an estimated$29.3 billion in 2020,after a marginal increase of 2%in 2019.2.The ability to reduce major operating costs allowed some dealers to maintain profitability in 2020:28

90、%were more profitable than in 2019 and 18%maintained a stable level of net profit.3.Dealers top priorities shifted markedly over 2020 to focus on existing clients,online sales,and finding ways to cut costs.Client relationships,online sales,and art fairs were their top priorities looking ahead to 202

91、1.4.The majority of dealers(58%)expected an improvement in sales in 2021,while 27%predicted they would be stagnant and 15%expected them to decline further.5.The size of dealers client bases shrank over 2020,with an average of 55 individual clients,down from 64 in 2019.Key Findings Auctions 1.Public

92、auction sales of fine and decorative art and antiques(excluding auction house private sales)were$17.6 billion in 2020,a decline of 30%from 2019.2.Private sales were conservatively estimated to have reached over$3.2 billion in 2020(up 36%on 2019).Total sales conducted by auction companies,including b

93、oth public and private,were estimated to have reached$20.8 billion.3.The three largest auction market hubs of Greater China,the US,and the UK retained a combined share of 81%of public auction sales by value.Greater China overtook the US to become the largest market,with a share of 36%.The US account

94、ed for 29%and the UK 16%.4.In 2020,the largest sector in the fine art public auction market was Post-War and Contemporary art(55%),which along with Modern art accounted for just over 81%of the value of sales.Sales in the Impressionist and Post-Impressionist sector,the dominant category 30 years ago,

95、showed the largest decline in value year-on-year,with sales down over 50%.20 21 Art Fairs 1.Of 365 global art fairs planned for 2020,61%were cancelled,37%held live events,and the remaining 2%of fairs held a hybrid,alternative event.2.A survey of 138 art fairs revealed that the majority(62%)offered a

96、n online viewing room(OVR)or digital version of their fair in 2020.3.The share of art fair sales from live events declined dramatically in 2020,accounting for just 13%of dealers total sales,with an additional share of 9%made through art fair online viewing rooms.4.Despite the high number of events b

97、eing cancelled,41%of high net worth(HNW)collectors surveyed reported that they made a purchase at an art fair in 2020,while 45%reported making one through an art fairs online viewing room.5.Just under half(48%)of the HNW collectors surveyed said they would be willing to go to an art fair in the firs

98、t six months of 2021,although 64%would be ready to attend local events.The majority of collectors(68%)reported that they would be happy to attend any fair by the end of Q3 2021,and over 80%into Q4.Key Findings Online 1.Despite the contraction of sales overall,aggregate online sales reached a record

99、high of$12.4 billion,doubling in value from 2019.2.The share accounted for by online sales also expanded from 9%of total sales by value in 2019 to 25%in 2020,the first time the share of e-commerce in the art market has exceeded that of general retail.3.The share of online sales in the dealer sector,

100、including art fair OVRs,expanded threefold in 2020 to 39%from 13%in 2019.Dealers at all levels showed significant increases in the online component of their sales,with the largest advance by those in the$10 million-plus turnover segment(to 47%).4.In the fine art auction sector,22%of the lots sold in

101、 2020 were in online-only sales,double the share in 2019.Works priced over$1 million made up only 6%of total online-only values,versus 58%for offline sales.5.90%of HNW collectors visited an art fair or gallery OVR in 2020,and 72%felt it was important or essential to have a price posted when browsing

102、 works of art for sale online.22 23 Collectors 1.Surveys of 2,569 HNW collectors conducted by Arts Economics and UBS Investor Watch in 10 markets indicated active engagement in the art market despite the COVID-19 pandemic.66%of those surveyed reported that the pandemic had increased their interest i

103、n collecting,including 32%who reported it had significantly done so.2.Millennial HNW collectors were the highest spenders in 2020,with 30%having spent over$1 million versus 17%of Boomers.3.Despite the restrictions in place,HNW collectors still purchased through a range of channels,with 81%having bou

104、ght art from a gallery in 2020,and 54%at auction.4.Dealers were the most preferred channel for purchasing art,with the majority of HNW collectors(57%)preferring to buy from their gallery or physical premises,while 29%liked to purchase from them online and 14%by phone or email.5.46%of HNW collectors

105、focused only on galleries they had bought from before,with a further one third doing this alongside being open to working with new galleries.41%were only buying works of artists whose work they had bought before.Economic Impact Key Findings 1.It is estimated that there were approximately 305,250 bus

106、inesses operating in the global art and antiques market in 2020,directly employing about 2.9 million people.2.More than 2.6 million people were employed worldwide in the gallery and dealer sector in 2020,down 5%year-on-year in about 291,000 businesses.3.There were an estimated 14,250 businesses oper

107、ating in the auction market,including both online and offline companies.Employment in the sector fell by around 2%year-on-year,with significant declines in some of the top-tier auction houses.4.The global art trade spent an estimated$16.6 billion on a range of ancillary and external support services

108、 directly linked to their businesses,a decline of 16%year-on-year.5.Spending on art fairs went from being the largest area of ancillary expenditure in previous years(at 24%in 2019),to just 10%of the total in 2020.As they continued their digital transformations,dealers and auction houses diverted mor

109、e resources to IT,with spending up by 80%year-on-year to$3.5 billion,the highest element of ancillary spending.The Global Art Market in 2020 28 29 Key Findings The Global Art Market in 2020 1.Global sales of art and antiques reached an estimated$50.1 billion in 2020,down 22%on 2019 and 27%since 2018

110、.2.Although many businesses maintained a significant number of transactions online,on aggregate,the volume of sales was estimated to have decreased by 23%to 31.4 million,its lowest level since 2009.3.Online sales of art and antiques reached a record high of$12.4 billion,doubling in value on the prev

111、ious year,and accounting for a record share of 25%of the markets value.4.Although all three of the major art hubs,the US,the UK,and Greater China,experienced a decline in sales,these key markets continued to account for a majority of the value of global sales in 2020,at 82%.5.Despite its biggest fal

112、l in sales since 2009,the US market retained its leading position,with a share of 42%of global sales values,with Greater China and the UK on par at 20%.1|The Global Art Market in 2020 6.Sales in the US art market fell by 24%in 2020 to$21.3 billion,but remained 76%above their level in the last recess

113、ion in 2009.7.Sales in Greater China decreased by 12%in 2020 to$10.0 billion,the third year of falling sales,although a less severe decline than its other major peers.8.Sales in the UK declined by 22%to$9.9 billion in 2020,their lowest level in a decade,but still 10%above the previous recession in 2

114、009.30 31 1.1|Overview of Global Sales The COVID-19 pandemic created the biggest recession in the art market since the 2009 global financial crisis.Unlike that period,however,virtually all of the mid-sized and larger art markets,including China,experienced a drop in sales values in 2020.Global sales

115、 of art and antiques reached an estimated$50.1 billion,down 22%on 2019.This was the art markets second year of declining sales,bringing values down by 27%since 2018.The COVID-19 pandemic created a period of crisis and uncertainty for markets globally,as businesses were forced to close their premises

116、 for extended periods,and live events,that have become pivotal in generating sales in recent years,were cancelled around the world.The art trade was particularly vulnerable in this crisis,being based on discretionary or non-essential purchasing,and heavily reliant on events and travel.While dealers

117、and auction houses found ways to maintain exhibitions and trading online,the pandemic had a profound effect on sales,employment,and business practices.Although values declined and the full impact on business survival is not yet fully measurable,2020 was also a period of restructuring and innovation,

118、bringing with it what many believe will be some lasting changes to the market.The pandemic imposed an exogenous shock to the markets system of operating,escalating trends Global sales of art and antiques reached an estimated$50.1 billion,down 22%on 2019 that were already underway,most notably the ro

119、llout of digital strategies and sales,which had lagged behind other industries up to now.Online sales of art and antiques reached a record high of$12.4 billion,doubling in value on the previous year,and accounting for a record share of 25%of the markets total value.Heading into 2020,the art trade wa

120、s already under pressure as geopolitical tensions and economic uncertainty in some of the key art markets had negatively affected sales in 2019,with a drop in value of 5%to$64.4 billion.While dealers and private sales maintained pace,those in the public auction sector declined as supply shrank at th

121、e high end of the market.This uncertainty was significantly amplified in 2020,with the multiple lockdowns stalling sales and shutting down events,while continuing political issues and economic volatility created a poor context for sales.Unlike past recessions,however,the declines in value were sprea

122、d throughout all levels of the market.Reflecting back over the previous decade,the last major recession saw sales fall in value by 36%in 2009 to a low of$39.5 billion,when the global financial crisis affected nearly all parts of the market(and representing a total decline of 40%from a peak in 2007).

123、2010 saw a strong recovery,as the booming Chinese market and a rapid rebound in the US pushed sales up to a high of just under$65 billion by 2011.Chinas boom ended in 2012 creating a slowdown in global values that year,however,strong sales elsewhere in the two years that followed,particularly in the

124、 US,saw values reach a peak of$68.2 billion by 2014.In the five years that followed,diverging performance in different regions and sectors of the market resulted in more muted annual sales growth.While some key regions saw differing results,supply at the high end of the market drove many of the bigg

125、er trends.There was also a notable divergence in performance between the auction and dealer sectors.From 2018,the dealer sector(covering both the primary and secondary markets)outperformed public auctions in terms of sales growth,as the less certain economic and political context created a perceptio

126、n among vendors of greater risk and less potential for better-than-anticipated results at public auctions,steering some to either hold back or sell privately.This continued in 2020,although both segments of the market declined,with the only significantly 1|The Global Art Market in 2020 Table 1.1|The

127、 Global Art Market:Value and Volume of TransactionsYearValue($m)Volume(m)2009$39,51131.02010$57,02535.12011$64,55036.82012$56,69835.52013$63,28736.52014$68,23738.82015$63,75138.12016$56,94836.12017$63,68339.02018$67,65339.82019$64,35040.52020$50,06531.4Growth 2019202022%23%Growth 2011201922%15%Growt

128、h 2009201924%1%Arts Economics(2021)positive trajectory on aggregate being auction house private sales.Public auction sales(excluding auction house private sales)contracted by 30%in 2020,while sales in the dealer sector fell by an estimated 20%.Private sales by auctions houses,on the other hand,rose

129、by 36%year-on-year from 2019.Combining all sales of auction houses(both private and public),Figure 1.1|Sales in the Global Art Market 20092020 Arts Economics(2021)Figure 1.2|Growth in Sales in the Global Art and Antiques Market Arts Economics(2021)32 33 Billion$80$70$68.2$67.7$64.6$64.4$60$63.8$63.7

130、$63.3$57.0$56.7$56.9$50.1$50$39.5$40$30$20$10$0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 the auction sector accounted for 42%of the value of A detailed analysis of the dealer and gallery sector sales in 2020 and dealers and galleries(including is given in Chapter 2,and Chapter 3 e

131、xamines the all online and offline retail sales of art and antiques auction sector,focusing on sales at public auctions.in the primary and secondary markets)for 58%.Although many businesses maintained a significantThe division between public and private sales varies number of transactions online,on

132、aggregate,thewidely between different regions and sectors.The volume of sales was estimated to have decreased boundary between these segments has also become by 23%,with some of the biggest declines reportedless defined,with significant overlap between auction for dealers and fine art auctions.This

133、brought theand dealer businesses as the network of sellers estimated volume of sales to 31.4 million,its lowestand transactions expands,both online and offline.level since 2009.1|The Global Art Market in 2020 Annual%change Value Volume 50%44%40%30%20%10%0%10%20%30%13%12%12%8%7%11%12%6%5%22%40%36%50%

134、20082009 20092010 20102011 20112012 20122013 20132014 20142015 20152016 20162017 20172018 20182019 20192020 The volume of sales was estimated to have decreased by 23%,to 31.4 million,its lowest level since 2009 Figure 1.4|Global Art Market Share of the US,UK,and Greater China 20112020 Arts Economics

135、(2021)19%22%30%16%23%25%23%20%24%17%22%22%17%19%21%19%21%20%17%20%21%16%21%19%18%20%18%18%20%20%34 35 Figure 1.3|Global Art Market Share by Value in 2020 Arts Economics(2021)US 42%Others 7%Greater China 20%UK 20%France 6%Germany 2%Switzerland 2%Spain 1%The US market retained its leading position in

136、the global ranks with a share of 42%of sales by value 1.2|Global Market Share Although all three of the major art hubs,the US,the UK,and Greater China,experienced a decline in sales,these key markets continued to account for a majority of the value of global sales in 2020 at 82%(stable on 2019).1 De

137、spite its biggest drop in sales since the global financial crisis in 2009,the US market retained its leading position in the global ranks with a share of 42%of sales by value.The Chinese art market was the first major market to experience lockdowns in the first quarter of the year.However,it regaine

138、d some momentum in the second half of 2020,and strong sales at the high end of the auction market helped to move Greater China statistically on a par with the UK,with a market share of 20%,up 2%on 2019.The UK retained a 20%share of global sales despite a very challenging year as businesses in the ar

139、t trade dealt with the pandemic alongside the difficult exit of the UK from the EU.After a strong year in 2019,French sales also fell significantly,with its global share dropping back to 6%.Sales in the EU(excluding the UK)were at 12%,a stable share year-on-year.Unless otherwise specified,for the pu

140、rposes of analyzing sales in this report,Greater China includes Mainland China,Hong Kong,and Taiwan.Share of sales by value 100%80%60%40%20%0%2011 2012 2013 2014 2015 1.3|Regional Performance The US has been the leader in global art market sales for most of the recent past,but it had a challenging y

141、ear in 2020 faced with one of the most severe outbreaks of COVID-19 worldwide and a volatile and divisive change in its political administration.Although there are hopes that the new Biden-led government may bring about more stability,many 1|The Global Art Market in 2020 US Greater China UK Others 2

142、9%42%44%44%43%42%40%39%36%33%2016 2017 2018 2019 2020 in the art trade in the US noted that collectors were often focused on other matters outside of art and their collections in 2020.It had also been particularly hard to source supply in the secondary market for some dealers and auction houses,with

143、 the year perceived as a poor time to sell and with less overall opportunities for sales,despite demand still being strong in some areas.1 36 Sales fell by 24%to$21.3 billion,their sharpest decrease in value since 2009.The US market has been a key driver of global art sales and one of the strongest

144、performing markets of the past decade.Resilient sales in the US in 2010 helped drive the art markets recovery from the global financial crisis,with continuing growth in values to 2015.Political uncertainties and a drop in high-end sales caused the market to contract by 16%in 2016,however,this was fo

145、llowed by a rebound to a historic peak of just under$30 billion in 2018.In 2019,a significant contraction in the auction sector brought the aggregate markets value down 7%to just under$28 billion,still its second highest level ever despite the fall in sales.Although this second year of decline in 20

146、20 has brought sales to the levels just above those of 2013,the market remained well in excess of the recession of 2009($12.1 billion).The US art market has grown by 76%since 2009,which remains significantly above other regions including Greater China(38%),the UK(10%),and the EU as a whole(-7%).US s

147、ales have grown 13%in the decade from 2011.Apart from domestic sales,the US has been a key center for the cross-border trade in art,which has been critical to maintaining its leading position in the global market.The rise of protectionism in the US under the Trump administration was a cause of conce

148、rn,as trade wars with China and other regions Trade data for the US is from the USITC DataWeb.had direct effects on some sectors,including tariffs introduced on both Chinese and some European works of art in 2019.Although the categories of art remain relatively narrow and exclusions are still being

149、sought by the art trade,these regulatory changes continued to be a cause of concern in 2020,particularly as trade waned significantly during the year.Imports of art into the US in 2019 had already stagnated year-on-year,but in 2020 they fell by 55%(to just over$5.2 billion and their lowest level sin

150、ce 2009).2 While some decline in the US market was virtually inevitable in 2020,experts within the art trade noted that it was not as bad as expected due in part to an increase in sales at the end of the year before changes in capitals gains tax were introduced.Although the new administrations polic

151、ies in relation to the arts and taxation are yet to be determined,there is some optimism that 2021 may see more stability,which may encourage greater activity by both vendors and buyers in the art market.However,it is also deemed unlikely that generous tax breaks may be directed to the very wealthy,

152、which could dampen activity at the high end.Exhibit 1 looks at some of these key tax issues in the US market in 2020.2 38 1|The Global Art Market in 2020 39 Exhibit 1:A Note on the US Art Market,Taxes,and the New Political AdministrationDiana Wierbicki,Withers,Partner and Global Head of Art Law,and

153、Sarah Verano,Withers,Art Law Associate The US Elections and Possible Federal Tax ReformsThe November 2020 US presidential election has resulted in a change of leadership.President Joe Biden and Vice President Kamala Harris both have relatively strong records of supporting the arts,and their election

154、 was greeted with enthusiasm by many in the artworld.Despite Bidens support for tax increases on the wealthy(likely to affect major art collectors),the change to the Biden/Harris leadership is also anticipated to be a stabilizing influence on both the US and international art markets.What tax reform

155、s they decide to introduce,and when,remains to be seen,and the art market is watching and waiting.At the end of 2020,leading into the November US presidential election,the possibility of a change in government encouraged a flurry of activity in the art market.While each of the US presidential candid

156、ates proposed changes to the tax code,the frontrunner,Joe Biden,proposed a reform to the capital gains rules that would be certain to impact art collectors.Under the existing rules,when a collector sells artwork owned for at least a year,any capital gains are taxed at a preferential federal collecti

157、bles rate of 28%,plus a potential additional 3.8%net investment income tax.Biden proposed eliminating this preferential rate for taxpayers with incomes over$1 million,meaning that such gains would be taxed as ordinary income.Biden also proposed raising the current ordinary federal income tax from it

158、s current rate of 37%to just under 40%.Recognizing that if Biden were to be elected,such tax reforms could be effective as of January 1,2021,some collectors rushed to complete sales of artworks with large gains before December 31,2020,to ensure they could capture the 2020 collectibles rate.solidify,

159、and the burden of sales tax compliance is only expected to increase as more states continue to adopt these regulations.As the COVID-19 pandemic has increased pressure on already-strained state budgets,tax experts are expecting a number of hold-out states,including Missouri and Florida,to finally ena

160、ct Wayfair rules to increase sales tax revenues.6 For several reasons,Florida in particular has a high volume of art transactions.Already a staple art fair location,in 2020,several galleries opened new Florida locations.Additionally,Florida has been a longtime tax-friendly location,attracting new re

161、sidents including art collectors.If Florida was to enact a Wayfair rule,it would be of particular significance to the art market.The other method states are anticipated to employ in order to increase their revenues is a step up in sales tax enforcement,which we have already seen them implement for a

162、uction transactions.7 Art dealers,therefore,may need to employ more resources to ensure compliance with sales tax withholding obligations,particularly when relying on one of the most common reasons for not collecting sales tax lack of nexus or local tax presence.US Tariffs on Photos,Prints,and Litho

163、graphs In 2019,the US imposed tariffs on various EU products,including a 25%tariff on printed books,brochures,leaflets,printed matter in single sheets,lithographs on paper or paperboard created in the last 20 years,and pictures,designs,and photographs printed in the last 20 years being imported into

164、 the US from the UK and Germany.These tariffs are set to remain in effect for the foreseeable future.In addition to capital gains tax reform,Biden proposed the elimination of the basis step-up,the mechanism which generally attributes a date-of-death fair market value basis to any assets(including ar

165、twork)held by a decedent at death.3 A common criticism of the step-up rule is that it is known to encourage a lock-in effect,discouraging taxpayers from realizing capital gains during their lifetimes because the value of those gains can be passed on,tax free,at death.This has been an invaluable esta

166、te-planning tool,minimizing the capital gains taxes due on inherited assets and has encouraged tax-sensitive collectors to favor a buy-and-hold(until death)strategy.Although it is unlikely that this proposal directly influenced many sales at the end of 2020,the elimination of this rule would certain

167、ly,in the long term,result in greater liquidity in the art market.The election of Biden and the party split in the Senate(with Vice President Kamala Harris able to cast a tie-breaking vote)will officially tip the balance of power in favor of the Democratic Party.As a result,tax reform in 2021 or 202

168、2 is an increasing possibility.4 US Sales Tax DevelopmentsIn 2018,the South Dakota v.Wayfair US Supreme Court decision gave states a green light to enact economic nexus statutes requiring out-of-state sellers to collect sales tax on sales over a certain value or volume threshold.5 Because art sales

169、often have such high values,dealers and auction houses often surpass the thresholds in a single sale and need to collect these out-of-state taxes on a regular basis,which many have noted has significantly increased their administrative burdens.Dealers obligations to collect sales tax when shipping o

170、ut-of-state continue to US Tariffs on Chinese ArtworksEffective September 1,2019,the US implemented customs tariffs of 15%on the import of Chinese artworks,defined to include all works of art,collectors pieces,and antiques.The rate was reduced to 7.5%on January 22,2020.Whether an artwork is consider

171、ed to be Chinese depends on whether it was originally created in China,not on the country from which it is being imported.Following the implementation of the tariffs,both Christies and Sothebys auction houses applied for their imports of Chinese artworks to be excluded from the tariffs,arguing that

172、charging the tariffs would be counterproductive and would result in a significant loss to their US businesses.Christies stated that the tariffs will severely impact the US art market as a whole,drying up any ability to purchase Chinese artworks outside of the United States.Punishing the US art marke

173、t in this manner flies in the face of an important American value of support for the artworld.8 In July of 2020,the US granted the exclusions sought by Christies and Sothebys for imports of Chinese artworks,however,the exclusions expired on September 1,2020.On December 29,2020,the US Trade Represent

174、ative announced the extension of certain exclusions through March 31,2021.Notably,an extension was not provided for works of art.3 https:/taxfoundation.org/joe-biden-tax-plan-2020.6 Bologna,M.and Baltz,T.(2021),“Flock of New State Taxes on E-Commerce Predicted for 2021”,Bloomberg Daily Tax Report,av

175、ailable at 4 Following the election,early Biden appointments continue to make tax reform look likely,including the appointment of Senator Elizabeth Warren,a long https:/ of wealth taxes,to the Senate Finance Committee,and the Treasury Departments hiring of several international tax specialists.7 See

176、 https:/www.manhattanda.org/d-a-vance-to-deliver-10-million-to-new-york-state-following-investigation-into-christies-auction-house/;https:/ag.ny.gov/5 South Dakota v.Wayfair,Inc.,138 U.S.2080(2018).press-release/2020/attorney-general-james-sues-sothebys-defrauding-new-york-taxpayers-out-millions.8 N

177、iquette,M.(2019),“Christies Seeks Relief from Trumps Punishing Tariffs on Art”,available at https:/ 1.5|Sales in the Major Art Markets 20092020 Arts Economics(2021)40 41 Despite a difficult start to the year,some strong auction sales in the last quarter helped boost Greater China to a position of pa

178、rity with the UK art market,and second in the global ranks.The Chinese market led the UK in the years between 2010 and 2014,but then after several years of parity,the UK had pulled ahead in 2018 and 2019,as slowing economic growth,trade wars with the US,changes in VAT policies in Mainland China and

179、political unrest in Hong Kong all fed into more cautious buying and weaker supply at the high end of the dominant auction market.In 2020,sales in Greater China declined by 12%to$10 billion,the third year of declining values,although a considerably more moderate contraction than its other major peers

180、.Sales in Greater China were 49%lower than their level a decade earlier when,at the height of its boom in 2011,values totaled$19.5 billion.However,this was followed by a sharp contraction of 30%in 2012 and a period of stagnant growth to 2016.After a short rebound in 2017,economic issues,trade wars,a

181、nd other issues led to cautious buying and selling,with declining sales for the next two years.China was the first market to feel the effects of the pandemic at the start of 2020,with the cancellation of major fairs such as Art Basel Hong Kong as early as March.Despite dealing with multiple waves of

182、 the pandemic,the Chinese market was slightly ahead in terms of a return to more normal functioning,with successful fairs held within Mainland China in the second half of the year.Values were also boosted significantly by some very high-value individual sales in the auction sector in the second half

183、 of the year,with Greater China leading the global public auction market by a considerable margin.Some experts within the trade believe this recovery was partially assisted by the resolution of VAT issues that had arisen and stymied the Chinese market in 2018 and 2019.Under VAT reforms in late 2018,

184、auction houses could only issue formal VAT invoices(Fa Paio)for the commission income they received from buyers(not the full sales price,with hammer price and premium,which was required to be issued directly by the sellers).As most vendors were private individuals,this was fraught with difficulties,

185、not just in obtaining the necessary permission and documents from the tax department to do so,but also in the process of issuance as information about buyers and sellers would need to be exchanged,which went against the current accepted practices of the auction industry in Mainland China.As a result

186、,in 2018 and 2019,without access to full invoices,some corporate and institutional buyers,who could claim the purchase price of works of art as expenses with a full invoice,reduced their activity in the auction market.From May 2020,changes in regulations allowed auction houses selling art to issue f

187、ull invoices,which may have stimulated some sales in the second half of the year.1|The Global Art Market in 2020 Billion$France UK EU US Greater China$35$30$25$20$15$10$5$0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sales in Greater China declined by 12%to$10 billion,the third year

188、of declining values 42 43 The UK retained a 20%share of the art market,stable year-on-year,although losing its 2%margin with Greater China.2020 was a very challenging year for many businesses that were forced to deal with both the impact of the pandemic alongside the economic uncertainty generated b

189、y the threat of a no-deal Brexit.Sales in the UK fell 22%to$9.9 billion,their lowest level in a decade,but still 10%above the previous recession in 2009 when they had dropped to just under$9 billion.The final Trade and Cooperation Agreement for the UKs exit from the EU was signed in December 2020,an

190、d from January 2021,imports into the UK from EU states have been subject to VAT and other charges,which has created concerns for businesses in the art market that trade with and from Europe.Imports of art and antiques were recorded by the HM Revenue and Customs(HMRC)as$2.1 billion in 2020,down one t

191、hird on 2019.Of these,87%by value were imports from outside the EU,meaning much of the higher value trade with major partners such as the US and China remains unaffected.9 While it is likely that London will retain its attractive-ness as a global hub and location for top-tier sales,with the expertis

192、e,infrastructure,and relatively trade-friendly regulatory stance required,some of the lower value,domestic EU art trade may shift outside of the UK to other EU states,with Paris likely to gain as the next largest market and base for many larger businesses in Europe.However,while there were hopes by

193、members of the French art trade that high-value trade potentially lost to London might also be diverted to Paris,this remains to be seen,with these transactions also possibly bypassing Europe altogether to the benefit of the US or China.After a positive year in 2019 when most other markets were rece

194、ding,sales in France fell 33%to an estimated$3.1 billion.Sales in most of the other mid-sized markets in Europe experienced similar double-digit declines,as sales in the EU as a whole dropped 22%to$15.9 billion(or just$5.9 billion measured without the UK market as will be the case from 2021).A signi

195、ficant issue for the art market in Europe in 2020 was the introduction of various requirements and regulations under the 5th EU Anti-Money Laundering Directive,which is implemented by national legislation.In the UK,the UK Money Laundering and Terrorist Finance Amendments Regulations became effective

196、 in January 2020.These regulations have meant that the art market has become part of the regulated sector across Europe for anti-money laundering(AML)purposes,and as such,all art market participants involved in transactions worth 10,000 or more are required to carry out satisfactory know your client

197、 and customer due diligence checks before completing transactions.While some Data is from the HMRC and covers imports of all items included in HN Code 97 works of art,collectors pieces,and antiques.Because some transactions are accounted for via the VAT margin scheme in the EU,official statistics ca

198、n underestimate intra-EU trade.Research carried out by Arts Economics on behalf of the British Art Market Federation indicated that for some of the major auction houses,consignments from EU member states accounted for up to 25%of their UK sales on average.The main dealer associations in the UK repor

199、ted that on average between 10%and 22%of dealers purchases for subsequent sale were made in the EU.These figures indicate that even accounting for under-recording,the majority of the value(75%or more)of trade into the UK is from outside the EU.businesses noted that they were already collecting much

200、of the required information,during 2020,the formal information-gathering requirements have created administrative burdens and costs for dealers in Europe,and are also being phased into the US in 2021 for antiquities dealers.(Exhibit 2 discusses some of the main issues regarding these regulations in

201、more detail.)Sales in the art market have often been relatively durable,despite issues in the wider economic and political environments,and have also reacted in very different ways to recessions that have occurred in the past.The unpredictable global landscape of 2020 presented the art trade with so

202、me of its biggest challenges to date,and has brought some fundamental changes,particularly the acceleration of the markets digital transformation.Although businesses found ways to maintain trading online,the pandemic had a profound impact on sales and some of the effects on employment and business s

203、tructures are still unfolding.While the art market is built around cross-border trade,the importance of local markets was emphasized in 2020,with sales at a more local and regional level rising for some businesses in the absence of major global events.International trade(imports and exports)of art a

204、lso diminished significantly in some of the major markets.1|The Global Art Market in 2020 However,while it is likely that travel may take some time to revive to pre-pandemic levels,international trade and cross-cultural communication and exhibition remain at the core of the global art market.Because

205、 works of art,especially at the upper levels of the market,are often not traded directly between artists and collectors,the comparative advantages of different markets are not based on which regions can produce the best art,but on which markets allow an efficient and cost-effective interaction betwe

206、en buyers and sellers.Such sales could,in principle,take place anywhere,which is why the political and regulatory environment plays an even more important role for comparative advantage in the art market than it does for trade in other goods.Those markets that maintain a healthy flow of cross-border

207、 sales are therefore still likely to see the most positive future growth scenarios.9 44 45 Exhibit 2:The Anti-Money Laundering Difference:Knowing the Ultimate Customer 1|The Global Art Market in 2020 Rena Neville,Founder and Director,Corinth Consulting Ltd.In 2019 and 2020,one of the biggest changes

208、 to the regulatory structure of the global art market was the implementation of the EUs 5th Anti-Money Laundering Directive(5AMLD),particularly in the UK,as the first of the major international art markets to be formally regulated.The full impact of the Directive is still unfolding,in part because t

209、he UK postponed the registration deadline for the art market to June 2021(from the initial January deadline).Some have confused delayed registration with delayed application of the new law,however,5AMLD has,in fact,been in effect since January 2020.Given the delay and the confusion over 5AMLD,it wou

210、ld be premature to assess its full impact,but certain challenges are already apparent.Both the domestic UK art market and its international peers are struggling most with the Know Your Customer aspects of the Customer Due Diligence(CDD)requirements under 5AMLD.As applied in the UK,art market partici

211、pants are obliged to lift the veil of anonymity and uncover the identities of the ultimate beneficial owner involved in transactions.The Know Your Customer rules are most challenging for many galleries and dealers as they strike at the core of the selling relationship.Although still burdensome,other

212、 aspects of the new law are relatively less difficult to endure.These include routine compliance obligations such as:conducting a risk assessment;implementing policies,procedures,and a training program that addresses the identified risks;appointing a Money Laundering Reporting Officer who is adequat

213、ely supported;and monitoring the program and keeping relevant records.These obligations are not directly intrusive to the dealer client relationship,however,they have added burdens in both direct costs and time.In a year when sales in the market were down by more than 20%,some of these costs,such as

214、 the 5,000 to set up the anti-money laundering function,have been particularly burdensome,particularly on some smaller businesses.Additional hidden costs include staff training,program administration,and management time,as well as a need potentially for upgraded data systems to better track and retr

215、ieve relevant information for government audits.However,in contrast to these relatively minor issues,the most intrusive and costly in terms of possibly lost,legitimate business are the Know Your Customer duties.Knowing,in the anti-money laundering sense,may be divided into three parts,all of which n

216、eed to be completed before any payment is accepted by a dealer:does the transaction make sense given the deal structure,who the buyer is and their wealth;the need to obtain proof of the ultimate buyers identity;and finally,to verify that identity.To determine whether a transaction makes sense,the UK

217、 applies a risk-based approach to uncover anything problematic,unusual,or suspicious.Aspects of a risk-based approach might include whether the person is on any sanctions or terrorist lists,are they a politically exposed person(involved with,or a close relative of,a government official),is their sou

218、rce of wealth readily known or easily ascertained,is the amount of their potential purchase consistent with their means,do the locations of their work,residence,and bank make sense and are they located in a high-risk jurisdiction for money laundering,as defined by the EU.General,internet adverse med

219、ia checks as well as paid search services help uncover publicly available facts that may indicate these risks.Moving to the next steps and assuming a simple sale to a private individual,the dealer must also obtain proof of the individuals identity that they need to then verify.The proof is often an

220、official,government-issued document that is in date and contains a photograph and the date of birth(with the standard being a valid passport or drivers license).The next CDD step is verification in two parts ideally seeing the document and the person together to confirm the likeness,and verifying th

221、e residential address in the form of a bill dated within the last three months,such as a utility,tax,or phone statement.Some dealers fear that certain serious collectors or particularly well-known individuals and celebrities may be reluctant to show a passport or drivers license,to say nothing of pr

222、oducing a recent utility bill.Even if they do not mind in principle,securing this information risks diminishing a clients impulse to purchase.In contrast to the art market,when the same high net worth client buys a 10,000 outfit,they need only produce a credit card and are free to leave the shop wit

223、h their purchase.CDD becomes yet more challenging when a buyer has an art advisor and the ultimate client/purchaser is a company of which the buyer is the sole shareholder,known in AML circles as the ultimate beneficial owner or UBO.In this scenario,the art advisor must provide to the seller dealer

224、proof of CDD on themselves and their authority to act as an agent,as well as disclosing the identity of their ultimate client,in this case the sole shareholder of the corporation.In guidance for the UK art market approved by Her Majestys Treasury,the dealer may rely on the agents CDD,if the agent th

225、emself is regulated.However,in reality,the ultimate clients identity still needs to be disclosed,even if not immediately,within the supporting identification and verification documents.The agent must confirm to the dealer the CDD steps they have taken to satisfy themselves about their client,and a g

226、eneric statement will not do.This disclosure of the ultimate client is problematic for each party the dealer,the agent,and the client.It is problematic for the dealer as it remains liable for criminal fines and imprisonment if there is a problem with the ultimate clients CDD.For competitive reasons,

227、the agent has no interest in disclosing the name of their client,and the client may be working with an agent precisely to remain anonymous.This scenario is exponentially more difficult if the agent and the client are in the US or in other regions that are not yet covered by a local anti-money launde

228、ring regime.In this case,the UK dealer may not rely on the US agents due diligence but should secure the CDD information for themselves,which presents one of the most problematic scenarios and one not uncommon particularly at the higher end of the sector.This uneven playing field for the many US/UK

229、transactions that occur appears to be a relatively short-term discrepancy,as the US is aggressively enhancing its own efforts to expand money laundering regulations to include the entire US fine art market.The US government is not only actively urging that its domestic art market adopt a risk-based

230、approach to AML compliance,but the Federal Government has already decided to regulate the antiquities market and is conducting a study in 2021 to decide whether 46 47 to extend AML regulation under the US Bank Secrecy Act to the broader art market.The most recent event that drew the attention of the

231、 US Government to the art market was an investigation launched by the US Senate with findings published in 2020,in part triggered by ineffective sanctions imposed after Russias annexation of the Crimea in 2014.In response to the February 2014 Russian annexation of the Crimea,the US imposed sanctions

232、 and added certain Russians to their Specially Designated Nationals And Blocked Persons List(SDNs).In March 2014,the brothers Arcady and Boris Rotenberg were placed on the SDN List but still managed to conduct a successful buying spree between March and November 2014.They reportedly purchased art wo

233、rks worth$18 million at auction houses and through private sales in New York via shell companies that the US contends were funded or owned by the ultimate beneficial owners,the Rotenbergs.10 The US Senate report of July 2020 disclosed that the Rotenbergs bidding and buying agent was a US citizen in

234、Moscow,who paid for the purchases with funds received from shell companies that were purportedly traced to the Rotenbergs.Sothebys and Christies were aware of the sanctions against the Rotenbergs but did not dig deeply enough to uncover the ultimate beneficial owners,that is,the ones who actually pa

235、id for the purchases.Arguably,had the US art market been regulated under a similar risk-based approach as the UK,knowledge of the ultimate buyers would have been discovered,the transactions not concluded,and the sanctions would have been effective.1|The Global Art Market in 2020 Leading on from the

236、investigation,in October 2020,the US Department issued an advisory note that strongly recommends that the US art trade adopts a risk-based approach to AML compliance.This is a worst-case scenario for the US art trade because AML compliance is simply recommended,not legally required.Whereas the UK tr

237、ade at least has the excuse when they ask clients for their passports and utility bills that,it is not me,its the law,I trust you,US dealers do not have the luxury of hiding behind the law in this way.On January 1,2021,as part of the National Defense Authorization Act,the US Congress extended to the

238、 antiquities market the client disclosure requirements under the US Bank Secrecy Act.Perhaps more importantly for the contemporary and fine art markets,in the same legislation,the US Congress directed a report to be conducted to ascertain whether the US Bank Secrecy Act should be extended to the bro

239、ader US art market.It would seem more likely than not that the disclosure requirements will soon also be required in the US,potentially as early as 2022.With the threat of further regulation in the US,there is little doubt that 2021 will be yet another challenging year.However,if the changes ultimat

240、ely result in consistency across the UK and US art markets,it would at least become a more level playing field between these two markets,leaving China then as the next frontier.5th EU Anti-Money Laundering Directive:Key ComponentsWho is an art market participant?Art market participants include aucti

241、oneers,dealers,and art advisors transacting in a single or series of linked transactions of a work of art valued at 10,000 or more,as well as operators of freeports that store works of art for a person or series of persons valued at 10,000 or more.What constitutes a work of art?Work of Art is not de

242、fined in the 5AMLD,so it is to be applied as defined by each of the EU member states.For example,the UK has applied its pre-existing definition of art as set out in the Value Added Tax Act of 1994,Section 21(6).It is critical to check local definitions.When did 5AMLD become applicable?Under the 5AML

243、D,each member state was to implement the Directive by January 10,2020.Of the current EU member states,one member state has failed to communicate any transposition measure and eight have communicated only partial transposition measures.Is 5AMLD limited to new clients or does it also apply to existing

244、 clients?5AMLD applies to all new clients as of January 10,2020,as well as previously existing clients.Customer Due Diligence must be done for all transactions post January 10,2020 before a transaction is completed.For previously existing clients,CDD must be done at certain prescribed times,such as

245、when applying a risk-based approach to an existing client or if a clients circumstances change.Were there any prior laws affecting the art market and anti-money laundering?Yes,in different ways in different countries.For example,in the UK,the Proceeds of Crime Act 2002 and the anti-bribery and anti-

246、corruption laws have generally applied to any suspicions of money laundering or dealings in stolen goods.The 5AMLD builds on these more general obligations to make art market participants specifically regulated entities.10 See Dawkins,D.(2020)Putins Billionaire Judo Buddy Accused Of Buying Art To La

247、under Money Despite US Sanctions,available at Sales 50 51 Key Findings Dealer Sales 1.The fallout from the COVID-19 crisis had a negative effect on dealer sales,with aggregate values declining by 20%to an estimated$29.3 billion in 2020,after a marginal increase of 2%in 2019.2.A survey of the dealer

248、sector at the end of 2020 revealed an average year-on-year decline in sales of 23%.The most significant average annual declines were reported by dealers with turnover greater than$10 million,at 31%.3.The ability to reduce major operating costs allowed some dealers to maintain profitability in 2020:2

249、8%were more profitable than in 2019 and 18%maintained a stable level of net profit.4.Almost half(48%)of dealers surveyed accessed loans for their businesses over 2020,with 68%of those availing of government lending or other repayable credit.2|Dealer Sales 5.The size of dealers client bases shrank ov

250、er 2020,with an average of 55 individual clients,down from 64 in 2019.6.Dealers top priorities shifted markedly over 2020 to focus on existing clients,online sales,and finding ways to cut costs.Client relationships,online sales,and art fairs were their top priorities looking ahead to 2021.7.The majo

251、rity of dealers(58%)expected an improvement in sales in 2021,while 27%predicted they would be stagnant and 15%expected them to decline further.52 53 2.1|Dealers Surveyed in 2020 While the dealer sector has been one of the most resilient parts of the market in recent years,the COVID-19 pandemic and t

252、he unpredictable environment it created presented businesses with significant challenges in 2020.Although many businesses continued making sales throughout the year,including those at the high end of the market,the fallout from this crisis had a negative effect on aggregate sales,with values declini

253、ng by 20%to$29.3 billion in 2020,after a marginal increase of just over 2%in 2019.The effects of the crisis were also not evenly distributed within the sector,with dealers in different regions and value segments faring very differently,including a minority who experienced an increase in sales.Some b

254、usinesses closed,and the extent to which others will survive over the coming years is still to be determined.However,a notable development in 2020 was that some dealers managed to maintain and even enhance profitability with costs also decreasing one of the more striking outcomes during the year.Pri

255、or to 2020,this sector tended to be a top-heavy,winner-take-all market,with businesses at the higher value end tending to show stronger growth in sales in most years than small and mid-sized businesses.One of the biggest concerns in 2020 was that the pandemic and resulting economic crisis could inte

256、nsify this polarized framework,accelerating the decline of smaller businesses and strengthening the position of the biggest dealers that might have more financial leeway and whose buyers might also enjoy a greater degree of insulation from the cultural and economic traumas of COVID-19.Although the l

257、onger-term effects of the pandemic are still unfolding,the sales results for the year indicated that some of the largest galleries were among those experiencing the most significant declines in sales.However,businesses at all levels were forced to review their strategies in the face of changed consu

258、mer behaviors and new economic realities,and the pandemic has brought structural change to the sector that may extend well beyond 2021.The results presented in this chapter focus on the core dealer sector,consisting of businesses trading in fine art,decorative art,antiques,and antiquities.The detail

259、s of gallery and dealer sales are private,and there is limited current and publicly available data on turnover and other aspects of their businesses.To research the sector,surveys are a critical tool.Arts Economics conducted a series of two surveys of the sector in 2020.11 The first survey in July f

260、ocused only on contemporary and Modern art galleries(with 795 responses),and then a more comprehensive survey of all sectors was carried out at the end of the year.This survey,conducted in December 2020,forms the basis of much of this chapter,with 920 responses used in the analysis that follows.12 1

261、1 These surveys were conducted in collaboration with Taylor Whitten-Brown,Department of Sociology,Duke University.12 The surveys were supplemented with interviews with dealers in different sectors and regions to provide deeper insights into some key trends.More information on the dealer survey and s

262、ources used in the report is given in the Appendix.The dealers surveyed were geographically diverse,covering over 55 different national markets.The highest share came from Europe(54%),and within Europe,one third of the sample was from the UK and France.Dealers from North America accounted for 20%of

263、the surveys respondents,with 18%from the US,while 15%were from Asia,including 9%from Greater China.Most of the dealers surveyed(95%)reported that they currently operated from a physical premises or gallery,and of those,94%reported physical locations in just one location or market.A small share of re

264、spondents(6%)maintained physical premises in two or more different national locations,with 2%operating out of three or more.The survey covered all sectors of the art and antiques market,although respondents were predominantly fine art dealers(90%),with 10%operating in decorative art and antiques.Alm

265、ost 70%of the sample dealt in contemporary art,either alone or with another sector such as Modern art.The global dealer sector is made up of an estimated 291,000 businesses covering both the primary and secondary markets,the vast majority of which are small and micro-sized businesses,both in terms o

266、f headcount and sales turnover.As the survey sample was drawn from dealers that are members of dealer and gallery associations or who participate 2|Dealer Sales Figure 2.1|Annual Sales Turnover of Survey Respondents in 2020 Arts Economics(2021)Under$250k 38%$1m$5m 24%$5m$10m 6%$500k$1m 13%$250k$500k

267、 13%Over$10m 6%in art fairs,the respondents were,for the most part,more established businesses,and the survey omits very many small businesses and sole traders.Respondents still varied in the size of their annual sales turnover:64%had annual sales of less than$1 million(including 38%with less than$2

268、50,000),and just 6%reported sales in excess of$10 million(compared to 9%in the global dealer survey conducted in 2019).The breakdown of sales in 2020 is provided in Figure 2.1.Figure 2.2|Number of Years in Business Arts Economics(2021)Figure 2.3|Gallery Operating Restrictions and Measures in Decembe

269、r 2020 Arts Economics(2021)54 55 Share of respondents 35%29%30%25%23%20%17%15%11%10%10%5%5%5%0%Under 5 years 510 years 1120 years 2130 years 3140 years 4150 years Over 50 years As the sample was drawn from associations and art fairs,most responding dealers were also relatively well established in te

270、rms of their tenure of operation.13 The majority had been in business for longer than 10 years,with an average of 21 years and median of 16 years.(This average was down slightly from the average number of years in business for the dealers surveyed in 2019 at 23 years and 25 years reported in 2018).O

271、nly 10%of the respondents in 2020 had been in operation for less than five years.To put this in context with other industries,67%of dealers had been in business for more than 10 years(from 63%in 2019)versus a share of 42%for US retail businesses,38%for businesses in the arts and entertainment indust

272、ries,and 37%for the US private sector generally in 2020.The share of businesses surviving after 20 years in US retail was just 27%(20%in the arts,21%in the private sector)versus 38%of the dealers surveyed.14 This indicates greater longevity in the dealer sector compared to some other industries.13 T

273、he survey was distributed by various national dealer associations,including CINOA,the ADAA,SLAD,CPGA,FEAGA and others,as well as to Art Basel exhibitors.These associations and art fairs require vetting and entry criteria and it is therefore more likely that the dealers surveyed had been open and est

274、ablished for at least one or more years.14 Industry data is from the US Bureau of Labor Statistics extracted in January 2021.The 10-year data applies to the share of businesses still open in March 2020 that were opened in March 2011,and 20-year is the share of businesses still open in March 2020 tha

275、t were opened in March 2001.2|Dealer Sales Share of respondents 100%91%70%48%34%9%7%7%3%80%60%40%20%0%Social/physical PPE and Appointment-Reduced distancing sanitation only hours When the survey was conducted in December 2020,5%of the dealers responding did not currently operate a physical gallery o

276、r premises.Of those that did,87%were open for business,with 16%of those reporting that they were open and running normally or in the same manner as they had in previous years.The majority of the sample(67%),however,were open but operating under restrictions,new conditions,or safety measures implemen

277、ted for visitors and staff.Partial Extended Others Online selling opening hours only The most common measures implemented in response to COVID-19 related to social and physical distancing(91%of open galleries),which included limiting visitor capacity,changing the gallery layout,and alterations to st

278、aff scheduling,including remote work and shift work.Personal protective equipment(PPE)for staff and visitors and personal and other sanitation measures were also used by a majority(70%)of respondents.56 Just over one third of dealers reported reducing their opening hours,although 7%extended them to

279、allow greater social distancing and make up for the reduced flow of visitors during any period.Other measures of precaution included temperature checks for staff and visitors,the cancellation of all openings and events,and the use of contact tracing protocols and apps for visitors.Of the 13%of deale

280、rs who reported that their galleries or premises were closed at the time of the survey,66%were based in Europe and 15%from North America.The majority(67%)of those galleries that were closed had done so due to government regulations or guidelines,while 15%had chosen to remain temporarily closed due t

281、o safety or COVID-19 related concerns.Of the remainder,13%were closed for reasons unrelated to the pandemic,including temporary closures for renovations,seasonal breaks,and exhibition-related factors,as well as permanent closures due to changing locations for the gallery.Five percent of those that h

282、ad closed(or 1%of the aggregate sample)reported that they had closed permanently,citing difficulties meeting overheads and the financial implications of the cancellation of art fairs on their businesses as some of the primary reasons for closing.This share of closures is likely to be conservative re

283、lative to the sector in 2020,as businesses that had closed were less likely to receive and respond to the survey.The issues of business closures and the effect of the pandemic on employment in the dealer sector is discussed in Chapter 7.1%of the dealers surveyed had closed permanently,citing difficu

284、lties meeting overheads and the financial implications of the cancellation of art fairs as some of the primary reasons for closing Figure 2.4|Average Changes in Year-on-Year Turnover by Dealer Turnover Segment 20192020 Arts Economics(2021)58 59 2.2|Dealer Sales After a relatively stable year in 2019

285、,sales in the dealer sector came under significant pressure in 2020.The sector was uniquely vulnerable to the impact of the COVID-19 crisis as it is primarily based on discretionary spending and strongly dependent on travel and in-person contact.While many businesses managed to maintain sales throug

286、hout the year,the value of these sales declined significantly.By mid-year,83%of the contemporary and Modern galleries surveyed in July had reported a decline in the value of their sales,with an average loss of 36%in value.By the end of 2020,across all sectors,the dealers surveyed reported an average

287、 year-on-year decline of 23%.The poorest performing segments of the market for the last four years have been those dealers at the lower end,particularly businesses with annual turnover less than$250,000.In 2020,all segments saw a drop in value,however,some businesses with lower turnover reported a l

288、ess steep decline year-on-year than those at the higher end of the market.The most significant average annual declines were reported by dealers with turnover greater than$5 million,with those over$10 million showing the largest overall losses(31%).15 There were some notable differences between regio

289、ns.In the first half of the year,Asian dealers reported a higher-than-average decline,being among the first businesses to experience the initial lockdowns brought about by the pandemic in Mainland China and surrounding regions.However,they fared better in the second half of the year,with the average

290、 overall decline reported by Asian respondents for the full year of 11%(and a drop of 8%in Greater China versus 55%in the first half of the year).US respondents also fared better than some other regions,with an average decline of 11%,while dealers in markets within Africa dropped 18%.Some of the sha

291、rpest reported annual declines in sales were from dealers in Europe.As a whole,respondents from the region reported an average decline of 28%,with those from the UK and France reporting a fall in sales of 24%and 32%respectively.15 As many dealers had significant alterations in turnover during 2020,t

292、he segments used to classify the market in Figure 2.4 and throughout the chapter are based on the dealers reported turnover in 2019.2|Dealer Sales Change in annual sales Under$250k$250k$500k$500k$1m$1m$5m$5m$10m Over$10m 0%5%10%15%20%25%30%35%31%29%23%23%26%19%The most significant average annual dec

293、lines were reported by dealers with turnover greater than$5 million Figure 2.5|Average Changes in Year-on-Year Turnover by Dealer Sector 20192020 Arts Economics(2021)Figure 2.6|Volume of Sales by Price Bracket in 2019 versus 2020 Arts Economics(2021)33%32%20%60 61 Change in annual sales Contemporary

294、 0%Contemporary and others Modern Decorative art,antiques,and antiquities Older fine art 10%20%30%28%40%39%50%Dealers working in the contemporary art market tended to fare better than others,with a decline of 20%,versus a 39%average drop in sales for businesses operating in older sectors of the mark

295、et such as Old Masters and Impressionism.Dealers in decorative art,antiques,and antiquities markets also reported a higher-than-average decline of 33%.Dealers operating solely in the Modern art sector experienced an aggregate fall in sales values of just less than one third,slightly worse off than t

296、heir peers who mixed contemporary and Modern art(with a 29%loss).However,performance within these sectors varied significantly,including a minority of businesses in nearly all sectors that saw a boost in sales despite the crisis.The volume of dealers sales also fell in 2020,with an estimated drop in

297、 the median number of works sold from 55 in 2019 to 34 in 2020.It is notable,however,that overall,the share of the volume of sales in different price brackets was relatively unchanged on 2019,with most works selling for less than$50,000(82%in 2020)and only 1%for over$1 million(versus 2%in 2019).2|De

298、aler Sales Share of works sold 2019 2020 50%47%40%30%20%10%0%37%9%5%2%42%41%12%4%1%Under$5k$5k$50k$50k$250k$250k$1m Over$1m The volume of sales fell in 2020,with an estimated drop in the median number of works sold from 55 in 2019 to 34 in 2020 Figure 2.7|Dealers Outlook on Future Sales in 2021 Arts

299、 Economics(2021)Arts Economics(2021)55%54%60%65%60%81%54%65%61%55%55%53%60%64%62 63 a.Share of Dealers by Turnover Segment 100%80%60%40%20%0%Under$250k$250k$500k When dealers were asked at the end of 2019 about the year ahead,most had been optimistic,with 75%predicting stable or better sales in 2020

300、.None could have anticipated the crisis that was to come.The COVID-19 pandemic has been a significant economic challenge to dealers around the world,as it has to millions of small businesses in other industries.Dealers were particularly vulnerable in this crisis due to the nature of their operations

301、,and some were Lower Same Higher 25%15%26%9%33%27%30%18%13%10%$500k$1m$1m$10m Over$10m already at risk financially before the crisis began.When surveyed mid-year in 2020,contemporary and Modern art dealers had a generally pessimistic outlook:79%of those surveyed thought overall 2020 sales would be l

302、ower than 2019 and,of those,58%felt they would be significantly lower.This turned out to be an accurate prediction of the year,as the end-of-year survey indicated that 74%of dealers experienced a drop in sales(including nearly half of the sample seeing a decline of one third of their turnover or mor

303、e).b.Share of Dealers by Region 100%80%60%40%20%0%US UK Greater France China Looking forward to the year to come in 2021,the majority of dealers surveyed expected an improvement in sales:58%expected an improvement in sales in 2021,including 16%predicting a significant improvement;27%expected sales t

304、o be about the same as in 2020;and 15%expected sales to decrease.2|Dealer Sales Lower Same Higher 37%10%15%4%27%9%19%21%27%30%18%26%27%24%21%18%10%9%Europe Asia South America Africa Oceania Although this shows a much more optimistic picture than the mid-year survey,it indicates that a significant 42

305、%of dealers still expect sales to be stagnant or worse in the coming year.Given 2020 was a relative low point for many businesses,this reveals continuing pressures in some parts of the market.64 A majority of dealers at all levels of turnover expected sales to improve,but the largest businesses,who

306、had the most significant sales declines in 2020,were the most optimistic about 2021.(65%of dealers with turnover greater than$10 million expected an increase in sales in 2021.)Those in the ranges from$500,000 to$1 million and$1 million to$10 million were slightly less optimistic.Anecdotally,these de

307、alers also reported concerns over the viability of art fairs in their traditional form in 2021 and the effect this might continue to have on their businesses given their reliance on fairs to generate sales,particularly to new buyers.Regionally,some of the lowest levels of optimism came from dealers

308、in mid-sized European markets,including only 35%of German and 47%of Spanish dealers who were hopeful that sales might increase in 2021.However,UK dealers reported a higher-than-average majority,with 65%expressing optimism about the year ahead,buoying sentiment in Europe overall.A similar pattern was

309、 reflected in Asia where dealers in the largest Chinese market were the most optimistic in the region.Measured without Greater China,just under half(46%)of Asian dealers expected an increase in sales in 2021.A significant number of dealers in the largest art market(the US)also thought sales would no

310、t recover quickly in 2021,with 47%predicting stable or declining values.Again,anecdotally,while many believed they had managed to get through the year relatively well in consideration of the circumstances,they voiced concerns that sales might continue to decline due to the cancelling of events and e

311、xhibitions until at least the second half of the year or further ahead.Dealers concerns about sales at art fairs in 2021 are discussed in more detail in Chapter 4.65%of dealers with turnover greater than$10 million expected an increase in sales in 2021 Figure 2.8|Share of Total Costs for Dealers in

312、2019 versus 2020 Arts Economics(2021)66 67 7%6%4%11%2.3|Dealer Margins As sales contracted in 2020,many dealers were keenly focused on controlling costs and how to maintain viability through reducing their outlays.Even in 2019,dealers relayed concerns over the pressure that escalating costs were hav

313、ing on their margins,particularly in relation to art fair participation,but also business overheads,including increasing rents in some key markets such as New York.These rising costs(combined with often variable sales)had put many businesses under financial strain.This was often compounded by poor a

314、ccess to any external financing.Although the reduction of art fairs resulted in a substantial financial loss for many dealers,some noted that by reducing the costs associated with travel and exhibiting at fairs,they were able to maintain profitability despite the drop in sales.In 2019,art fair expen

315、ses were reported as having been the largest component of total operating costs for businesses,accounting for 26%on average higher than both payroll and rent.These were reduced to just 16%in 2020(and were reported as zero for nearly 30%of the sample).The costs of work-related travel also fell from 7

316、%to 4%.16 The survey of galleries in July 2020 revealed that the most common forms of COVID-19 support that galleries reported accessing were grants,subsidies,or other emergency funds provided by governments.Income support for employees or the self-employed were widely used as well as rent freezes,r

317、eductions,or deferments.See Arts Economics(2020)The Impact of COVID-19 on the Gallery Sector,available at and rent were noted as a key concern for dealers,and accounted for around half of their operating costs.Some dealers were able to access government supports for payroll,rent,and other overheads,

318、allowing them to stabilize these costs.However,most of this support was available only for a limited period and many schemes had been phased out by the end of 2020,leaving some dealers in precarious financial circumstances.Some businesses noted that while they and their peers had survived in 2020,th

319、ere were concerns that more businesses may close in the coming years,as government support dwindles and economic conditions remain difficult.16 2|Dealer Sales Share of costs 2019 2020 30%25%20%15%10%5%0%27%26%25%24%23%17%16%14%Rent and Payroll Art fairs Travel IT Others mortgage As sales contracted

320、in 2020,many dealers were keenly focused on controlling costs and how to maintain viability through reducing their outlays Figure 2.9|Debt Ratios in the Dealer Sector Arts Economics(2021)68 2|Dealer Sales 69 Previous surveys have consistently shown that there is a lack of credit and lending in the d

321、ealer sector.Although this means that businesses are often not burdened with excessive debts(or have low financial risk),it also means that many are unable to access credit,business loans,or facilities such as overdrafts that would help them through difficult periods.In many markets,government loans

322、 were made available during 2020.However,in practice,some dealers were reluctant to take on extra debt at a time when revenues were low and uncertain.When asked if they had accessed any loans or external credit for their business during 2020,just over half of the respondents(52%)said they had not.(M

323、ost of these had not tried to access credit or loans,although a small share of 4%had tried but were not able to.)The majority of dealers that did secure external credit for their businesses took up loans from governments made available due to the pandemic.From those dealers that accessed lending(48%

324、of respondents):68%accessed government lending or other repayable credit;18%accessed loans or credit from a bank or other private lending institution;10%accessed loans or other repayable credit from personal or private sources;1%received loans or financial assistance from non-governmental organizati

325、ons such as an art association or non-profit foundation;and 3%received support from some other type of external funding or lender.Dealers were asked how changes in their lending may have altered their companys debt ratio.17 The majority of dealers(55%)had maintained a debt ratio of less than 10%in 2

326、020,down by just 3%on the share reported in 2019.The number of dealers with debt of between 31%and 50%did rise to 12%(versus half that share in 2019),although Figure 2.9b still indicates a sector with relatively low leverage in 2020.18 As a point of comparison,most second-tier auction houses surveye

327、d in 2020 had a similarly low level of debt,with 77%reporting debt ratios less than 10%and 84%less than 30%,indicating that,apart from a minority of businesses,lending and debt was relatively low in the art market.19 In most years,low lending in the dealer sector is due in part to a lack of access t

328、o credit.However,in 2020,with most governments extending credit at relatively low interest rates,risk aversion and a lack of certainty about their future sales is likely to have been the biggest deterrent for businesses against taking on greater leverage.17 Debt ratio in this context describes a com

329、panys debt and liabilities versus its assets(sales and stock).It can be interpreted as the proportion of the companys assets that are financed by debt and is therefore also an indicator of their financial risk.18 The debt-to-equity ratio in general retail industries in the US in 2020 averaged 24%(or

330、 32%adjusted for leases)and 39%for special lines of retail(or an adjusted 71%).These ratios are defined differently from those in the survey but are useful for benchmarking.These market debt-to-equity ratios are estimated using the aggregated value of debt divided by the sum of equity(or market capi

331、talization),and the data was supplied in December 2020 courtesy of Aswath Damodaran,Stern School of Business at New York University.19 The survey of second-tier auction houses is discussed in Chapter 3.a.2019 b.2020 Over 70%51%70%Over 70%51%70%3%3%1%5%31%50%31%50%6%12%0%10%11%30%55%28%11%30%0%10%29%

332、58%48%of dealers secured external credit for their businesses in 2020,with 68%of those accessing government lending or other repayable credit Figure 2.10|Change in(Net)Profitability in 2019 versus 2020 Arts Economics(2021)Arts Economics(2021)24%29%38%31%28%28%70 71 a.Share of Dealers by Turnover Les

333、s profitable Same More profitable 100%80%60%40%20%0%18%54%11%58%22%17%23%12%55%54%50%48%All dealers Under$250k$250k$500k$500k$1m$1m$10m Over$10m 54%of dealers reported that they were less profitable in 2020 than in 2019,18%maintained a stable level of net profit and 28%were more profitable 2|Dealer Sales b.Share of Dealers by Region Less profitable Same More profitable 100%80%60%40%20%0%US Asia Gr