The Global Art Market - What Will the World Look Like in 2030 According to the Citi Report

November 17, 2015

Have you ever wandered what will world look like in, say, 15 years? If you have some special skills, like predicting the future, you already know what will happen, and you'll find this article quite uninteresting - just be sure to contact the editorial staff of WideWalls right away, we have something important to ask you. For the rest of the future-blind world, it is always interesting when someone credible, learned and professional engages in speculations on the future of, in this case, the global art market. Yes, Citi, one of the world's largest financial institutions, has issued its report called The Global Art Market - Perspectives on Current Drivers and Future Trends, and we are highlighting some excerpts, so you could also find out what the future holds.

citi art market report
The geography of the art market in 2000 and 2014

The Geography of the Art Market

According to Citi experts, there were two major factors for the incredible growth of the art market since the year 2000: the one is China, and the other is the outperformance of top prices. Since 2000, the global art market has grown the staggering 13 percent per year. Consider just the global auction market for fine art: at the beginning of 2000's it was worth $3 billion; in 2014 it was worth $16.1 billion, more than five times larger, with one of the biggest and deepest global recessions in almost a hundred years, that happened in the middle of this period. Of those 450 percent of increase between 2000 and 2014, China is "responsible" for one third. The growth of the world's GDP during these 15 years was much smaller, with 3.5 percent per year (the exports were higher with 8.1 percent growth, but that's still way bellow the growth of the art market). Let's look at the geography of the art market. In year 2000, more than half of auction sales in value (in dollars) took place in the United States (look at the graph The geography of the art market in 2000 and 2014), and more than half at the United Kingdom. This duopoly had more than 80 percent of global auction market in 2000.

citi art market report
Contributions to sales growth 2000-2014

Chinese Art Market and its Characteristics

And what about China? Nowhere on the map. Or, to be correct, China was on the map, or, on the graph in this case, but more as a statistical anomaly, then as a forceful dragon. And then, we come to the year 2014. And look at China! Today, it has more than one quarter of global sales. In 2014, the United States, China and the United Kingdom together had around 85 percent share of global art market, so, duopoly has become a triumvirate. While China exploded in these 15 years, 17 of 29 countries that had auction sales in 2000, have experienced a decline in market share, including the United States that had the biggest absolute decline with almost 20 percent loss of the global art market share. China had achieved this with several characteristics of its art market that are pretty unique and different from characteristics of other, developed markets. In China, almost 70 percent of the art market consist of public auctions (the secondary market), opposed to the much bigger primary market in developed markets (gallery sales). Also, in the United States so called individuals of high net worth (HNW) hold around 9 percent of their wealth in art and antiques; this number is around 7 percent in the United Kingdom, while in China, because of the local regulations and not so many options for local investors, this number is around 17 percent.

citi art market report
Auction sales in China 2004-2014

The Peak has Passed

Now, let's look at the future. The two main factors of growth, as we've already mentioned, were the rise of China and the outperperformance of top prices. The average price for fine art at auction went from $26,578 in 2000 to $49,234 in 2014. That price growth was particularly important and visible for the developed markets, since the growth in China was accounted by astonishing growth of numbers of artists sold at auction and offered lots per artist, as well as the simply superb growth of the number of auction houses - from 1 dominant house to 66 in 2014. But, according to Citi's specialist, China's spectacular growth has peaked, and it will not continue, at least not at this pace. Also, they think that there has to be a limit to be reached regarding ever-growing prices, so, these two factors could lead to subtraction of one third of the annual growth: global growth, in this forecast, would be around 9 percent, instead of today's 13. Citi's experts say that it appears that China has reached its long term equilibrium size in the global art market.

citi art market report
The global art market in 2030 - three cases

Three Possibilities of the Future

So, when we look at some possibilities of further development of the art market, Citi's experts offer three options. If Chinese art market continues to grow this way, by the year 2030, China will have 99 percent of the global art market share - the growth of other big markets, the US, the UK, France and Germany will be too slow to catch up (around 3-8 percent growth annually). This case will also mean that the art market is going to grow at staggering 47.6 percent annually (Compound Annual Growth Rate, or CAGR). The second case is if we assume that the number of lots sold in China will from now on grow at the pace of the world's historical growth, with other countries continuing to grow at current pace. This way, the global art market will grow at about 11 percent per year, while at case number 3, this growth will be around 9 percent. In case number 2, almost nothing will change in terms of market shares of the US, China, UK and France, while in case number 3, the UK's market share will shrink significantly, some not mentioned countries will grow, while China and the US will stay at around same levels. So, there you have it! Future for free!

Please, read the rest of this extraordinary art report here - you'll find a lot of highly interesting and important information on the art market.

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Featured image: Pixar Planet. All other images courtesy are from Citi's report The Global Art Market - Perspectives on Current Drivers and Future Trends.