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85Tables and FiguresOnline SalesFigure 6.10 Global Personal Luxury Goods Market and Share of Chinese Buying 291Figure 6.11 Share of Assets Purchased in the Last Two Years 297Figure 6.12 Spending on Works of Art / Objects in the Last Two Years 298Figure 6.13 Number of Works of Art / Objects in Collections in 2017 299Figure 6.14 Preferred Sales Channels for Art and Objects 301Figure 6.15 Share of Collection Financed Through Credit or Loaned Funds 302Figure 6.16 Ranking of Considerations When Purchasing Art 304Figure 6.17 Resale Period for Works of Art Sold from Collections 305Figure 6.18 Average Number of Buyers by Dealers’ Sales Turnover in 2016 and 2017 309Figure 6.19 Share of Dealers’ Buyers by Purchase History 310Figure 6.20 Market Share of Sales by Buyer Group in 2017 312Figure 6.21 Most Important Nationalities of Buyers for Dealers in 2017 315Table 5.1 Website Metrics: Selected E-Commerce Companies in 2017 254Figure 5.1Figure 5.2Figure 5.3Figure 5.4Figure 5.5Figure 5.66 Sales in the Online Art and Antiques Market 231 Annual Growth in Online Sales: Art and Antiques Versus General Retail 231 Share of Online Sales (via Invaluable) by Auction House Turnover Level 237 Share of Online Sales (via Invaluable) by Turnover Level 2014 Versus 2017 238 Share of Online Sales 2015–2017 (via the-saleroom.com) 239 Dealers’ Views on Online Sales Over the Next Five Years 245Global Wealth and Art BuyersTable 6.1Table 6.2Table 6.3Table 6.4Table 6.5Table 6.6 Growth in GDP Per Annum, Constant Prices (%) 268 GDP per Capita (Ranked Highest to Lowest in USD and PPP dollars) 272 Regional Changes in Wealth 2007–2017 278 Location of Top 200 Collectors (Based on Primary Place of Residence) 295 Frequency of Use of Sales Channels for Art and Objects 300 Share of Dealers’ Local Versus International Buyers in 2017 and 2016 313Figure 6.1Figure 6.2Figure 6.3Figure 6.4Figure 6.5Figure 6.6Figure 6.7Figure 6.8Figure 6.9 Sales in the Art Market Versus Growth in Wealth, HNW Wealth and GDP 264 Growth in Global Wealth and Wealth per Adult 2000–2016 275 Regional Shares of World Wealth Versus Adult Populations in 2017 279 Share of Regional Wealth Holdings of the Regions’ Top 1%, 5% and 10% in 2017 281 The Distribution of World Wealth in 2017 283 Number and Wealth of Dollar Millionaires 2010–2022 287 Global Share of Dollar Millionaires in 2017 288 Global Share of Millionaires with Wealth in Excess of 50 Million in 2017 288 Global Share of Dollar Billionaires in 2017 2897Economic Impact and ConclusionsTable 7.1 Ancillary Expenditure and Employment Generated in 2017 329Figure 7.1Figure 7.2Figure 7.3Figure 7.4Figure 7.5 Numbers Employed in the Dealer Sector in 2017 323 Gender and Age Profile in the Dealer Sector in 2017 324 Gender and Age Profile in the Second-tier Auction Sector in 2017 326 Share of Expenditure by the Global Art Trade on Ancillary Services in 2017 328 Global Sales in the Art Market Since 1990 3339

10Acknowledgments11AcknowledgmentsThe Art Market 2018 presents the results of acomprehensive analysis of the global art and antiquesmarket in 2017. The report looks at the key macrolevel trends in the global art and antiques trade,reporting on the performance of different regions,sectors and value segments of the market.Chapter 3 reports on the auction sector, looking againat sales by region and value segment. It also presentsa comprehensive analysis of the principal fine artauction sectors, describing their performance in termsof sales, regional market share, prices, segmentationand artists.The information presented in this study is based ondata gathered and analyzed directly by Arts Economics(www.artseconomics.com) from dealers, auctionhouses, art fairs, art and antique collectors, art andfinancial databases, industry experts and othersinvolved in the art trade. (The Appendix outlines someof the key data sources used in the report.)Chapter 4 provides an overview of exhibitions andart fairs. It analyzes the geographical spread, growthand content of commercial and non-commercialexhibitions over the last ten years, and examines thedevelopment of art fairs, charting their risingimportance for sales in the dealer sector.Chapter 1 provides an overview of the global market,looking at the value, volume and regional distributionof sales of art and antiques in 2017 and the decadeleading to it. It reviews the performance of some ofthe major national and regional art markets over thisten-year period.Chapter 2 focuses on dealers and galleries, reportingon sales and other key indicators in different valuesegments and sectors of the market, and presentingan analysis of important areas such as profitability,supply, inventories, financing and buyers. It reportsfindings on the primary market and the secondaryresale market, distinguishing them in terms of dealerturnover, artist representation and other features,and discusses gallery longevity, providing quantitativeanalysis of gallery openings and closures along witha discussion of the main issues facing galleries in 2018.Chapter 5 looks at sales and developments inthe online art market, reporting on its size and keystructural features.Chapter 6 provides a contextual overview ofworld wealth, showing how changes in the size anddistribution of wealth within and between regions areshaping trends in the art market. This chapter focuseson high net worth wealth and presents the resultsof a survey of US high net worth individuals carriedout for the report in conjunction with UBS.Chapter 7 discusses the significant economiccontribution the art market makes to the economiesin which it operates in terms of employment andrevenues as well the support of a range of ancillaryindustries. It concludes the report by reviewingsome of the key issues that may shape the marketgoing forward in 2018.A critical part of the research each year involvesa global survey of art and antique dealers. I wouldlike to say a special thanks to Erika Bochereau ofCINOA (Confédération Internationale des Négociantsen Oeuvres d’Art) for her continued support ofthis research, along with the presidents of the dealerassociations around the world who promoted thesurvey among their members. Thanks also to ArtBasel for helping to distribute the survey. My deepestgratitude goes to all of the individual dealers whotook the time to support this research by completingthe surveys. I am also very grateful to all those dealerswho shared their valuable insights on the art marketthrough interviews and discussions during the year.Many thanks also to all of the top and second-tierauction houses that also took part in the auctionsurvey. Thanks especially to Susan Miller (Christie’s),Joshua Charlton-Briggs (Sotheby’s), Caroline Conegliano(Phillips), and Eric Bradley (Heritage Auctions).Thanks also to the online companies for theirsupport of the survey and in providing otherinformation on the sector, and to Thomas Galbraithfor his insights for the online chapter. I am verygrateful also to O’Neal Rowe (Invaluable.com) for theuse of their online auction data, as well as Richard Lewis(the-saleroom.com) for data supplied on the UK.I would also like to thank UBS for their help andcooperation with the survey of US HNWIs, whichprovided invaluable insights in the report.I am grateful also to Diana Wierbicki ofWithersworldwide for her help with informationon US tax regulations.The primary fine art auction data supplier for thisreport was Auction Club, and many thanks toWilliam Vanmoerkerke and Sofie Scheerlinck for theirhelp in assembling this set of data. The auction dataon China is supplied by AMMA (Art Market Monitorof Artron) and my sincerest thanks for their continuedsupport of this research on the Chinese auctionmarket and to Yuting Zhang for his help with the data.I am very grateful also to the Shanghai Cultureand Research Institute for their help researching theChinese art market.I would also like to extend a special thank you toSusanne Massmann and her team at Artfacts.netfor their support and provision of data on exhibitions,fairs and galleries. Many thanks also to all of the artfairs that shared information for the report.Finally, I am very grateful to Noah Horowitz andMelissa Netecke for their time and encouragementin helping to coordinate the research.Dr Clare McAndrewArts Economics

12Director’s Foreword & StatementDirector’s ForewordThis second edition of the Art Basel and UBS GlobalArt Market Report appears in the midst of whatmany consider a paradigm shift within the industry.So now, more than ever, understanding the market’sdynamics is essential. Fortunately, the report’sauthor, Dr Clare McAndrew of Arts Economics, haslong ranked among the most definitive analystsof this industry. Since she joined forces with Art Baselin 2016, she has worked with us to focus upon themarket aspects most fundamental to the ecosystemwithin which Art Basel exists. Thus, this year’sreport includes its first-ever stand-alone chapteron exhibitions and art fairs (Chapter 4), alongsidein-depth research on dealers, auctions, onlinedevelopments, global wealth dynamics and theindustry’s economic impact.Compared with the many markets where everytransaction is public record, the art market has longposed a thorny challenge for analysts. This is preciselywhy the Art Market Report, which combines globalauction sales data with its industry-leading dealersurveys, proves so valuable. While true transparencyis inherently unattainable, the fundamentalimage put forward here rings profoundly true: Themarketplace is growing ever larger, more accessible,13Statement by UBSand more global; and yet while all three adjectivessuggest countless opportunities, they also presenta complex set of challenges, especially within anindustry that has innovated and evolved more slowlythan most other industries.During the past year, as this report was compiled,there has been an unprecedented questioning,both public and private, of the conventional gallerymodel and established ways of doing business.As every individual in the market questions theirassumptions – trying to envision professionaltrajectories that work for them and the artists theycherish – we hope this analysis provides freshperspectives on the myriad ways forward.This is an enormous undertaking, and Art Basel wishesto thank Dr Clare McAndrew for her tenacity andrigor in taking on this intricate task, UBS for its vitalsupport in co-producing the report with us, andthe hundreds of galleries and art-market professionalswhose input helped shape this fascinating andthorough study.Marc SpieglerDirector, Art BaselThe 19th-century artist, businessman and politicalphilosopher William Morris wrote that people shouldlive by a golden rule. “Have nothing in your housesthat you do not know to be useful, or believe to bebeautiful.” This rule seems to divide economicsand art. Economics is about the useful. Art is aboutthe beautiful.That division does not exist. Economists are moreand more vocal about the need to think beyondeconomic data to measure the quality of life. Morris’squote continues: “Beauty, which is what is meantby art [is] a positive necessity of life.” Art contributespositively to the world around us, in ways thatthe facts and figures of GDP cannot hope to discover.The motivations and philosophy of the art world havemuch to contribute to the economic world. Passiondrives art, and passion is an increasingly valuableproperty in economics. Art frequently challengesestablished ways of thinking. The world hovers on thebrink of the fourth industrial revolution. This willchallenge established ways of doing business – eventhe established ways of structuring economics.Challenge is a key part of economic success in a timeof change.Economics also plays a role in the world of art, asit always has done. In this report, Dr Clare McAndrewclearly sets out the context for the art market intoday’s global economy. Art is a growing industry,with a need to attract a broad base of new buyers atdifferent price levels. There are opportunitiespresented through future growth in the online artmarket. The technological change that is changingthe economy is also changing the world of art.Although there often seems to be a focus on dollarsper painting, UBS clients who invest in art are nottypically looking for financial gain. Art is often aphysical manifestation of the values that they wishto pass to future generations. Art has much to teacheconomists, and amidst record-breaking auctionresults in 2017, economics also has something to sayon art. The two disciplines can work together, eachbenefiting the other. I hope that, whichever sideyou start from, you will find this report both usefuland beautiful.Paul DonovanChief Economist,Global Wealth Management, UBS

Key Findings15Key FindingsGlobal1. Sales in the global art market reached 63.7 billionin 2017, up 12% from 2016.2. The volume of sales (number of transactions) grewmore moderately than values, at 8% year-on-year.3. In 2017, aggregate sales by dealers accounted for alarger share of the market, at 53% by value, with auctionsales accounting for 47% (up 4% from 2016).4. The three largest markets of the US, China and the UKaccounted for 83% of total global sales by value.5. The US was the largest market worldwide, accountingfor 42% of sales by value, with China in second place(21%) and the UK the third largest market with 20%.6. Sales in the major art markets all advancedyear-on-year in 2017: in the US by 16% to 26.6 billion;in China by 14% to 13.2 billion; and in the UK by 8%to 12.9 billion.

16DealersKey Findings1. Dealer sales in 2017 reached an estimated 33.7 billion,up 4% year-on-year.Auctions171. Sales at public auction of fine and decorative art andantiques reached 28.5 billion in 2017, up 27% year-on-year.2. Dealers with turnover below 500,000 saw a declinein sales on average of 4%, the second year of losses inthis segment.2. The US and China dominated auction sales with acombined 68% share (the US with 35% of sales, China33%, and the UK 16%).3. For dealers at the very highest end (sales over 50 million), sales growth was strongest at 10%, althoughthis was only around half the growth rate reported forthis segment in 2016.3. From 2007 to 2017, nearly all segments up to 1 milliondeclined in value, whereas the market for works pricedover 1 million grew. The biggest increases were atthe very highest end, with the value of sales of workssold for over 10 million increasing by 148% over tenyears, and 125% year-on-year in 2017.4. The number of gallery closures has varied considerably,peaking in 2009 and falling in recent years. Galleryopenings have declined steadily over the last decade,with the number of new galleries established in 2017around 87% less than in 2007.5. While the ratio of gallery openings to closures in 2007was 5:1, this has declined rapidly since then, dropping to0.9:1 in 2017, that is, more closures than openings.6. According to the dealer survey, the three biggest issuesfacing dealers in 2018 are: finding new buyers; theeconomy / demand for art and antiques; and participationat fairs.4. Post War and Contemporary art was the largestsector by value in 2017, accounting for 46%, followedby Modern art (27%).5. All of the fine art sectors increased in value yearon-year, including a 12% increase in the Post War andContemporary sector to 6.2 billion, with sales of thework of living artists advancing by 19% to 2.6 billion.6. Sales in the European Old Masters sector rose 64%year-on-year to 977 million, however, this upliftwas due to the sale of the Leonardo da Vinci paintingfor 450 million at Christie’s in the US, without whichsales would have fallen 11%.

18Exhibitions andArt FairsKey Findings1. The gallery was the primary institution for exhibitionsworldwide in 2017, accounting for 55% of the numberof global exhibitions.2. Exhibitions are much more globally dispersedthan sales in the art market. The US accounted for a 21%share, followed by Germany (12%) and France (10%).3. Dealers reported that they made 46% of their salesat art fairs in 2017, up 5% on 2016.4. Sales at fairs were estimated to have reached close to 15.5 billion in 2017, up 17% year-on-year, while thecosts for dealers to attend fairs rose 15% to 4.6 billion.5. On average, dealers attended five fairs in 2017, thesame number as in 2016.Online191. The global online art and antiques market wasestimated to have reached a new high of 5.4 billion in2017, up 10% year-on-year and accounting for 8% ofthe value of global sales.2. The online art market has increased substantiallyin size over the last five years (by 72%), and itsshare of total art market sales has also edged up from5% in 2013.3. Online sales have been a key method to access newbuyers: dealers reported that 45% of their online buyerswere new to their businesses in 2017; 41% of thosebuying online at second-tier auction houses were newbuyers; and in top-tier houses they averaged over 40%.4. Most of the traditional offline dealers and auctionhouses surveyed in 2017 recognized the online channelas a key area of growth over the next five years.

20WealthKey Findings1. A survey of (high net worth individuals) HNWIs inthe US by UBS and Arts Economics in 2017 revealed that35% were active in the art and collectibles market.2. The survey indicated that the most common pricerange for buying works was less than 5,000 (79%of respondents), and 93% reported that they most oftenbought at prices less than 50,000. Only 1% ofrespondents bought at prices in excess of 1 million.3. The most frequently used channel for purchaseswas a gallery or dealer, with 66% of the sample havingused them to purchase art.4. 11% of respondents had used credit or loans topurchase works of art or objects in their collections.5. Only 32% of collectors felt that the expectedfinancial return on their investment was important,although this was higher (at 47%) for those withwealth over 5 million. The majority of the collectorssurveyed (86%) reported that they had never solda work from their collection.6. Sales to private collectors dominated the dealerand auction sectors, accounting for 66% of dealers’ salesin 2017 and 64% for second-tier auction houses.EconomicImpact211. There were approximately 310,685 businessesoperating in the global art, antiques and collectiblesmarket in 2017, comprising 296,540 in the gallerysector and 14,145 auction houses.2. The art market directly employed an estimated3 million people in 2017, stable from 2016.3. It is calculated that the global art trade spent 19.6 billion on a range of external support servicesdirectly linked to their businesses, supporting afurther 363,655 jobs.4. The largest area of spending, although only incurredby dealers, was on art fairs, which represented 23% ofthe total at 4.6 billion, an advance of 15% year-on-year.The second largest area of spending was on advertisingand marketing, which totaled 2.8 billion.

The GlobalArt Market in2017

1 The Global Art Market in 201727Key FindingsThe GlobalArt Market in20171. Sales in the global art market reached 63.7 billionin 2017, up 12% from 2016.2. The volume of sales (number of transactions) grewmore moderately than values, at 8% year-on-year.3. In 2017, aggregate sales by dealers accountedfor a larger share of the market, at 53% by value, withauction sales accounting for 47% (up 4% from 2016).4. The three largest markets of the US, China and the UKaccounted for 83% of total global sales by value.5. The US was the largest market worldwide, accountingfor 42% of sales by value, with China in second place(21%) and the UK the third largest market with 20%.6. Sales in the major art markets all advancedyear-on-year in 2017: in the US by 16% to 26.6 billion;in China by 14% to 13.2 billion; and in the UK by 8%to 12.9 billion.

281 The Global Art Market in 2017Following two years ofdeclining sales, themarket turned a cornerand increased12% year-on-year to 63.7 billion.1.1 Overview of Global SalesSales in the global art market reached 63.7 billionin 2017, up 12% from 2016. Following two years ofdeclining sales, the market turned a corner withincreasing sales in both the auction and dealer sector.These gains were driven by sales at the top end ofthe market, capped by a historic record in the auctionsector, with a work by Leonardo da Vinci achieving 450 million, more than four times any pricepreviously achieved at auction. However, away fromthe premium price segment, overall marketperformance was mixed.The combination of a high-performing market atthe top end with mo

Figure 3.12 The Post War and Contemporary Art Sector: 2007-2017 131 Figure 3.13 Market Share of the Post War and Contemporary Sector in 2017 132 Figure 3.14 Sales in the Post War and Contemporary Sector 2007-2017: Key Markets 133 Figure 3.15 Sales by Price Bracket in the Post War and Contemporary Sector in 2017 134