Art Market Goes Into Overdrive As Wealthy Up Their Spending By 42%

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The rich are spending more than ever on art and antiques. The average spend in the first half of 2021 reached $242,000, an increase of 42% on the year before.

Driving this growth is a new generation of millennial collectors, whose average purchase was much higher at $378,000, according to a new survey carried out by UBS and Art Economics.

Not only have wealthy millennials doubled their pre-pandemic 2019 average spend, but their tastes have gone digital: 12% of art sales in the first half of 2021 was digital, including non fungible tokens (NFTs), film and video art.

Beeple, or Mike Winkelmann’s NFT, ‘Everydays: the First 5000 Days,’ shocked the art world in March when it sold for $69.3 million in March. Since then millennial buyers have rushed to buy NFT artworks, with open and limited editions selling out in record time.

Overall, NFT sales on Ethereum jumped from $65 million in the entire of 2020 to $1.2 billion in the first half of 2021 alone. The average age of NFT buyers, according to Christie’s, is 38 and nearly three quarters of them are new to the art world.

“They value the virtual world more than the real world. They value owning a digital image of something more than having a physical painting on their wall in their home,” says Sacha Jafri, an artist who holds the record for the fourth most expensive artwork sold by a living artist, and who has recently branched out into NFTs.

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When UBS and Art Economics asked high net worth millennials (those worth over $1 million) what they were interested in purchasing over the next 12 months, 47% of those surveyed said digital artworks.

The art market is rapidly coming to terms with this shift in tastes. The NFT marketplace circumvents much of the traditional gallery model, with most works sold through online platforms. In Europe especially, many art dealers are struggling with average sales dropping by 7% across the region in the first half of 2021.

But NFTs do not have to disrupt traditional galleries, says Clare McAndrew, the founder of Arts Economics. “As more art is sold online and outside the traditional gallery framework, their critical role in establishing and managing the careers of artists has also been highlighted.”

Christie’s, for example, has already made a name for itself in the space, clocking $93.2 million worth of NFT sales in the first half of 2021.

Dealers with expertise in NFTs can provide guidance in this new area of the art market. NFTs are now so prevalent on online platforms that new buyers struggle to work out what is worth the asking price and what is not. Valuations are askew and the secondary market is volatile.

What Is The Future For NFTs?

But as the art fairs return, galleries reopen and auctions resume, there are signs the NFT and digital market might be overcome by pent-up demand for physical works of art.

When asked by UBS and Art Basel what art they would buy in the second half of 2021, 70% of those surveyed said a painting. Sculptures, prints and works on paper were next on the priority list.

Leonardo da Vinci’s ‘Head of a Bear’ sold by Christie’s for £8.8 million ($12 million) in July.

AFP via Getty Images

Furthermore, with the exception of Beeple, digital and NFT artworks do not fetch nearly as much as their physical counterparts, which is another reason behind 2021’s increase in spending.

Last year, during the midst of the pandemic, auction houses promoted online sales of lesser value works, leaving blockbuster pieces for when in-person bidding could resume.

Sellers, too, stayed away from the market, aware that online bidding would capture a fraction of the attention and prices commanded when wealthy buyers are gathered together in a room.

Once real-life auctions resumed the headline sales returned. The first to break the $100 million threshold in two years was Pablo Picasso’s ‘Femme assise près d’une fenêtre’ which was sold for $103.4 million in May at Christie’s New York live evening sale. Another record was set by Leonardo da Vinci’s drawing ‘Head of a Bear’ which sold for £8.8 million ($12 million) in July.

These sales show the art market is quickly returning to pre-pandemic highs, only it is different than before: Millennials are now a dominant force in the market, and their preference for digital and NFTs is unlikely to diminish.

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