Art Basel and UBS's&nbsp;mid-year survey&nbsp;takes stock of the impact of the pandemic on the art market – and it’s not all bad news

Undeterred by COVID-19, collectors’ commitment to art has been going strong in 2020

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The year 2020 will be known in the history of the art market, as in the wider world, as the year of the COVID-19 pandemic. The art market has been turned upside down, with fairs canceled and galleries forced to close temporarily, shuttering the main venues and events at which collectors were previously able to support gallerists and artists. The Impact of COVID-19 on the Gallery Sector, an Art Basel and UBS&nbsp;mid-year survey&nbsp;prepared by Dr. Clare McAndrew, founder of Arts Economics, offers an early analysis of this historic moment. Within it, the major hit to galleries’ income is quantified&nbsp;–&nbsp;as is their rapid shift online.‘The COVID-19 pandemic has presented the gallery sector with some of its biggest challenges to date. Sales in the sector are down 36% already in the first half of 2020, with most galleries bracing for further declines, while those of all sizes have had to furlough or permanently lay off a significant number of employees,’ says McAndrew. ‘The pandemic will continue to [pose] substantial challenges [for] those businesses already in a situation of financial risk, and may alter the abilities of even the most secure to survive or thrive. Depending on how long the various phases of this crisis last, the support provided and obtained, and how deep and protracted the recession is that follows, 2020 may [reveal] unprecedented resilience or permanent change to the landscape of the artworld as we know it.’ The survey she compiled is&nbsp;based on responses from 795 galleries operating in the Modern and&nbsp;contemporary art sectors, representing 60 different national markets across all levels of&nbsp;turnover, as well as insights from&nbsp;360 High Net Worth (HNW) collectors in the US, the UK, and Hong Kong SAR (China).‘This study reflects the many and significant challenges our industry has faced through the first half of 2020, as it also signposts others that lie just ahead,’ says Art Basel Director Americas Noah Horowitz. ‘Throughout it all, what is equally clear from the results of the report is the shared sense of engagement, purpose, and community that continues to define so much of the art market and remains vitally important to our future.’

As would be expected, this was an exceedingly difficult period for galleries, with five out of six (83%) seeing a decline in sales value. And losses were hardly equal across the sector. Existing power imbalances were compounded, with smaller galleries experiencing the largest drop: Those with sales of between $250,000 and $500,000 per annum saw them fall by nearly half (43%). With the virus still going strong in the US, the nation that comprises the largest share of the art market, those losses may not improve in the year’s second half.In recent years, galleries have counted on receiving a considerable share of their revenue from art fairs, so the widespread cancellations hit them hard. While some, in pre-COVID times, saw as much as 46% of their annual turnover come from these events, that proportion fell to just 16% in the first half of 2020. Gallerists had already been grumbling about their schedules being chock-full, and they may take the slowdown as an opportunity to reassess; many say that they may reduce their art-fair participation for 2021 as well. Notably, those with sales of more than $10 million expect to implement the highest reduction in fair participation, saying that, on average, they plan to rent just four booths in 2021, rather than seven, perhaps since they have been best positioned to pivot to showing and selling via their websites.Across the sector, while art fairs canceled or postponed their 2020 editions, online sales soared as the industry moved to the most socially distanced environment of all. While the art field has been, in the main, slow to adapt to the Internet age, galleries have finally seen the necessity to change, and the numbers have told the story: Their share of online sales went from 10% in 2019 to 37% in the first half of 2020.One unexpected benefit of galleries moving to sell online may be that, perhaps because collectors are even less tethered to geography, they are finding new buyers. This may point to some degree of reinvigoration of the field ahead as new connections are made. Those gallerists who did sell online made a full quarter of those sales to buyers who had previously had no dealings with them. Meanwhile, galleries with an annual turnover of under $250,000 proved themselves most adept at expanding their client base: More than a third (35%) of their online customers were new buyers, while higher-end galleries (with a turnover of more than $10 million) were only half as likely to recruit new customers.

One especially striking finding was that, while many people’s minds were on more urgent concerns than art, collectors showed an unswerving, and even growing, commitment to their avocation. Whether online or in person, almost all HNW collectors (92%) added at least one work of art to their holdings in the first six months of the year, and despite global instability and hits to their stock portfolios, a sixth of collectors (16%) spent more than $1 million. The biggest spenders were Millennials, with the outlay for one-sixth of this group reaching more than $1 million, while only 4% of Baby Boomers spent that much. Three-quarters of collectors had patronized galleries, often in the flesh: Masked and socially distant, some 41% had done their buying in person at galleries’ physical locations, and almost as many (38%) had bought via their websites or online viewing rooms.HNW collectors’ interest in buying art had increased since COVID-19 swept the world, possibly because they were spending more time at home and researching their passions online, or because they were inspired to dig deep to support galleries and artists experiencing hard times. The report indicated it was true for 59% of the group, while almost a third, or 31%, said that it had significantly increased their interest.While the future is uncertain and many galleries may be forced to close permanently due to the shocks of the pandemic, there are some causes for optimism, with younger collectors displaying a willingness to commit greater resources to supporting artists and galleries, and a healthy minority stating that their interest in collecting is only deepening.Presented by Art Basel and UBS, The Impact of COVID-19 on the Gallery Sector is available to download&nbsp;<a href="https://www.artbasel.com/about/initiatives/the-art-market" target="_blank">here</a>.Dr. Clare McAndrew, founder, Arts Economics, Noah Horowitz, Director Americas, Art Basel, and Paul Donovan, Global Wealth Management Chief Economist, UBS will discuss key findings of the report on Thursday, September 10, 2020 at 2pm CET. Join the live broadcast <a href="https://ubs.trickbox.live/artbasel-survey">here</a>. No registration is necessary.Top image: Grayson Perry, presented by Victoria Miro at Art Basel Hong Kong 2019.&nbsp;

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Art Basel and UBS's mid-year survey takes stock of the impact of the pandemic on the art market – and it’s not all bad news