[2022 Art World Review] 1 Trillion Won Art Market, Now in a 'Adjustment Period'

Total Auction Sales Down 62% Year-on-Year
Overseas Market Achieves Record Sales with Large-Scale Collection Auctions Amid Financial Crisis
Outstanding Planning and Works Needed to Turn Crisis into Opportunity

At the art fair 'Frieze Seoul' held at COEX in Gangnam-gu, Seoul, Louise Bourgeois's 'Gray Fountain' (below) and George Condo's 'Red Portrait Composition' (above) are on display. [Image source=Yonhap News]

[Asia Economy Reporter Kim Heeyoon] "A situation where the brakes were slammed without safety measures" The art market, which surged sharply during the COVID-19 period, has shown signs of stagnation since mid-year. Some analyses even suggest that the boom ended as of July. In fact, the total hammer price in the auction market, a key indicator, was only about 36.67 billion KRW in the third quarter of this year. This represents a 62% decrease compared to the same period last year. It is the lowest quarterly record in the past three years. The industry diagnoses that the market has entered a correction phase.

According to the "2022 Q3 Art Market Analysis Report" by the Korea Art Authentication Research Center, the domestic auction market was held eight times in the third quarter of this year. The average hammer rate was only 65.87%, dropping more than 15% from the 81% average hammer rate in the first half of this year.

The downward trend was detected starting from the May auctions. High-priced works by so-called "blue-chip" artists such as Park Seo-bo and Lee Ufan were consecutively unsold. Inflation caused by Russia's invasion of Ukraine, tightening policies worldwide, and interest rate hikes by the U.S. Federal Reserve occurred simultaneously, delivering a major shock to the financial markets, and the repercussions were directly transmitted to the art market.

[Image source=Yonhap News]

End of Domestic Art Market Boom... Warning Signs Against Optimistic Approaches

The chill did not dissipate even at the Seoul Auction Hong Kong auction last month. Large-scale works by major artists like Ha Chonghyun and Yoon Hyongkeun, which used to sell as soon as they appeared, were repeatedly unsold. Despite the event resuming after two years, the hammer rate remained at 65%, and only fifty out of eighty-four lots found new owners.

This contrasts sharply with the unprecedented boom in overseas auction markets during the same period. The Christie's London auction held on October 13 recorded total sales of 70 million USD (about 95 billion KRW) despite adverse financial market conditions. All forty-four lots offered were sold. Sales were 11.9% higher than the same period last year. Only three works sold for more than 5.8 million USD (about 8 billion KRW), accounting for more than half (55.3%) of total sales.

According to the "Art Market 2022" report released in March by the global art fair Art Basel and global financial group UBS, the global art market including artworks was 50.3 billion USD (about 64.23 trillion KRW) in 2020, shrinking by 21.9% compared to the same period in 2019. Last year, it rebounded by 29.4% to 65.1 billion USD (about 83.13 trillion KRW). This was thanks to the strong performance of global auction companies like Sotheby's and Christie's. Their secret to resilience in a downturn is securing a diverse and stable portfolio network. By offering high-priced rare works and attracting demand, they record high sales and are relatively less affected by financial markets.

The formula was also effective at the Paul Allen Collection charity auction held by Christie's last November. Paul Allen (1953-2018), co-founder of Bill Gates and Microsoft, was widely known as a mega collector. Thanks to his fame, the auction was expected to reach a total of 1 billion USD (about 1.27 trillion KRW) even before it started. Expectations were further raised as the collection of American real estate tycoon Harry Macklowe and his wife, which came out in May, recorded the highest transaction amount of 922 million USD (about 1.17 trillion KRW). The actual results exceeded expectations.

Charity auction event for the Paul Allen Collection held by Christie's last November. Photo by Christie's official website

'Paul Allen Collection' 1.4 Trillion KRW... Highest Auction Record in History

The Paul Allen Collection, consisting of a total of sixty lots, was sold for a total of 1.5 billion USD (about 1.91 trillion KRW). It is the highest record for a single auction, nearly twice the transaction volume of the Korean art market. The highest-priced work sold was "Models, Group" by French pointillist painter Georges Seurat, which sold for a staggering 149.4 million USD (about 190 billion KRW). Five works exceeded 100 million USD, including Paul C?zanne's "Mont Sainte-Victoire" (138 million USD), Vincent van Gogh's "Orchard with Cypresses" (117.2 million USD), and Gustav Klimt's "Birch Forest" (105 million USD). Thanks to this, twenty-seven artists set new personal record prices.

The inclusion of masterpieces that left their mark on art history demonstrated the art market's capacity regardless of economic recessions or financial market downturns. The domestic art market also prepared a turning point and began expanding. In July, the Arts Management Center announced that the art market size in the first half of the year was 532.9 billion KRW. Six art fairs led by the Gallery Art Fair recorded sales of 142.9 billion KRW in the first half, nearly matching last year's total art fair sales (154.3 billion KRW), driving growth. The center analyzed that the art market size will exceed 1 trillion KRW for the first time this year.

In September, the joint hosting of "Kiaf," Korea's representative art fair, and "Frieze," one of the world's top three art fairs held in the UK, also contributed to this turning point. The former lagged behind the latter in terms of attention. However, it was able to enjoy a trickle-down effect by presenting diverse content to global collectors visiting Korea.

For this reason, some argue that the art market needs to grow its scale further. Kim Donghyun, Exhibition Business Team Leader at the Korea Gallery Association, emphasized, "Through the joint hosting of Kiaf and Frieze, Seoul has started to attract attention in overseas markets," adding, "We need to consider how to effectively utilize this new opportunity from a long-term perspective." "Kiaf will be held together with Frieze for the next four years. Our artists' works will be exhibited alongside world-renowned works. The perspectives of visitors and collectors can grow together. Each gallery must now enhance planning capabilities and artist competitiveness under the banner of 'selection and concentration' and present better content."

This content was produced with the assistance of AI translation services.