Despite a coronavirus-driven drag on all economic activities, such as luxury spending on arts, a relatively sharp rebound could follow after the lockdown due to pent-up spending demand and rapid innovation.
Art experts joined UBS in a recent webinar to discuss their views about the post-lockdown environment specifically with regards to the art world. According to Paul Donovan, chief economist of UBS’s global wealth management unit, the rebound could be sharper than expected based on observable evidence.
«A lot of people during the lockdown – wealthier individuals, pensioners, people working from home – are on full income or furlough but your spending is forced lower. Very much like wartime rationing – you got the money but there’s nothing to buy,» he explained. «That money will burn a hole in people’s pocket when lockdowns are lifted. WE may see some of that money coming out and going on fun spending.»
Donovan highlighted an example of the Shanghai-based Hermes store which registered $2.8 million in sales on a single day after reopening from the lockdown – a record-high for the firm.
Effective Experimentation
Economics aside, the world has been undergoing rapid innovation in recent years and receptiveness to new ideas has been on the rise, providing additional tailwinds for the rebound.
«Things taking place in the last weeks and months took years to develop in the previous crises,» said Noah Horowitz, Art Basel’s Americas director, highlighting factors such as a market of younger collectors and greater openness to innovations enabled by digital technology.
«That concoction of factors leads to many open questions about how and what a rebound might look like.»
None Unscathed
Still, the road ahead remains bumpy as the art market grapples with the new realities of post-coronavirus environment. According to a recent report, «The Art Market 2020», co-published by UBS and Art Basel, the market was already experiencing a slowdown after posting an estimated $64.1 billion in sales last year (5 percent drop).
«If you look back at 2009, nearly every sector had a pulldown so I think we are probably looking at something like this again,» added Clare McAndrew, founder of Arts Economics. «I don’t think anyone is going to come up and say they were completely spared with what’s going on at the moment, unfortunately.»
