Tag: Howard Lutnick

As Observer predicted would happen in our own end-of-year reporting, the market’s K-shaped divide will only become more acute: the most robust performance and dynamic deal flow are expected either at the top end—above the $1 million mark—or in the more accessible tiers below $50,000, while the middle market remains sluggish, especially for contemporary artists whose prices outpaced their résumés on the way into the five-figure range.

While 51 percent of experts surveyed expressed a positive outlook for the over-$1 million segment, confidence has rebounded even more sharply in the lower tiers, with 61 percent of respondents expecting a stronger year, compared with just 44 percent in 2025. Even on the heels of a stellar fall auction season, most experts—57 percent—agree that the secondary and auction markets will recover more quickly than the primary market, where 46 percent anticipate a flat year of post-bubble stability and only 35 percent foresee a comparable revival.

Across period categories, demand continues to concentrate around a limited number of names. For example, while the $236.4 million record-breaking Klimt sale contributed to the Modern segment’s standout performance—reaching $1.38 billion in 2025, up 19.4 percent year over year—the survey shows that auction sales were largely driven by just three top performers: Pablo Picasso (up 23.8 percent), Mark Rothko (up 122.2 percent) and Alexander Calder (up 108.9 percent). Similarly, on the Postwar and Contemporary side, the strongest gains were recorded by institutionally and market-consolidated artists such as Jean-Michel Basquiat, Gerhard Richter, David Hockney, Ed Ruscha and Yoshitomo Nara, all of whom have been the subject of major museum exhibitions in recent years, reinforcing both buyer interest and market confidence.

Meanwhile, as the ultracontemporary segment continues to cool, all five of the top-selling Young Contemporary artists at auction—Matthew Wong, Nicolas Party, Avery Singer, Shara Hughes and Jadé Fadojutimi—have experienced year-over-year declines in both lot volume and total sales since 2023. Nicolas Party, once a market phenomenon, saw his total auction sales fall from a peak of $20,170,129 in 2023 to $2,497,160 in 2025. It remains unclear whether his current exhibition of 40 pocket-size paintings at Karma New York is intended to reignite market interest or to strategically introduce more accessible price points for new buyers after prices rose too quickly to sustain demand. Only 10 works were actually offered for sale, priced between $165,000 and $205,000, and all sold. The remaining three quarters of the exhibition consist of works from the artist’s archive—replicas of earlier pieces—intended, perhaps, to maintain visibility and keep his “myth” alive.

More broadly, compared with the near-impossible waiting lists of the recent past, many of these artists are now considerably more accessible on the primary market, provided buyers are willing to meet revised price expectations. This shift may help explain the increase in unsold, withdrawn or canceled lots at recent auctions, unless estimates were already adjusted to create a sense of “deal.” A vivid 2022 abstraction by record-setting artist Jadé Fadojutimi, for example, failed to sell at Phillips last November, likely due to an overly ambitious $800,000-1,200,000 estimate. At Frieze Seoul in September, Taka Ishii presented an entire booth of her works priced between a more accessible $475,000 and $610,000, all available for sale on preview day.

Holding periods and annual rates of return

Looking at 81 repeat sales in the contemporary segment, the average annual rate of return (CAGR) fell to +2.3 percent (not inflation-adjusted), down from +5.1 percent the previous year. Short-term resales were particularly weak: nine works resold within five years posted an average annual loss of -9.2 percent. While it’s best to avoid framing art purely in financial terms, analysis confirms that, in today’s post-wet-paint-bubble market, historically validated works held for extended periods by the same owner deliver the strongest resale outcomes.

In the Impressionist category, for example, at least 67 percent of resold lots generated positive returns, up slightly from 65 percent in 2024, with an average annual return of +5.4 percent (not inflation-adjusted), compared with +4.3 percent the previous year. The average holding period increased to 27.3 years from 22.9 years in 2024, while the top 10 performing lots achieved an average CAGR of +18.2 percent over an average holding period of 14.6 years. The strongest individual result of 2025 was Tamara de Lempicka’s Femme Assise (1925), which sold for $522,357 (including buyer’s premium) at Christie’s Hong Kong in September 2025 after being acquired in 2015 for $31,283—an annualized return of +30.3 percent over a ten-year holding period.

Returns are even more polarized in the Postwar category when holding periods are factored in. According to ArtTactic, among 10 works resold within five years, the average annual loss was -7.6 percent. In contrast, works held for more than two decades delivered significantly stronger results, with average annual returns of +9.6 percent, rising to an average CAGR of +19.1 percent over a 15.3-year holding period.

In the contemporary segment, the holding period proves decisive, as time allows living artists to achieve more meaningful institutional validation—helping justify price levels and fueling both demand and confidence. Longer-held works, particularly those owned for more than 20 years, continued to perform more positively, delivering average annual returns of +8.9 percent. The strongest result was Lynette Yiadom-Boakye’s Womanology (2010), which sold for $573,181 (including buyer’s premium) at Phillips London in March 2025 after having sold for $90,600 at Christie’s London in 2014, yielding an annualized return of +19.4 percent over a 10.4-year holding period.

Political uncertainty and market expectations

One of the most revealing elements of the report is the extent to which art market experts’ sentiment aligns with rapidly shifting global geographic and economic conditions—particularly given how eventful the year’s opening has been. Despite growing political division and rising tension at both national and international levels, the Federal Reserve Bank’s Blue Chip survey of professional forecasters still projects about 1.9-2.0 percent real GDP growth for 2026, with inflation hovering around 2.9 percent and unemployment slightly higher than in 2025. At the 2026 World Economic Forum, U.S. officials suggested even stronger early-year momentum, with Commerce Secretary Howard Lutnick forecasting first-quarter GDP growth above 5 percent. Reinforcing this relative resilience, all 33 U.S. banks with assets over $50 billion posted positive total returns last year.

Yet political uncertainty is clearly filtering into market expectations. While art expert sentiment toward the U.S. art market as the primary global center remains broadly positive heading into 2026, more optimistic growth expectations declined from 52 percent in 2025 to 48 percent in 2026. The current political and economic environment has also shaped experts’ perceptions of London and, more broadly, the U.K., which was once the undisputed second global center of the art market. Nearly half of respondents—49 percent—expect the British art market to remain at current levels, reflecting cautious confidence but also an acknowledgment that punitive tax policies targeting high-net-worth individuals—compounded by the longer-term disruptions of Brexit—have increasingly pushed wealth toward other global centers rather than attracting it.

Despite Europe entering 2026 in a phase of growing fragility—marked by heightened geopolitical tension, economic deceleration and a visible erosion of political leverage on the global stage—expert sentiment toward the continent has nonetheless improved. Positive expectations for Europe’s role in the art market rose from 17 percent to 28 percent, primarily driven by Paris’s renewed positioning as the most dynamic global art hub. Still, with the overall economic growth outlook for 2026 remaining sluggish at around 1.3 percent with slower wealth expansion than in other regions, most experts anticipate a stabilized, largely flat market characterized by incremental improvements rather than a full revival or renewed growth cycle.

Experts increasingly agree that power dynamics—and particularly the financial force shaping the future of the art market—are shifting toward new geographies. Unsurprisingly, with the arrival of Art Basel and Frieze and the success of Sotheby’s early Saudi sales, the Middle East—and the Gulf in particular—stands out as the most bullish region heading into 2026, with 76 percent of experts expecting positive market performance and minimal downside risk. This confidence is driven not only by the growing concentration of wealth but also by robust public investment in cultural infrastructure, an expanding institutional presence and sustained government-backed initiatives, with tourism authorities partnering directly not only with global museum brands but also, increasingly, with fairs and auction houses. Although the Middle East still accounts for a relatively small share of global turnover and activity remains concentrated in a limited number of centers, with regional economic growth projected at around 3.9 percent in 2026, its fairs and institutions are emerging as new magnets for international market activity at a moment when other regions face slower growth and mounting political headwinds.

South Asia and Southeast Asia are the other regions experts expect to sustain growth, driven by rising domestic wealth, increasing international recognition of regional artists and expanding institutional engagement that continue to bolster market confidence. This momentum is further reinforced by a younger, increasingly affluent population drawn to art, design and luxury collecting, with growing spending power. According to Christie’s year-end results, younger and new buyers from the region accounted for 37 percent of global luxury auction spending. Reflecting this shift, 53 percent of respondents now believe the art market in South Asia will continue its ascent, up from 32 percent last year. In comparison, positive expectations for Southeast Asia have climbed to 48 percent, up from 35 percent in 2025. India, in particular, remains the region’s anchor market, supported by strong domestic demand, projected economic growth of around 6.4 percent in 2026 and a rapidly expanding base of high-net-worth and ultra-high-net-worth individuals.

The primary gateway to the region remains Hong Kong, where all major auction houses have doubled down over the past year, investing heavily in expansive, experience-driven luxury headquarters. While auction results in 2025 were uneven and buyer behavior at Art Basel Hong Kong was notably more conservative, expert sentiment toward the city has improved sharply. Positive expectations for Hong Kong as the region’s leading art-market hub rose from 19 percent to 48 percent, while negative views fell dramatically from 52 percent in 2025 to just 14 percent heading into 2026.

This rebound in confidence has unfolded alongside renewed optimism around mainland China. Despite escalating geopolitical tensions and U.S. tariffs, China posted approximately 5.0 percent economic growth in 2025, meeting the government’s official target and marking a modest rebound amid persistent domestic weakness and external pressures. While domestic consumption remained subdued—with retail sales growing only about 3.7 percent—and private museums continued to close throughout 2025, the improving art-market outlook appears increasingly driven by ultra-high-net-worth individuals and internationally mobile capital, particularly as it continues to funnel through Hong Kong’s established financial and cultural infrastructure.

Looking more broadly across Asia, experts also anticipate renewed energy in the South Korean market following a slow year and sluggish sales at Frieze Seoul, as the initial contemporary boom gave way to more conservative behavior—even among younger buyers. Thirty-four percent of experts expect a positive turn (up from 16 percent in 2025), supported by a broader wealth outlook pointing to moderate economic recovery, with growth projected at around 1.9-2.0 percent in 2026, driven by semiconductors, A.I.-related investment and a rebound in domestic consumption. This recovery is expected to be measured rather than explosive, as the market stabilizes after a speculative phase and becomes increasingly supported by institutional engagement and a more selective, quality-driven collector base.

Stability is also expected to continue to characterize Japan’s steadily evolving art market, in line with its broader economy and political landscape. Neutral sentiment among experts rose to 65 percent (up from 35 percent), reflecting a market historically anchored in mature institutions and seasoned players—largely resistant to speculative excess after having already absorbed its consequences during the 1980s boom.

Looking to the other side of the Americas, despite slowing regional growth and heightened geopolitical tension heading into 2026, confidence in the Latin American art market is strengthening, with positive expectations rising to 41 percent on the back of record-setting Modern sales and increased international visibility.

Experts’ outlook for Africa’s art market also remains stable rather than expansionary, with modestly improving sentiment and declining downside risk supported by selective institutional interest and growing international visibility—even as strong economic growth from a low base continues to be tempered by structural infrastructure constraints.

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