“I don’t believe for one second that it’s cyclical. It’s structural. The infrastructure is too big. There are too many advisors, too many galleries, too many artists, too many fairs. Everything will need to downsize. In my blunt opinion, blood will flow in the streets before the art market finds a new balance.”
-Belgian collector and art market commentator Alain Servais
It’s not been widely covered, but the art world is facing it’s day of reckoning after the insatiable rise of high end art prices during the pandemic.
After seeing a years of astronomically rising interest and sales of high-end art, in which many wealthy people mistakenly looked at art as an asset class, it appears the bottom is falling out. High-end investors have taken a beating. How much of a beating? After reaching a peak in 2022, fine-art auction sales during the first half of 2025 totaled $4.72 billion – down 40.9 percent from 2022’s first half.
Adding to this is the fact is that politicians have caught on to the dirty secret that high-end art was being used extensively for money laundering the last 10 years. Heavy regulation is now starting to close the loopholes.
Buying the work of fast-rising artists and quickly reselling them for higher prices became rampant during the pandemic. Faced with a surge of investors from around the globe, galleries raised primary prices, aiming to capitalize on red-hot demand and dissuade speculators from reselling quickly.
But the strategy backfired. Art sold for $500,000 at primary is now only getting $250,000 at auction.
The largest major art shows in the world are seeing dramatic declines – and in an unheard of development – are now even cancelling shows. Many investment-focused art buyers got burned and have been limping out. While the official line has always been that aren’t isn’t an asset class – many dealers have suggested exactly that all during the pandemic.
“That’s not how you should be collecting. And if you have been, sorry, you’ve done something that’s not productive. Read the fine print. The reality is, no one ever said you are going to make money if you buy my artists.”
Allan Schwartzman
Now those same studios and dealers that were feeding the frenzy are announcing bankruptcy and closures on a near weekly basis. Many can’t even make their rent. Pace moved into a new 75,000ft property in New York and is paying a staggering $700,000/mo in rent – for a total of $220 million over the life of the entire lease. Some such as Clearing already owes $420,000 in back rent and fees. Many world class galleries are closing up shop after believing the party would never end.
Survivors are turning out to be leaner and trying new models with small galleries, seasonal business in California winters, and very low-rent locations in tiny outlying cities that look promising for budding art community growth.
It’s a fascinating read and worth checking out.
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