Accounting, finance & control

Tefaf’s report reassesses the value of the art market

By Rachel Pownall | March 7, 2017 | 3 min read
The economist Rachel Pownall is having a busy year. Approached last summer by the Tefaf art fair to take on its annual art market report after Clare McAndrew, its previous author, moved to the Art Basel franchise, Pownall had to pull Tefaf’s annual report reassesses the value of the art market together a year’s worth of data that is notoriously difficult to find, while keeping her commitments as an art market and finance professor at Maastricht University and TIAS Business School. “It’s been all-consuming to start from scratch,” Pownall admits. 

This year’s report, released on March 6 ahead of the Tefaf Maastricht art fair, incorporates information from offices of national statistics, export and import data and the private company database, Orbis, as well as the more accessible auction results from Artnet. The top line number — valuing the art market at $45bn in 2016 — is, on the face of it, down quite considerably on the number that McAndrew had of $63.8bn for 2015. Pownall says, however, that she has used different methodologies — for example, she has a narrower definition of dealers and galleries. McAndrew identified more than 69,000 dealers in the US alone last year; Pownall identifies 21,000. If Pownall were to apply her methodology to the previous year, she says, the 2015 total according to her reckoning would have been $44bn. Therefore the 2016 figure would in fact have been a marginal rise.

Given the discrepancy between her numbers and McAndrew’s, Pownall is keen to divert attention away from the overall value of the market. She says that her more narrow focus “has the outcome that the industry estimates are smaller, yet we consider this to be more representative of the art and antiques market globally.” 

Pownall’s overall findings are surprisingly positive given the dramatic fall in auction sales last year: by 18.8 per cent globally, and 41 per cent in the US. But the report finds that the private market has made up the slack. Sales through dealers and galleries have risen by 24 per cent, with auction houses’ private deals at around $2bn in 2016. Pownall calculates that dealers’ sales accounted for around 63 per cent of the market, far higher than previously assumed (around 50 per cent).

“Privacy and anonymity, cherished in the western world, are shifting trade towards dealers in certain markets,” Pownall says. She cites Gabriel Zucman’s book The Hidden Wealth of Nations, which estimates the foreign wealth held in Switzerland at $2.3 trillion. Secrecy is paramount and the report states that “Sales go unrecorded into tax havens or through offshore arrangements, or in a temporary period of flux, whilst located in one of the world’s, increasing in number, Freeports.”

Given such hidden data, how certain can Pownall be of the report’s findings? Despite trawling through thousands of numbers, she concedes that putting an exact figure on the private sales market is “near impossible” because “the art dealer market is extremely opaque”.

She defines the important takeaway to be the “delta”, an economic term for the ratio of change, of the art market, which she finds generally points to an industry that is “shifting, not shrinking”. She is also positive about the market’s outlook despite geopolitical uncertainty, and points to a survey in the report that finds 76 per cent of dealers expect their buyer numbers to increase this year.

Yet while Pownall is optimistic about the art market, she is troubled by its inequality. She reiterates that a handful of dealers and auction houses dominate, finding that 30 dealers account for around a third of gallery sales and 20 auction houses for 70 per cent of the public market. Meanwhile, she finds that sole traders, who make up around 75 per cent of the US market, for example, are struggling most to make a profit.

Given that she believes the inequality will grow, why does Pownall dedicate so much time to deciphering the rather cold-blooded art market? Her eyes light up. “The non-pecuniary aspects of art, its heterogeneity, why people buy, why they sell, an understanding of what drives taste and how price can be an influence — it’s all fascinating.”

Auction sales in Africa 
The Tefaf Art Market Report 2017 finds that Africa & Oceania accounts for just 1 per cent of auction sales. For Africa, the auction sales figures peaked in 2013 at around $32m but fell to around $14m in 2016. The majority of auction sales in Africa emanate from South Africa where $16.6m sales were recorded in 2015, dropping to $11.5m last year.

This article was originally published on on 3/3/2017. The full report is available through

Dr. Rachel A.J. Pownall is a Professor in Art Finance and Museum Management at TIAS and Professor of Art Finance at Maastricht University. She is an expert in the area of Art Finance and has published widely on the subject of Art as a Financial Investment, Art as Collateral, and has created her own Art Price Indices. Pownall teaches in the TIAS Program Art Finance & Collections Management.