How the desire for the new is transforming the global art market

Certain young artists are recently hitting extraordinarily high price levels very early in their careers, rising within a year from a few thousand to several million dollars. Especially since the pandemic, the so-called “Ultra-Contemporary Art” is the fastest growing segment within the global art market according to the latest Artprice.com report . The stakes for gambling on artists born from 1975 have never been higher.

Take, for example, the paintings by London-based artist Flora Yukhnovich (b. 1990) who made her secondary market debut in April 2021, when a 2018 untitled, small-scale window landscape fetched $22,951 (more than five times the highest estimate) in a sale at Bonham London.

By June, the demand for Yukhnovich’s paintings breached the $1 million mark at a Phillips sale in New York; the artist’s luminous seven-foot-tall work ‘Pretty Little Thing’ (2019) sold (for more than 15 times its high estimate) for $1.2 million.

In March 2022, Yukhnovich’s lush painting ‘Warm, Wet 'N' Wild’ (2020), set a new auction record, fetching an astounding $3.6 million at a Sotheby’s evening sale in London.

What causes these breathtaking prices for fresh works by young artists and what are the consequences? In this brief article you will find some of my thoughts, but I look forward to reading yours in the comments.

In the past, an artist’s price level was something that evolved over time. Guided by primary market galleries and created at secondary market auctions, the traditional pricing system is mainly based on track records such as past sale results, rarity or museum shows. But recent market developments indicate that this critical information is apparently no longer of value to current buyers who are willing to spend millions on 30-year-old artists on the secondary market (in which the artist is not the seller and only receives an Artists' Resale Rights royalty fee of up to 4% in the EU).

The paintings of the earlier mentioned Flora Yukhnovich don’t last long on the walls once they’re dry —the in-demand artist’s work has been selling out at shows and art fairs almost as soon as it is hung, leaving the scores of collectors who "missed out" to find only her second-handed works at public auctions.

The rushed digital developments during the lock-downs made the art market more accessible to a new, younger group of wealthy collectors with a progressive taste and keen interest in artwork by peers that captured their zeitgeist. But today’s high competition and limited availability (or access to new works for top-end primary market entrants) of “tomorrow’s Basquiats and Warhols”, resulted in multiplying pre-sale auction estimates by ten, twenty or thirty times ending up bidding over $3 million for a painting executed in 2020 (that sold to the seller for about $40k in a gallery).

My concern is that some unseasoned buyers purchase these works with their ears (rather than eyes) trying to diversify their (liquid) investment portfolios with contemporary art. They probably don't realize (or don't care) that these prices may not be as reliable in the long run —as they hear about investment results from matured blue-chip artwork, often considered a hedge against inflation— and more importantly have a huge impact on the pressure of the young artist's long-term career. The moral responsibility for the latter, of course, also lies with the seller.

The positive outcome of this particular market boom is that it could finally lead to a price correction of artwork by women and artists of color. I sincerely hope that this social development is more sustainable than the way in which the recent prices are being determined. Time will tell.

[Portrait images courtesy of the artists Flora Yukhnovich (1990), Amoako Boafo (1984), Avery Singer (1987) and Ayako Rokkaku (1982)]