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The Korean Art Auction Market’s Turnover Grew 344% over the Year… But Now It Is Showing Signs of Cooling Off

Photo by Sasun Bughdaryan on Unsplash.

Artprice, a France-based online art price database, released its annual Contemporary Art Market Report on October 6 and analyzed that the Korean contemporary art auction market saw a 344% increase in turnover between July 2021 and June 2022. Meanwhile, Korean art market research organizations, such as the Korean Arts Management Service (KAMS) and the Korea Art Price Appraisal Association (KAPAA), report that the local auction market has begun to cool off, especially from the year’s second half.

Artprice has analyzed the results of contemporary art auctions, particularly focusing on the group of young artists under the age of 40 as the influx of millennial collectors (born between the early 1980s and the early 2000s) into the contemporary art market, especially after 2018, has increased the buyer base of under-40 artists at auction.

According to the report, global sales of contemporary artworks by artists born after 1945 totaled $2.7 billion, a slight decrease from the previous year’s total of $2.73 billion until June of this year. This slight decline was attributed to China’s zero-COVID policy, but except for China, the global contemporary art market has grown by 9%.

Geographical breakdown of turnover from Contemporary Art auctions (July 1, 2021 – June 30, 2022) ©artprice.com.

In the United States, contemporary art auction sales reached approximately $1.05 billion, accounting for 39% of the total auction turnover for contemporary art. Despite its 33% contraction, Greater China ranked second in the global contemporary art auction market, with a turnover of $740 million. The UK reached about $486 million, France reached $68 million, South Korea surpassed Japan with $65.5 million, and Japan reached $65.2 million.

In the first half of 2022, the total transaction value of artworks by artists under 40 reached an all-time high within the contemporary art market sector. The total turnover of these young artists’ works reached $200.9 million in the first quarter of this year, accounting for 2.7% of the global fine art auction sales. According to Artprice, works by under 40 artists now account for 16% of global contemporary art turnover, a significant increase from 0.5% in 2002.

The rapid increase in sales of works by young artists has resulted in the addition of more dynamic works to the art market, such as those by women artists, NFT art, street art, African artists, etc. New art market bases, such as Seoul and Tokyo, have also emerged as important contemporary art markets.

Seoul, in particular, experienced astonishing growth as its contemporary art market size increased by 344% to $65.5 million, comparable to that of Paris. In the first quarter of this year, the volume of works by artists under the age of 40 grew by 617% in the country, reaching $7.1 million. On the other hand, works by young artists in the Japanese contemporary auction market grew by 55% in both the first and second quarters of this year.

Young Korean artists under the age of 40 who entered Artprice’s top 200 list of contemporary artworks were Kim Sunwoo (b. 1988), who came in 33rd place, Anna Park (b. 1996) in 75th, GaHee Park (b. 1985) in 121st, and QWAYA (b. 1991) in 160th place.

Exhibition view of Kim Sunwoo's solo exhibition "bon voyage" at Print Bakery, Seoul. © printbakery

Yet, the Korean art auction market appears to have reached a plateau as the second half of this year has begun, despite its remarkable results in the previous year. According to the KAPAA, the local art auction market only reached 43.9 billion KRW in the third quarter of this year, a decrease of 46% from 95.3 billion KRW in the same period last year.

The KAMS has been releasing the quarterly size of the Korean auction market and reported on the 13th that the local market is estimated to attract bids worth 44.36 billion KRW (approximately $31 million) in the third quarter of this year.

In the second quarter of 2021, the market attracted bids worth a total of 92.1 billion KRW, reached a high of 94.5 billion KRW in the year’s third quarter, and showed a slight decline in the last quarter of 2021 when it reached 84.8 billion KRW. The market began to draw a downward curve to 78.5 billion KRW in the first quarter of this year and 66.5 billion KRW in the second quarter.

KAPAA also reported that the bid rate fell below 70% due to a contraction in the transaction of international star artists and artworks with a sharp price increase. The association determined the local art auction market’s total successful bid rate for the third quarter of this year to be 60.59%.

Exhibition view of Woo Kuk Won's solo exhibition "I'm your father" at Noblesse Collection, Seoul. ©Noblesse Collection.

Korean art market watchers say that the economic downturn caused by inflation and international interest rate hikes has affected the local art market, with the weakened buying power of young collectors also contributing to its decline.

Young Korean collectors have shown a strong tendency to purchase artworks with a focus on short-term investments, anticipating a profit from resale within three years or less.

Young artists’ artworks may experience a drop in value and sales if they are repeatedly auctioned within a short time frame and/or if their price increases dramatically before their value is converted to a fair market price.

Last year, young artists such as Woo Kuk Won (b. 1976), Moon Hyeong-tae (b. 1976), Kim Sunwoo (b. 1988), and other international stars garnered the attention of these young collectors. However, the reports of local market researchers indicate that the resale of these works has increased and that their prices have begun to fall. It is believed that the Korean art auction market has entered a period of stabilization.

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