Is the Ultra-Contemporary Art Market the New Contemporary?

Amoako Boafo’s Exhibition View. Courtesy of Gagosian.

As headlines from the art world dominate news channels, it seems as though each sale sets a new record, each genre enjoys burgeoning popularity, and collectors act in unison across public auctions. However, the reality is that each region possesses its own narrative, culture, and idiosyncrasies, which significantly influence collectors' purchasing decisions, much like in the stock market.

A new report from Morgan Stanley and Artnet, released in the first quarter of 2024, casts light on a divergent pattern in investments in Ultra Contemporary Art. As the initial excitement settles and sustained growth establishes itself through auctions, one might raise a question: Is the Ultra-Contemporary Art Market the New Contemporary?

Behavior of Sales in Auctions

The definition of Ultra Contemporary Art encompasses artists born after 1974, setting it apart systematically from historical movements such as Impressionism, post-war art, and other genres. In recent years, collectors have demonstrated a pronounced preference for acquiring works by Ultra-Contemporary artists at auction, relative to the broader scope of sales that include Old Masters and Modern art genres. The sales behavior of collectors varies annually. For instance, in 2023, interest in Impressionism & Modern Art surged among collectors of works by artists born in Latin America and the Caribbean, whereas interest waned for Post-War & Contemporary artists from the Asia-Pacific region.

One of the most notable developments has occurred within the Ultra-Contemporary art genre, where buying preferences starkly contrast with those in other segments of the global art market. African artists, in particular, have diverged from global trends, with Ultra-Contemporary sales over the last four years accounting for a larger percentage of overall sales. Although demand has fluctuated, interest has remained robust since 2017. This sustained interest may be attributed to the continent's rich and diverse cultural range, a burgeoning production of new artworks, and the initiation of dialogues addressing social issues from the past century, such as the Black Lives Matter movement, the repatriation of artefacts, and ongoing political instability in several countries.

Courtesy of Morgan Stanley & Artnet Report 2024.

Moreover, other artists from Europe, Asia, and the Pacific have not garnered as much attention in Ultra-Contemporary sales as their African-born counterparts within the same art historical genre. An analysis of the data reveals that Ultra-Contemporary sales represent only a modest percentage of the overall art market, which is valued in the billions of dollars. Until now, there has not been any significant market behavior in Ultra Contemporary Art with an exception of African artists. This trend may be attributable to a variety of factors, including an abundant supply of works from different art historical periods, risk aversion among collectors and investors, and a tendency to pursue popular works of art, akin to chasing 'hot stocks' on Wall Street.

Courtesy of Morgan Stanley & Artnet Report 2024.

Long-term Capital Accumulation

The emerging interest in Ultra-Contemporary African artists and the fluctuating results elsewhere could signal promising investment opportunities and portfolio diversification within the art market. However, forecasting the future remains fraught with uncertainties, influenced by the effects of wars, social conflicts, and political dynamics. Nonetheless, allocating a small portion of an investment portfolio to Ultra-Contemporary works could foster long-term capital accumulation for various reasons.

Primarily, while many investors focus on blue-chip works anticipating substantial annual returns, Ultra-Contemporary artworks may offer a more advantageous potential for returns in the coming years. Emerging artists, often unrecognized by both the public and major art institutions, represent a segment with a favorable risk/reward ratio when compared to investments in more established art historical genres. Additionally, diversifying into this field enhances exposure across different geographies, genres, and mediums, potentially mitigating risk and enhancing the overall investment strategy.

Secondly, the dynamics of economics and politics are perpetually in evolving motion, influencing investment opportunities linked to GDP growth and potentially altering the landscape for art market investments in the short to medium term. According to the African Development Bank, the African continent boasts a promising macroeconomic outlook characterized by increasing investments, diminishing dependency and structural reforms. With the implementation of new education policies according to UNESCO and robust governmental support, it is reasonable to anticipate that African artists will maintain their momentum in Ultra-Contemporary art sales.

Furthermore, the IMF projects that both China and India will significantly enhance their economic power over the next decade, thereby increasing wealth among their populations. This economic upturn could enable artists from these regions, representing a combined population of nearly four billion, to thrive. Their growing participation could diversify and expand the scope of Ultra-Contemporary art, introducing new perspectives and enriching the artistic dialogue.

Omar El Lahib, Potential Bird Conflict, 2022. Courtesy of Saatchi Yates.

Thirdly, the collecting preferences of collectors are evolving, with many substantial collections being auctioned off, signaling a forthcoming wealth transfer over the next decades. Investing in Ultra-Contemporary art is timely as the behavior of younger collectors will shape future investment cycles in the arts. Unlike Impressionist and Old Masters, Ultra-Contemporary art captures the zeitgeist and possesses the vision to attract new collectors to its sphere.

Last but not least, it is crucial and prudent to support emerging artists in their careers and artistic endeavors. Many artists have been profoundly affected by the recent surge in the cost of living in major cities, ongoing wars, and cuts to arts and culture budgets in several nations(link). Investing in their work not only aids in sustaining their livelihoods but also enhances their professional trajectories. Such financial support can benefit investors as well, potentially leading to an appreciation in the value of the artists' oeuvre as their careers advance.

Caroline Walker, Spritz for Bitz, 2022. Courtesy of Stephen Friedman Gallery.

Win-Win For All

Each art historical narrative and genre cultivates its own dedicated collector base, followers, and investors. As we examine auction results, various aspects of the art market might appear opaque and homogeneous. However, discerning analysis often reveals emerging patterns, introducing the necessary heterogeneity to the market. Thinking creatively, distinguishing oneself from the mainstream, and embracing minority behaviors can significantly enhance art market investment returns. In a market dominated by those chasing popular trends for quick bucks and showing little trust in emerging talents, investing in Ultra-Contemporary art presents a unique opportunity. These artists, who capture the narratives of today and envision those of tomorrow, offer potential for substantial rewards with minimal risk, benefiting artists, collectors, and investors at the same time.

Cenk Usel

Art Market Professional