The 2015 Report on the State of the Art Market, in which the authors evaluate the overall activity in Korea’s art market over the previous year, has been released. Since 2009, the Korea Arts Management Service (KAMS) has conducted annual statistical analyses to determine the size of Korea’s art market, the results of which are published in its Examination of the State of the Art Market. Based on this yearly investigation of art-related transactions, broken down according to distribution range and public reach, the size of the Korean art market increased 7.3 percent in 2014, recording KRW 349.6 billion in sales. Thus, the latest data suggest that the Korean art market is showing signs of recovery after an extended period of stagnation.

Recovering From a Long Slump

The 2015 Report on the State of the Art Market examines the management of the art market’s key points of circulation, namely, galleries (35), auction houses (10), and art fairs (35); as well as the market’s public sphere, chiefly public art in buildings, art banks, and museums (203). Figures have been obtained, and analyses carried out, through objective and reliable means of measuring sales of art works.

The Korean art market for 2014 was worth KRW 349.6 billion, based on total sales transactions. This represents a 7.6 percent increase over the corresponding figure for 2013.

The 2015 Report on the State of the Art Market reveals that art sales at the key points of circulation reached KRW 288.4 billion, while sales in the public sector amounted to KRW 61.2 billion, for a total of about KRW 349.6 billion. As this is a 7.6 percent increase from the previous year, the Korean art market is displaying signs of recovery after a period of stagnation that started in 2011.

Key Points of Circulation
Growth of Auction Sales Driving Market Recovery

The rebound seen in Korea's art market in 2014 was closely linked to increased sales at auction houses. Korean auction houses enjoyed total sales of KRW 7.78 billion in 2014, a 31.5 percent increase from the previous year. In contrast, sales at galleries and art fairs increased only 5.3 and 5.6 percent, respectively, during the same period. In terms of the number of works sold, auction houses sold 11,414 individual pieces, a 15 percent increase from 2013 and the largest rate of increase among all points of circulation. Compared with auction houses, galleries are experiencing a modest rate of growth, whereas art fairs are in decline.

The 2014 data for the key points of circulation reveal a 10.5 decline in the number of works sold compared with the previous year, although total sales increased 7.9 percent. This indicates growth in the market for works of mid- to high-range value. At auction houses, which experienced the most growth, works valued at KRW 60 million and above accounted for 51.8 percent of sales in 2014, a 5.6 percent increase over the corresponding figure for 2013 (46.2 percent).

Public Sector Declining Sales of Public Art in Buildings; More Purchases by Public Museums and Art Banks

The amount of art purchases by the public sector totaled KRW 6.52 billion, a 10 percent decline from the previous year. Spending declined for public art both in buildings (13.1 percent) and in university and private museums (43.5 percent), but public museums and art banks purchased more art—21.3 and 12.8 percent more, respectively—for an overall increase in public spending on art. The number of works purchased totaled 2,124, a very slight increase (0.3 percent). Art spending by university and private museums fell 43.5 percent, although the number of works purchased increased 5.2 percent, signifying a drop in the value of the individual works purchased.

Continuing Market Imbalances; Framework for a Healthy Art Market Remains an Unresolved Issue

Despite disasters such as the sinking of the Sewol ferry, 2014 was the first year since 2010 that the Korean art market grew, a clear indication of recovery from stagnation. The key forces behind this recovery seem to be the growth enjoyed by auction houses and the craze for Korean monochrome paintings that arose in the second half of the year. Galleries, however, are still struggling compared with auction houses. Furthermore, with a few exceptions, mid- to small-scale art fairs are also experiencing slower growth, exposing an art market that’s still highly imbalanced. Even the growth seen by auction houses benefited mainly the market’s top two establishments, further evidence of persisting disparities in growth.

Supported by the progress made in 2014, the art market is expected to experience even higher levels of growth in 2015. Profits generated at auctions are on the rise, with the highest price ever paid at an auction having just been recorded this year. With the introduction of the Affordable Art Fair, Goods and other events that deviate from the standard format, methods of approaching consumers are diversifying more and more. After an extended period of stagnation, it seems that the art market is finally beginning to recover. Although the popularity of Korean monochrome paintings and growth in the auction market are contributors to overall growth, the issue of disparate growth remains unresolved. It's time to ponder how to restructure the art market so that all its components are healthy, for only then will we achieve long-term growth and market stability.