Pent-up demand after more than two years of coronavirus travel disruptions spurred unexpectedly strong sales at Art Basel in Hong Kong this year, but mounting global economic uncertainty is clouding the outlook for the Chinese art and collectibles market. A number of galleries at the annual art fair sold out their entire booths during the event held in late May, including Hong Kong-based de Sarthe Gallery, Tokyo’s Take Ninagawa and Los Angeles-based Anat Ebgi, according to art publication Ocula Magazine . Numerous works broke the million-US-dollar mark. Fabio Rossi, the owner of art gallery Rossi & Rossi in Hong Kong’s Wong Chuk Hang, said “collectors had less chance to travel last year due to Covid, so they were excited” when they could join an in-person event again. Art Basel, which draws collectors from around the world, faced a number of challenges this year, including a muted global economic outlook, postponement of the fair’s usual calendar slot in March, and Hong Kong’s strict seven-day quarantine for overseas visitors. Did Hong Kong’s art gallery scene survive the pandemic? “It was still tough in March and April. But all of a sudden the mood improved,” Rossi said, adding that many sales at this year’s fair were to new clients or people just dipping their toe into the art world. The “Hurun Chinese Luxury Consumer Survey 2022”, released in January, showed that 58 per cent of China’s wealthiest individuals were “very confident” about the Chinese economy in 2022 – the highest level over the past decade. The survey, which interviewed 750 high-net-worth Chinese with an average age of 37 and average household wealth of 42 million yuan (US$6.2 million), found that 92 per cent of them had plans to invest in the collectibles market this year – a record high – up from 70 per cent in 2021. Jewellery and jadeite were the most popular collectible categories, followed by luxury watches, Chinese painting and calligraphy. Everyone is concentrating their money on top artworks from established artists Chiang Lim-che Despite strong sales at Art Basel , investment enthusiasm among Chinese collectors may already be shifting, as economic challenges ranging from coronavirus outbreaks to tumbling international orders weigh on local businesses, according to some in the art world. Chiang Lim-che, vice-chairman at the Association for Traditional Chinese Furniture, who is also an experienced antique trader, said the mood of mainland collectors “has changed significantly” since March. Rich and upper-middle-class Chinese have faced a rare combination of pressure, including supply chain disruptions caused by coronavirus controls and declining demand for goods in the domestic, European and US markets, he said. “The economy, global and domestic, is currently on a sharp downward trajectory,” he said. “Everyone is concentrating their money on top artworks from established artists, while collections in the middle and at low-level prices might see a rapid decline.” Though the mainland Chinese collectibles market “is changing rapidly”, collectors still want security, whether they are rich millennials or middle aged, Chiang said. Rossi, however, warned that prices are not guaranteed, though some people may buy art as an investment. “The market is driven by auction houses,” he added. “Some collectors may want to diversify their money, [but] somehow they can’t sell it out any more after two to three years.” In the future, the security of a collection would need to take into account how easy it was to carry and sell globally, said Chiang, as well as whether it met globally recognised standards on value. What does Hong Kong’s growing art scene mean for the education sector? Early in June, a young influencer named LK with millions of followers complained in a video that a Qing dynasty ceramic he bought last year at an auction house had declined in value from 60,000 yuan to 44,000 yuan – underscoring the risks of buying art as an investment. China is the second-largest art market in the world, accounting for 20 per cent in value, behind the US at 43 per cent, according to “The Art Market 2022” report published by UBS and Art Basel. Some 53 per cent of high-net-worth collectors across the world intend to buy art this year, down 4 per cent from 2021, the report said. In total, 39 per cent of rich collectors plan to sell works this year, an increase of 4 per cent compared with 2020, the report added. Jan Boes, head of client strategy at UBS’ Global Family Office for the Asia-Pacific region, said mainland art collectors differed in tastes from those in Hong Kong, Taiwan and Singapore. The former prefer established artists that “come with a price tag”, while the latter are more open to new and younger artists from their local communities. Many people in art also collected assets such as watches, jewellery, gemstones, wine and handbags, Boes said. Tony Zhuang, a Guangzhou-based watch collector in his twenties, said sales of “luxury watch brands” among affluent Chinese families – including favourites such as Rolex and Audemars Piguet – are thought to have peaked in early March. “The classic Rolex Daytona 116508 Green Dial reached 1.2 million yuan in March from 280,000 yuan in 2019,” he said. “But now Rolex prices in China’s pre-owned market and second-hand market are down over 30 per cent.” Who has free money or is in the mood to collect? Steven Liu Steven Liu, a senior executive at a technology company in Guangdong, said the decline in prices for luxury watches shows “everyone’s confidence is very poor in terms of future economic growth and consumption”. “Everyone is worrying about how to readjust their supply chains, or tired of paying rent and employees’ wages,” he said. “Who has free money or is in the mood to collect?” Despite declining value and the “speculative” nature of collecting watches, Zhuang and Liu said they are still one of the best investment options for mainland millennials and Generation Z because they offered better return than the yuan, bitcoin or US dollar. W.Y. Wang, a Chinese manufacturing exporter, said luxury watch prices have been dropping since March, but are still higher than last year. “Collectable watches have always been my topic to open conversation with global clients after business conversations, and this global businessman hobby can always helping to soften the tense atmosphere,” he said.