Why the Japanese Art Market Is One of the Fastest Growing in Asia

While South Korea’s art scene has been stealing the spotlight in recent years, Japan is staging a quiet yet deliberate comeback. A recently published study by Dr. Clare McAndrew (the brains behind the annual Art Basel and UBS report) reveals that Japan’s art market has grown by an impressive 11 percent since 2019, leaving the global market’s sluggish 1 percent growth in the dust. Japan now holds the title of Asia’s second-largest art market, commanding a 5 percent share by value—dwarfed only by China’s behemoth-like 80 percent dominance.

Commissioned by Japan’s Agency for Cultural Affairs, Dr. McAndrew’s study is a clear bid to rally local players and investors, decode the complexities of Japan’s art market and highlight the potential of an industry that currently employs more than 12,675 people.

But let’s rewind to the ’80s, a golden era when Japan ruled the Impressionist and Modern art market with the confidence of a seasoned collector brandishing a paddle. Japanese collectors were the titans of the auction room, snapping up million-dollar masterpieces and claiming an estimated 3 percent of the global market. The numbers were staggering: in just the first nine months of 1989, Japan imported a jaw-dropping $1.5 billion worth of paintings. By 1990, the country was the largest art importer in the world, holding a 30 percent share of global imports by value—outpacing both the U.K. and the U.S. That same year, the ARTnews Top 200 Collectors list included a whopping twelve Japanese names, an unmatched regional showing. Fast forward to today, and the same list features only five Japanese collectors, a stark reminder of how dramatically the market has changed.

The Japanese art market’s meteoric rise in the late 1980s was fueled by the “bubble period” of the nation’s economy when asset prices skyrocketed across the board. A surging property market inflated by speculation created newfound wealth, and a strong yen paired with soaring stock values encouraged the Japanese to channel their surplus cash into art. But as is often the case with bubble economies, this enthusiasm came with a dash of recklessness: inexperienced buyers, high-risk financing and questionable art-backed transactions. When the bubble inevitably burst, the art market imploded alongside it, and liquidity dried up almost overnight.

For decades afterward, Japan’s art market was so diminished that it barely registered in global reports like UBS and Art Basel’s authoritative surveys. Meanwhile, South Korea emerged as a cultural and economic force, propelled by substantial public investment in the arts and bolstered by global phenomena like K-pop and Korean cinema. This newfound prominence may have reignited a sense of competition in Japan, whose cultural exports—think video games, anime and J-pop—defined global trends through the 2000s but have since taken a more subdued role on the world stage.

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The recent report provides a glimmer of hope for Japan’s art market, estimating sales of $681 million in 2023 across dealers, art galleries and auction houses. While Japan’s share of the global art market remains a modest 1 percent, government reforms in recent years have begun to lay the groundwork for broader international engagement. Chief among these efforts was a 2021 tax overhaul that eased restrictions on artworks sold or displayed through free port zones. This change eliminated millions in duties and taxes, enabling international galleries to more feasibly participate in Japanese art fairs. The reform proved pivotal in the 2023 launch of Tokyo Gendai, a new addition to The Art Assembly portfolio. By its second edition last year, the fair saw a sharp rise in international exhibitors, underscoring its growing appeal. Meanwhile, other events like Art Collaboration Kyoto (ACK) and Art Week Tokyo have also gained traction, drawing increased interest from abroad.

Despite these strides, the report highlights Japan’s lingering insularity. Only 10 percent of Japanese dealers’ annual sales come from art fairs, with just 2 percent generated at overseas fairs—far below the global average of 29 percent. Even more telling, 30 percent of Japanese dealers didn’t exhibit at any fairs between 2021 and 2023. Many cited steep costs, exchange rate pressures and logistical challenges as reasons to approach international participation cautiously, though some expressed a desire to expand their presence at global events.

On the collector side, Japanese high-net-worth individuals (HNWIs) also exhibit preferences that set them apart from their global peers. While the average global collector attended six art fairs in 2023, Japanese HNWIs attended just four, evenly split between domestic and international fairs. However, their gallery attendance stood out: even post-pandemic, Japanese HNWIs visited ten gallery exhibitions—four locally and six abroad—surpassing the global average. Their reliance on long-term dealer relationships and preference for gallery visits over fairs underscores a distinctive approach to art acquisition that continues to shape the local market’s dynamics.

Despite its predominantly local profile, Japan holds 5 percent of the Asia region’s total market share, according to the report. This positions Japan well behind China’s overwhelming 80 percent dominance but ahead of South Korea, which trails in fourth place with a 2.5 percent share. Artnet’s Price Database data reinforces these figures, showing Japan accounted for 5.1 percent of Asia’s auction market from October 2023 to September 2024. Meanwhile, South Korea saw a sharp 27.2 percent year-on-year decline in auction sales during the third quarter, dropping to $17 million, according to the Korea Art Authentication and Appraisal Institute.

Delving deeper into the numbers from Dr. McAndrew’s report, Japanese auction sales reached $221 million in 2023, contributing one-third of the total value of the nation’s art market. The auction scene is dominated by 15 established companies specializing in art, antiques, and collectibles, with Mainichi Auction leading the pack at 33 percent of the market share by value. In 2023, Mainichi sold more than 21,000 lots, though more than 90 percent of these fetched under $10,000, and over half were sold for less than $1,000. Notably, only four auction houses in Japan achieved sales exceeding $1 million for individual works, with Western artists commanding the highest prices. For example, Pierre-Auguste Renoir’s Après le Bain (c. 1901) fetched JPY 276 million (approximately $2.1 million) at iART Auction.

Interestingly, while some of Asia’s top-selling living artists—Yayoi Kusama, Yoshitomo Nara, and Takashi Murakami—hail from Japan, their high-value works are typically sold in international markets like Hong Kong rather than domestically. Kusama, for instance, was the ninth highest-grossing artist at global auctions in 2023, with a market value nearing $176 million. However, only 12 percent of those sales were recorded in Japan, where just 13 of her 202 works sold for over $1 million. Similarly, Yoshitomo Nara saw only 3 percent of his total auction sales by value take place in Japan that year, underscoring the tendency for Japan’s most celebrated artists to achieve their highest prices abroad.

These figures underscore a persistent trend in Japan’s art market: the overwhelming majority of transactions remain firmly rooted in the lower-tier price ranges. In 2023, works priced under $50,000 accounted for a staggering 95 percent of dealer sales, up sharply from 65 percent the previous year. The auction market tells a similar story, with 91 percent of lots selling for less than $10,000—a clear reflection of the market’s cautious approach to high-stakes investment.

Japanese buyers, true to form, continue to exhibit both caution and conservatism, relying heavily on personal relationships with galleries rather than embracing more speculative channels like auctions. Galleries and dealers remain the backbone of the nation’s art market, accounting for 68 percent of total sales by value in 2023. This translates to an aggregate market value of just under $460 million, reaffirming the centrality of these long-standing, relationship-driven networks in shaping the dynamics of Japan’s art economy.

The report estimates that Japan is home to 2,060 active dealers, ranging from galleries and antique shops to other outlets selling art and collectibles. Unsurprisingly, the majority are clustered in Tokyo prefecture, which accounts for 59 percent of the total businesses, while the broader Kanto region takes the lion’s share at 66 percent. Kyoto claims a distant second place with 8 percent, followed by Osaka at 6 percent. But notably, a whopping 97 percent of these dealers operate solely within Japan, with just 3 percent maintaining premises overseas—proof that international expansion remains a distant dream for most. These galleries are anything but fledgling enterprises, with an average of 40 years in operation. Only 13 percent have been in business for a decade or less, and the primary market remains thin, with just 18 percent of dealers focusing exclusively on emerging artists. Instead, 45 percent of galleries juggle both primary and secondary markets, cushioning their portfolios with established names.

Still, the data reveals the hurdles Japanese dealers face in nurturing fresh talent. In 2023, 24 percent of sales came from their top-selling artist (a slight dip of 2 percent year-on-year), while 42 percent came from their top three artists, signaling a heavy reliance on proven names. Despite these challenges, the prevalence of lower-priced transactions suggests an undercurrent of untapped potential. Yet, the market’s conservatism is glaring in other ways. For instance, high-net-worth individuals (HNWIs) in Japan lag behind global peers in acquiring works by female artists—women accounted for just 40 percent of their collections in 2024, compared to a global average of 44 percent. Galleries reflect a similar imbalance: only 35 percent of their programs feature women artists, who account for just 20 percent of total turnover.

Japan’s art market revival aligns with a broader economic resurgence

After decades of stagnation, Japan is enjoying a period of steady growth marked by the end of deflation and renewed corporate vigor. Inflation remains modest—just 3.3 percent in 2023, well below the U.S. (4.1 percent), the U.K. (7.3 percent) and France (5.7 percent). GDP growth has also surged, averaging 3.5 percent in 2022 and 2023—double the growth rate between 2013 and 2019. Meanwhile, wage growth has hit a 30-year high, buoyed by an economic strategy blending monetary, fiscal, trade, and industrial policies to boost productivity and sustainability. Consumer spending is up 0.9 percent, while gross domestic product rebounded by 0.7 percent in the second quarter of 2024.

“Moderate inflation and the best period of nominal economic growth since the collapse of its asset bubble in the early 1990s are helping usher in a generational shift in Japan’s economy and markets,” noted Morgan Stanley’s Chief Japan Economist, Takeshi Yamaguchi, in a recent report. “Large employers have cast aside what was a well-established practice of no wage hikes and no price increases, beginning a positive cycle of increases in both.”

This economic momentum has also impacted the yen, which appreciated to 144.6 against the U.S. dollar in August 2024, driven by expectations of rate hikes in Japan and rate cuts in the U.S. Though inflation and prices are gradually ticking up again, Japan appears to have found the elusive formula to escape its long-standing stagnation, instilling confidence among both local consumers and international investors. As Japan steadily reclaims its economic stature on the global stage, its art market seems poised to follow suit—quietly, yet with undeniable potential.