Artworks enter the market through the primary (first) market when they leave the hands of the artist, and, after passing through the collections of individual collectors, they move into the secondary (second) market, circulating within the broader art world.
The Primary Market
When considering living artists, their latest works are typically introduced through primary-market venues such as galleries, department stores, and art fairs. These institutions plan exhibitions and present the works to the public, forming what is known as the “primary market.” Pricing in the primary market is determined by a combination of factors, including the artist’s years of activity, the time and materials required for production, exhibition-related expenses such as booth fees and labor costs, and various promotional costs. Although prices tend to rise as an artist gains recognition and popularity, such increases do not necessarily reflect the actual balance of supply and demand.
Advantages
- When an artist’s secondary-market prices rise, works acquired at primary-market levels can sometimes yield unexpected value.
- There is also a unique pleasure in following an artist’s growth through their works and accompanying them on their creative journey as a collector.
Disadvantages
- It often takes many years for an artist’s reputation to become firmly established, making this field inherently unsuited to investment strategies that seek immediate returns.
- Moreover, an artist does not always achieve lasting fame, and their growth may not unfold in the way collectors anticipate.
The Secondary Market
Once a work released in the primary market passes into the hands of a collector, it enters the realm of the secondary market, where it is treated not as new but as pre-owned. This is the domain to which we, as dealers in antique and fine art, belong. The secondary market forms a broad pyramid structure: the higher tiers emphasize artistic and cultural value, while the lower tiers take on the character of general recycled goods. In the art world, pre-owned works do not necessarily lose value as long as their condition remains sound, and many pieces are actively traded within this secondary market. Works by deceased artists and historical art objects all fall within this category. The most common method of acquiring works in the secondary market is through auctions. Auction prices are determined by the balance of supply and demand, and strong popularity can cause prices to rise significantly. At times, the intensity of competition among bidders in the charged atmosphere of the auction room can drive prices to levels far beyond expectations—into the hundreds of millions or even tens of billions of yen. Although such prices do not always reflect the intrinsic value of the artwork itself, they do represent market-driven valuations that are more closely aligned with actual demand than primary-market pricing.
Many works that enter the market through the primary market tend to settle in price once they move into the secondary market. However, works by globally recognized artists such as Yayoi Kusama and Yoshitomo Nara often experience demand that far exceeds supply, particularly in the case of unique paintings, where secondary‑market prices can reach levels far beyond conventional expectations. In the secondary market, broader economic conditions exert a significant influence on price formation. During Japan’s bubble economy, demand greatly surpassed supply, driving extraordinary price increases across many categories. After the bubble burst, substantial corrections followed, and with the exception of certain specialized fields of Japanese art, the effects of that downturn can still be observed today. By contrast, Chinese art maintains strong global demand, supported by an international market. Museum‑quality works continue to achieve astonishing prices at auction. In recent years, the rise in secondary‑market prices has accelerated further, with record‑breaking auction results frequently making international headlines. To be featured by leading auction houses such as Christie’s or Sotheby’s, a work must undergo rigorous evaluation by their teams of specialists, and only those that meet their exacting standards are presented to the global market.
Advantages
- Because prices are generally lower than in the primary market, collectors can acquire works under more accessible and realistic conditions.
Disadvantages
- Expert knowledge is essential for determining authenticity, and there is always a risk of making an incorrect judgment. By choosing reputable auction houses or trusted dealers with strong expertise, that risk can be significantly reduced.
