Pace Gallery, one of the world's largest art galleries, has launched an ambitious campaign to establish Japan as Asia's leading regional art market. The global gallery chain opened its Tokyo location in 2024 with a clear mission: to position the country as a major player in the international art world and attract more collectors to the region.

Kyoko Hattori, Vice President of Pace Japan and the de facto head of the gallery's operations in the country, believes that expanding Japan's art market and attracting more international galleries is crucial for achieving this goal. A seasoned art professional and collector herself, Hattori was headhunted by Pace CEO Marc Glimcher after serving as regional representative for auction house Phillips in Tokyo for approximately three years.

"I want Tokyo to be the center of art in Asia," Hattori said in a recent interview, emphasizing that bringing more international galleries to Japan is essential for realizing this vision. "I want to see it happen." Her confidence in Japan's potential stems from her extensive experience in the art world, including her involvement in the 2022 auction of a monumental Jean-Michel Basquiat painting for $85 million on behalf of Japanese billionaire Yusaku Maezawa.

Hattori joined Pace in May 2024, drawn by the opportunity to establish a mega gallery presence in Japan. "Pace is one of the biggest galleries globally, and I was interested because there was no mega gallery in Japan," she explained. While she acknowledges the significant challenges ahead, she remains optimistic about Japan's ability to become a leading regional art market, though she notes that international observers may have more confidence in Japan's potential than the Japanese themselves.

The timing of Pace's entry into Japan appears strategic, as the country has been experiencing notable growth in its art market. Pace established its bright, airy 510-square-meter gallery space in Mori Building's Azubudai Hills development in 2024, coinciding with rapid growth in Asia's art market. Despite Japan's long-standing tradition of art collecting and gallery culture, the country has fallen behind locations like Hong Kong and South Korea in hosting international galleries and major art fairs.

Recent market data supports Japan's growing prominence in the Asian art scene. According to research by the Cultural Affairs Agency conducted jointly with art economist Clare McAndrew, Japan became Asia's second-largest art market in 2023, capturing a 5% share in value. This places Japan behind the combined market of China and Hong Kong, which dominates with 80% of the market share. More encouraging for Japan's prospects, while global art sales increased by only 1% between 2019 and 2023, Japan experienced an 11% increase over the same period, growing from $611 million to $681 million.

The 2025 Art Basel Global Market report further validates Japan's upward trajectory. While South Korea, despite hosting numerous mega international dealer galleries, saw its sales decrease by 15% in 2024, Japan's art market grew by 2% year-over-year. These positive trends have positioned Japan as a bright spot in the regional art market, generating international attention and headlines praising the country's potential.

However, Japan still faces the challenge of catching up with more established art markets, particularly in attracting international audiences. With many international galleries already operating spaces in Hong Kong and Seoul, some industry observers question whether there's room for a third major location in the region. "With many international galleries already opening spaces in Hong Kong and in Seoul, a third location in the region may be viewed by some as oversaturation. Would they open three locations in Asia? I think that's also the challenge," Hattori acknowledged.

Recent developments suggest growing international interest in Japan's art market. Ceysson & Benetiere established its first Asian gallery in Tokyo's Ginza district in May, while Space Un, an internationally focused gallery co-founded by Japan-based Edna Dumas of the Hermes luxury brand family, opened in 2024. These new additions to Tokyo's gallery scene indicate increasing confidence in Japan's art market potential.

One of the most significant barriers to Japan's art market development has been its taxation framework, which experts have long considered less competitive than other major art markets. This tax structure has historically placed Japan at a disadvantage in securing serious international interest from galleries and collectors. However, recent policy changes offer hope for improvement.

A breakthrough came in 2023 when Tokyo Gendai, held annually in Yokohama, became the first Japanese art fair to secure a tax break for foreign exhibitors. The government granted the fair bonded status, exempting foreign dealers from paying taxes and tariffs on artworks brought into Japan for exhibition. Previously, these taxes represented a significant burden for international galleries seeking to access the Japanese market. Under the new system, taxes are only imposed when artworks are actually sold.

The importance of continued tax reform was highlighted during a September event at Pace's Tokyo branch, where CEO Glimcher spoke alongside Mexican American artist Leo Villareal, who was debuting his work in Japan, and veteran Liberal Democratic Party lawmaker Taro Kono. Kono had spearheaded the tax break for foreign art dealers during his tenure as state minister on deregulation. "Hopefully the tax changes," Hattori said, acknowledging that taxation remains a serious challenge for market development.

Despite these structural challenges, Glimcher remains optimistic about Japan's potential. Speaking to guests at the Tokyo event, he described Japan as an antidote to an art world that had previously "gone crazy for consumption" and was facing a recent slump. "Tokyo has not been part of that overexcess," he noted, suggesting it was time for the Japanese capital to become the center of the region. His only mild criticism was that collectors could be more aggressive in their art purchases, though he placed the responsibility on galleries to better meet collectors' needs.

The weakening yen presents both challenges and opportunities for Japan's art market development. While Japan remains one of the world's wealthiest countries, the yen's declining value against the dollar means Japanese collectors must pay significantly higher prices for international artworks compared to collectors from countries with stronger currencies. This currency disadvantage has been felt directly by Japanese collectors who remember when the yen was stronger against the dollar.

Hattori has encountered firsthand complaints from Japanese collectors about rising prices for works by Pace artists and the increasing costs associated with art purchases. Her standard response to such concerns reflects her long-term optimism: "You better buy now," she tells hesitant collectors. Despite currency-related challenges, she maintains that Japan's domestic collector scene is surprisingly robust, with the country boasting a healthy population of very serious collectors.

The Japanese art collecting landscape is also evolving demographically. Younger collectors are emerging alongside more female collectors who are eager to build their own collections. "I like female collectors, because they're very instinctive, which resonates with me," Hattori said, noting that she is personally driven by emotion when acquiring new pieces for her own collection, which she describes as "something of a diary."

Japanese collectors possess unique qualities that add to the market's dynamism and distinguish it from other regional markets. "I find Japanese collectors are less focused on investment value. It's less transactional, which I think is great. They do not hire advisers," Hattori observed. "If you visit a Japanese collector's home, each collection is very different." This individualistic approach to collecting reflects a deep appreciation for art that those seeking to develop a global art hub must cultivate and nurture.

The authenticity of Japanese collectors' engagement with art particularly impresses Hattori. "If we bring them global, high-quality works, they are very enthusiastic to buy," she explained. "They're not interested in parties, but they really want to enjoy art." This genuine appreciation for art, rather than its social or investment aspects, suggests a solid foundation for sustainable market growth.

Looking ahead, Japan's path to becoming Asia's premier art market hub will require continued policy reforms, particularly in taxation, alongside sustained efforts to attract more international galleries and major art fairs. The country's recent market growth, combined with its unique collector culture and increasing international attention, provides a strong foundation for Pace Gallery's ambitious vision. Success will ultimately depend on whether Japan can overcome structural barriers while maintaining the authentic art appreciation that sets its collectors apart from other markets in the region.