As thousands of visitors streamed through a Hong Kong exhibition hall and deals were struck for works by Picasso and Yayoi Kusama, art collectors celebrated the Asian financial hub's return to its bustling heyday.

The scenes at Hong Kong's Art Basel fair last week had not been seen since 2019, with a crackdown on pro-democracy protests and pandemic restrictions in the intervening years radically transforming the city.

More than 86,000 visitors poured through the halls of the fair, reflecting a return to pre-pandemic numbers, with reported sales of more than $98 million, double those of 2019, according to organisers.

Among the biggest deals were a 1964 Picasso sold for $5.5 million, as well as works by Japanese artist Kazuo Shiraga ($5 million) and a strikingly surreal "pumpkin" by Kusama ($3.5 million), according to reported sales figures released by the fair.

The energy at Art Basel reflected the increasing importance of the Asian art market, said organisers, who told AFP that their work was not impacted by the city's national security law.

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© AFP/File

"Asia has been the fastest developing art market in the world," Angelle Siyang-Le, director of Art Basel Hong Kong, told AFP.

For some, however, the success of the fair was not indicative of a healthy art scene.

Hong Kong once held a reputation as a bastion of free speech within authoritarian China, but the national security law (NSL) imposed in 2020 after widespread and sometimes violent pro-democracy protests has criminalised dissent, including in art.

"I don't think just because the sale(s) number at Art Basel is good (it) means 'Hong Kong is Back'," said Kacey Wong, a dissident artist who left the city in 2021 due to the crackdown.

"The NSL created self-censorship amongst the creative industry. Instead of exploring social/political topics, artists dive more into decorative colourful subjects to avoid the NSL's red line(s)."

Last week, a digital artwork that contained the names of jailed Hong Kong democracy protesters on a billboard in the heart of the city was taken down.

- Competing cities -

For art collectors, however, the crackdown has not seemed to matter.

"So far we feel like there's been no impact, we are confident that we will be operating the same way as before," Siyang-Le said.

Foreign artists said they were happy to take advantage of Hong Kong's market.

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Hong Kong's national security law has criminalised dissent, including in art / © AFP/File

"It's an opportunity to get more (exposure)," said M Pravat, a New Delhi-based artist who was exhibiting at Art Basel.

Years of harsh pandemic restrictions in Hong Kong have seen other Asian cities, including Seoul and Singapore, vie to supplant it on the international art scene.

Thierry Ehrmann, head of market analysis firm Artprice, said Hong Kong remained well-placed to compete.

"Hong Kong retains the advantage of a well-structured market, with the presence of the major international players... which translates into a considerable lead in terms of sales revenue," he told AFP.

One of Hong Kong's main advantages for collectors is its lack of customs duties, value-added taxes or inheritance taxes on works of art.

- 'Extraordinary' potential -

China is the world's second-largest art market, after the United States, with sales set to recover from a dip related to pandemic controls that have now been lifted, according to Artprice.

The world's three main art auction houses are expanding their presence in Hong Kong, where art auctions netted more than $1.16 billion last year.

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China is the world's second-largest art market, after the United States / © AFP

Sotheby's was projected to generate 12 percent of its global art auction turnover in Hong Kong in 2022, compared with 13 percent for Phillips and eight percent for Christie's.

Last year, Sotheby's signed a lease for a 2,230 square-metre (24,000 square-foot) space in the heart of Hong Kong's Central district, which boasts some of the most expensive rents in the world.

"The potential is extraordinary," said Alex Branczik, chairman for Modern and Contemporary Art in Asia for Sotheby's. "The acquisition of this space really shows that we are here to stay".

- New clients -

Today, the auction house has as many bidders in Asia as it does in North America.

"These bidders in Asia are fundamentally important to our sales rooms in London, New York, Paris and so forth," said Branczik.

In 2022, one-third of Sotheby's Asia bidders were new clients, and two-thirds of new clients worldwide were from the region.

Artists not in the city's art elite, however, have had more trouble making a living.

"In my career, I try not to rely on selling my works to galleries as a way of living, they are simply not reliable," said Wong, the dissident, who now lives in Taiwan and says he "dare not" exhibit his work in Hong Kong.

Auction houses and collectors, he said, steer clear of "sensitive artists and works".

"For them these types of works are landmines."