Chinartree

Is Middle-Eastern art still a good investment this year? - January 2009

“The value of a Canaletto will never go down to zero, it will never do an Enron or a Marconi.” Philip Hoffman, CEO of The Fine Art Fund Group.

The last five years has seen a massive boom in Middle-Eastern contemporary art market – both in terms of interest and sales.  Investors looking to diversify their portfolios beyond the usual property and stock market options, turned towards art with enthusiasm and vigour. 

One of the major catalysts in this growth was the arrival of Christies in Dubai in May 2006.  Over the course of 2007, the London based auction house saw sales in excess of $24 million.  Of the 340 works that sold that year, the majority were from the Middle-East (mainly Iran) and India.  Since then we have seen Sotheby’s, Bonhams and Phillips de Pury set up base in the Emirates.  Bonhams inaugural sale broke three records, including masterpieces by Gulgee and Farhad Moshiri selling for $336,000 and exceeding the $1 million mark respectively.

At the time, the exponential growth of in the regional contemporary art market seemed unstoppable.  Just weeks before the world saw major financial institutions liquidated, nationalised or bailed out, Middle-Eastern art prices were still climbing high.  However, we can no longer deny that the global economic downturn has also affected the UAE across several sectors, particularly property and tourism.  The first indicator that art was also a victim of these circumstances was in the disappointing October/November 2008 Dubai auction results. 

Nevertheless we’re being told that despite the recession there is still interest in the market and that collectors are still buying.  We asked leading representatives of Middle-Eastern art what does this all mean for 2009?

Galleries and the Return of the Primary Market 

In the last couple of years the region has seen a mushrooming in the number of galleries – namely in Tehran and Dubai.  So will these new gallerists be advising their collectors that regional art is still a sound investment?

“Yes I do think contemporary middle eastern art is still a good investment and most of these artists are still at accessible prices.  Now that the speculation that was happening in the secondary market has died down, it’s possible to purchase good works at good prices,” says Sunny Rahbar from The Third Line Gallery. 

Perhaps this is an indicator that the economic decline has brought about some positive changes in the market such as the settling of the hype in the auction houses.  This in theory means that the primary market is able to be more competitive, potentially supporting both new Middle-Eastern artists and collectors. 

Art Fairs and Emerging Trends

John Martin, director and co-founder of Art Dubai also feels particularly confident of the artists emerging from this region over the next year. “Watch the artists taking centre stage at exhibitions and biennials worldwide, especially the Venice Biennale, the Abraaj Capital Art Prize and the upcoming Saatchi show in London. This is the year for the more innovative artists from the Middle East.”

Rumour has it this year’s Art Dubai will be attended by the movers and shakers of the international art world.  Many now see Dubai as the most important art hub in the Middle-East and stress the importance of this regional market in this time of global financial decline.

John explains why this is “Even in a recession, some financial investments excel. It is no less true in the art market where there will inevitably be artists, particularly the younger avant-garde artists who make a huge impact globally. I would say there is a high likelihood that many of these stars will emerge from within the Middle East and the Arab diasporas in 2009.” 

Art Funds and Long-term Views

As well as the younger emerging artists from the region, there are groups that will be continue their interest in the more established or ‘blue-chip artists.’  The Fine Art Fund Group is one such example and was established with support from Addax bank in 2008, with an initial fund of $35 million.  They also look at recent economic events as an opportunity rather than a hindrance.

“I think now it a  promising long term investment more than ever. Now is the most opportunistic time to acquire art from the Middle East. ” says Maneli Keykavoussi, Head of Middle Eastern Markets for the Fine Art Fund.

The fund is taking a long-term view where it will look to mature its collection of modern and contemporary artwork over the course of five years, providing long-term capital for its investors.  They see no reason why developments in the region will not continue.    

“The next three to five years will see significant growth as culture becomes an even more central part of the tourist industry in the Gulf and the collector base in the Arab world grows. I think we have many more collectors today than three years ago in the Middle East and that is still growing.”

Clear Waters ahead?

Overall we seem to be being told now is the right time to buy art, despite and in fact because of the economic decline.  The region also appears to be continuing its growth with conviction. But how do you feel as artists, collectors and art enthusiasts of the UAE?  Would you choose this year to begin investing in art?  Do you have confidence in the confidence?