x Abu Dhabi, UAEWednesday 20 September 2017

Emirates NBD's new fund pursues the art of making money

Emirates NBD's private banking division is hoping to draw in the ultra-rich with its new investment fund which aims to make money through fine art.

There is money to be made in art. In October, Christie’s auction house set the new record for Middle East auction sales, including the sale of Mahmoud Said’s 1929 painting The Whirling Dervishes for $2.5m, the most expensive Middle East painting ever sold. Satish Kumar / The National )
There is money to be made in art. In October, Christie’s auction house set the new record for Middle East auction sales, including the sale of Mahmoud Said’s 1929 painting The Whirling Dervishes for $2.5m, the most expensive Middle East painting ever sold. Satish Kumar / The National )

Emirates NBD's private banking division has launched an investment fund to tap into a $10 billion (Dh 36.7bn) Middle East art market.

The bank, which is the biggest by assets in the UAE, has partnered with the Fine Art Fund Group, an art investment company, to draw ultra-rich clients with at least $3 million in wealth who wish to invest in art as an alternative asset class.

"We're not doing interior decoration. It's not an aesthetic investment but a financial investment," said Gary Dugan, the chief investment officer of Emirates NBD, private bank in the Middle East, stressing the importance of clients making a profit over buying for enjoyment.

Mr Dugan said the fund is expected to break even this year without disclosing a target for 2011 or the private bank's targeted assets under management, the market value of assets that the company manages on behalf of investors.

But he said the private bank's assets under management will grow by "double digits" every year for the next 10 years.

"I believe we'll comfortably take market share in the region," though he said it was "difficult" to assess the private bank's existing market share in the region.

International banks in Europe and the US have traditionally catered to art lovers in the Middle East.

The UAE's art market remains limited in comparison to the international market, which is worth more than $3 trillion and is dominated by the US.

A raft of museums are planned to open in Abu Dhabi in the next few years, with the Louvre and Guggenheim among those expected to launch.

The Fine Art Fund Group counts 16 of Forbes rich list as its clients and deals in the world's top masterpieces such as Picasso and Raphael.

In its fastest deal, the group bought an Old Master from the 17th Century for $4.75m in 2008 and sold it for $6m the next day, at the time Lehman Brother's collapsed.

Philip Hoffman, the chief executive of the Fine Art Fund Group said "rare art is being bought by museums and never being sold again. Now wealthy individuals are looking to buy a different kind of asset class like art."

"At a time when people are unsure about investing in certain equities and the integrity of certain companies, art investment is about safety that you can physically hold onto and move with you," he said, adding that he expects the Middle East art market will triple in worth in the next five years.