The Middle East art market has gained momentum since the dark days of the financial crisis. With Abu Dhabi Art kicking off next week, here is a beginnner's guide to investing.
Putting you in the picture when investing in art in the UAE
This year’s fair – running from Wednesday to Saturday – will feature more than 45 galleries, modern and contemporary art exhibitions. Valuable works will be snapped up by wealthy individuals for whom a collection is often simultaneously symbolic of an investment, a ticket into an elite social club, and a treasure to pass down to generations to come.
The Middle East art market has steadily picked up since the financial crash resulted in the closure of some of the region’s most prominent galleries.
The Guggenheim Abu Dhabi is set for completion in 2017, The Louvre Abu Dhabi is poised to open its doors next year and the expansion of Alserkal Avenue, an arts and culture hub in Dubai’s Al Quoz area, is under way.
This year also marked a record for Art Dubai in terms of size and global representation and is also proving strong in the auctions sector, as indicated by the US$12.5 million in sales at last month’s Christie’s Modern & Contemporary Arab, Iranian, and Turkish Art auction (the highest achieved since 2010).
These signs all send a green light for investing in the Middle East art market. So here is a beginner’s guide to the process:
Where to begin
There are several reasons why art is a viable asset source says Salma Shaheem, head of Middle Eastern Markets at The Fine Art Fund Group, an art investment and advisory service and perhaps the best known “art hedge fund”.
“First, it enjoys a low correlation with traditional assets, which is important for portfolio diversification,” says Ms Shaheem. “Secondly, it’s moveable. You can take your Picasso and it will have value in any currency. Finally, it’s a hedge against inflation because there is increasing demand against diminishing supply.”
Experts insist that investors simultaneously view themselves as collectors, never acquiring a work that does not also carry emotional currency. The ideal purchase should merge investor and collector sensibilities.
Ms Shaheem believes that “what differentiates investing from collecting is the divide between the love of the aesthetic and the ability to foresee financial returns”.
To enter the market, she advises serious investors to set aside a period of five years to allocate $200,000 to $500,000 and take a long-term perspective.
“Your aim could be to go for some of the more big ticket modern pieces,” adds Ms Shaheem. “So take your time to source and research, work your way towards some of the more contemporary names.”
While this level of initial investment might be practical for the wealthy, it’s not compulsory for those that want to dip a toe into the region’s art market.
Dianne Brown, a Dubai-based art consultant, counts a number of young professionals among her clients who use their annual bonus to invest into art.
“I always tell young collectors not to be afraid of making a mistake on a first purchase,” says Ms Brown. “As long as you love what you are acquiring and can afford it, then it will never become a regret.”
Do your research
Before making a purchase, familiarise yourself with the market. Visit fairs such as next week’s Abu Dhabi Art, Art Dubai next March and the Sharjah Biennial. Study the catalogues of upcoming auctions of regional art at Christie’s in Dubai, Ayyam Gallery’s Young Collectors Auctions, or Arabian Wings in Jeddah, and observe an auction before bidding yourself. Also take the time to follow the careers of artists that interest you.
Ms Brown cautions that if a price looks too good to be true, a seller contacts you via email promising quick cash if you purchase and flip a piece, or a work you are considering cannot be authenticated, back away from the deal immediately.
A wise investment piece would be the work of an established artist who is represented by a major gallery; this artist will have had solo shows, participated in group exhibitions, have garnered substantial press and may have caught the eye of important collectors.
To improve your knowledge, attend art nights at local hubs like DIFC and Al Quoz and read specialised Middle Eastern arts publications such as Canvas.
A report published by artprice and Charchub presented the top 20 contemporary Middle Eastern artists from 2012-14 according to auction sales data; it included the regional heavyweights Farhad Moshiri from Iran, Chant Avedissian from Egypt and the Lebanese artist Mona Hatoum.
Once you are in the know, call in an expert such as an art adviser or consultant.
“The right adviser can help you clarify your taste and develop a strategy for growing your collection,” Ms Brown explains. “Through established relationships they can help you to get high-demand works that might be difficult to acquire on your own from exclusive galleries or private collectors.”
Consider your legacy
Many pieces that were originally acquired to sell at auction have become family heirlooms, passed down the generations as both a treasure and an asset. And there can be financial benefits to this.
In many European countries, those that make their private collections available to a museum or other public institution for a stipulated period of time are issued an exemption for art and heritage tax if and when they do eventually sell that work. Although the UAE does not have similar financial policies, investing in art can be a way to nurture the local community, leave a public legacy or document important artistic moments in a rapidly shifting region.
As a way to give back to the UAE, Ramin Salsali, 50, made his collection accessible to the public when he opened the Middle East’s first private museum, Salsali Private Museum, on Dubai’s Alserkal Avenue in 2011.
The Iranian, who says he does not know the value of his collection, began acquiring pieces more than 25 years ago in Germany and has never sold a single piece from his collection of more than 900 works.
“The only value I have is the quote I receive from the insurance company, which conducts an appraisal as part of a standard process,” he says. Having recently been named by the art market research platform Larry’s List as one of the top three collectors of Middle Eastern art, he views himself as investing in the “cultural ecosystem of the community”.
Although he is a realist and understands many choose to invest in rather than collect art, Mr Salsali advises buyers to exercise emotional intelligence.
“Sure, you can invest in art and add it to your portfolio. From a clear financial standpoint, the work’s value may go up and you can sell and make a profit.
“However, once you spend time with the art, waking up to it every morning, there is a high possibility that you will ultimately fall in love with it. In that case, the emotional investment is extremely high.”
Whichever level of investment you choose, considering the security of your collection is also essential.
Take out a specialised insurance policy, keep certificates of authenticity in a safe place and install works away from bright lights or leaky air conditioning units. Finally, never try to clean paintings without the assistance of an industry professional.
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