Dubai: Art sellers who were biding their time and waiting out the worst of the economic recession are now feeling more confident about the market and consigning their most important works to auction houses.
Auction specialists are hoping that these valuable pieces will lift the market, which dipped in the last two years when sellers were hanging on to their top-quality works in the hope that prices would rise.
"What hit the art market most is that vendors were not comfortable giving their pieces in late 2008 and early 2009," said Isabelle de La Bruyere, Christie's Director for the Middle East. "In the last eight months we've seen a regain of confidence in the art market," she said, citing as an example the Impressionist and Modern art auction in London, which sold $230 million (Dh844.61 million) in artworks.
In Dubai, she cited the auction offering 25 works of Egyptian art from the collection of Dr. Mohammed Farsi, a mayor of Jeddah. On sale on April 27 at the auction of International Modern and Contemporary Art, it will include works by renowned artists such as Mahmoud Saeed and Abdul Hadi Al Gazzar.
"There is indeed a confidence from vendors because they have seen that great works of great quality always sell, they do always find a home and a buyer, and they sell very well," said de La Bruyere. "The money is still there."
According to de La Bruyere, sellers' willingness to part with quality pieces is a reaction to global art sales. "The art market is a global phenomenon and people react to it globally. If there's confidence in sales in New York or London, it does affect the Dubai market," she said.
Matthew Girling, Bonhams Chief Executive for the UK, Europe and the Middle East, believes that sellers' restored confidence was a realisation that prices will not rise to the "giddy levels" of 2007 any time soon and there was no point waiting any longer to sell.
Auction specialists are hoping that 2010 will be a better year in terms of quality artwork and good sales.
"The fortunate thing about this year is that there are more quality pieces coming on to the market," said Girling. "We're hoping it will pick up considerably."
On Bonhams' upcoming Orientalist Art sale on May 13, Girling noted: "We've been fortunate to secure for sale a very good collection of Orientalist pictures… We're pushing hard to make sure we sell as much of it as we can and that it is a profitable business for us going forward."
New stones
In the jewellery market, new top-quality stones are appearing in auction houses for the first time in two years.
In its upcoming biannual Jewels and Watches auction on April 28 in Dubai, Christie's is selling a 26.6-carat fancy, intense yellow diamond.
"We haven't had such beautiful diamonds coming up in Dubai for the last three seasons," said de La Bruyere. "It shows that people are now ready to put their money in the best of beautiful stones slowly but surely. Stones, signed pieces, and antiques will always sell very well."
In the pre-recession days, the global art boom led to a burgeoning of art institutions and galleries in Dubai and the Middle East.
Sossy Dikijian, Art Director of Dubai-based Artspace Gallery, observed the frenzy of activity going on in the art world. "What happened because of the art boom is that prices rose very quickly, people spent millions of dollars, and were buying many pieces," she said. "It was pretty crazy, it came to a point where we were sold out of art work. It was ridiculous."
"When the market crashed, it stabilised the art world: prices went down to the normal value range," said Dikijian.
In some ways, the financial crisis had the positive effect of bringing prices down to reasonable levels and removing speculators from the market, leaving more room for serious collectors, art experts agreed.
"When the contemporary art market was at its peak quite recently people were speculating in an incredibly short space of time. The normality of the art market is one of slow growth and you might see your investment turn into a good profit in 15 or 20 years. But people were making profit in less than a year," Girling said. "So everyone was jumping on the bandwagon and that of course eventually lost a couple of wheels. Which was probably a very good thing because that's how the art market normally behaves."
But the auction market was still hard hit by the recession.
Christie's global annual sales figures have shown a decline of 11 per cent in 2008 and 24 per cent in 2009 and had smaller lots in some auctions.
Bonhams' Dubai market was affected "much worse" than their London or New York auctions because it is new, said Girling. In 2009 their sales total dropped by five times the 2008 levels, he said. But because Bonhams sells a wide range of products from art to cars, some areas "have ridden out the recession better than others", he said, giving the example of how their 19th century and Old Masters paintings have "helped prop up the business".
"Where you had the biggest bubbles, which is essentially in the contemporary art market, that's where you see the most gas coming out when you get a recession," he said, pointing out that contemporary and modern art are basis for the Dubai market.
"It was affected badly, but we pick ourselves up, dust ourselves down, and get on with it and say ‘well that was tough but we still believe that it's a good place to do business'," Girling said.
World record
But even in the midst of the crisis in December 2008, Christie's broke the world record for any jewel sold at an auction with a $25 million sale of the Wittelsbach diamond in London. The 35.56-carat grayish blue diamond was sold to the renowned jeweller Lawrence Graff.
In October 2009, Christie's New York sold the Annenburg diamond, a 32.01-carat D flawless diamond for $7.7 million — a world record price for any white diamond sold at an auction.
In October 2009, Christie's Dubai offered an oval-shaped Fancy Intense Diamond weighing 25.35 carats. The initial estimate was $300,000 to $400,000 and sold for $446,500.
But how is there a market for such luxury jewels during the crisis?
"Quality pieces will always attract buyers. In the high market, any piece that is a period piece, a signed piece, that is intact and in good condition will always retain its value," explained Lyne Kaddoura, Christie's Jewellery Specialist. She added that if someone bought a diamond 10 years ago, it can still be sold for the same price today because the high prices have adjusted to reasonable levels after the recession.
Many buyers saw jewellery as a wiser investment of money compared to the fluctuating currency values rather than simply as an aesthetic purchase in these difficult times.
"I wish people wouldn't think of investing, investing, investing. There are so many people in the region who talk to me about this and I always say ‘think about collecting, not about investing'," said Girling.
"Think about the passion to collect something. You want to invest some of your thought and intellectual life in this to enjoy it, and if you do that you'll get great pleasure out of it and it may turn into investment. But don't think of investing as the first and foremost motivating factor."
Dubai seeks to make the most of the boom in local artscape
There is more to Dubai's art and jewellery auction market than six-figure prices, impeccably dressed bidders, and high-brow connoisseurs: This is an emerging market trying to secure its footing on the global auction scene.
The boom of the local artscape over the past six years — as arts institutions, fairs, and galleries flowered around the city — encouraged international auction houses such as Christie's and Bonhams to set up shop in Dubai.
Christie's, the first to open a representative office in 2005 and begin sales in May 2006, has already announced its seventh bi-annual Jewels and Watches sale on April 28. Pre-sale estimates are at $8 million (Dh29.37 million) to $10 million — an increase from the last October 2009 sale with estimates at $4.5 million to $6.5 million, according to Christie's Jewellery Specialist Lyne Kaddoura.
British fine art auction house Bonhams, which opened its first Middle East representative office in Dubai in October 2007, will hold its Orientalist Art sale on May 13.
The sale will include about 130 works of art by 19th and early 20th century American and British artists, according to Matthew Girling, Bonhams Chief Executive for UK, Europe, and the Middle East. Highlights of the collection include A Cairo Street by Arthur Von Ferraris, estimated at $1 million to $1.5 million, and Bedaween caravan, Sinai by Richard Beavis, estimated at $350,000-$400,000, he said in a phone interview from London.
Bonhams' first Orientalist art auction achieved a 78 per cent sale of the Orientalist paintings for a total of $2.25 million.
Art experts agree that Dubai is an up and coming market. "Just like the rapid development in other sectors, Dubai is promoting art and culture and seeking to be an art hub in the region," said Sossy Dikijian, art director at Artspace Gallery in Dubai.
The Middle East is Christie's highest and fastest growing auction market in terms of registrants, according to de La Bruyere. Dubai sales attract participants from 30 countries with over 70 per cent of the buyers hailing from the Middle East.
The Middle East market has grown by an astonishing 400 per cent in terms of Middle Eastern clients' spending at Christie's auctions internationally, she said.
"We were selling Farhad Moshiri [paintings] for $48,000," said de La Bruyere of the artwork that now sells for over $1 million. "If you look closely from May 2006 until today for seven auctions, our market in Dubai has risen significantly."
Christie's, which holds biannual sales in two categories of Jewels and Watches and International Modern and Contemporary art in October and April, has a total sales figure of $145 million in Dubai since May 2006.
Bonhams, which has held four auctions in Dubai since 2007 worth over $20 million, has achieved record-breaking sales in Dubai for Orientalist art. Its inaugural Dubai auction in March 2008 broke records for an auctioned Pakistani work of art, Polo Player by Ismail Gulgee, which sold for $336,000.
Dubai's business environment, strategic location, and international clientele were some key factors in attracting international auction houses here, according to William Lawrie, Head of International Modern and Contemporary Art at Christie's Dubai.
Amid established auction centres in London and New York, Dubai is attempting to carve a niche market for itself.
"We've found a market for Arab and Iranian art mostly, which is to a certain extent the identity of the Dubai sales. It is unique to Dubai now," noted de La Bruyere.
According to Girling, Bonhams' sales database shows that modern, contemporary, and Orientalist art auctioned in London is mainly sold to Middle Eastern collectors or by collectors based in the Middle East.
And while art is a global language, there does seem to be a divide down the lines of nationality. Roxane Zand, Sotheby's Director for the Middle East, explains: "A pattern has so far been observed whereby regional buyers tend to appreciate the art from their own cultures. It is natural to respond more readily to familiar themes and aesthetics than to art from elsewhere. Having said that, tastes are evolving and over time areas of collecting will expand."
But even as it attempts to establish itself as a commercial art hub in the region, Dubai is still taking its first steps in the global auction scene. "Compared to the billions that go through the art market across the globe, Dubai is a tiny, tiny, tiny market because it is new," said Girling.
Primer
Sure, grandmother's jewels may have great sentimental value and you wear them to all the fancy dinners, but could they also be a real treasure on the market? As auction season kicks off in Dubai, you may consider putting up your own valuables for sale.
But where to begin? Gulf News has a step-by-step simplified guide on how to sell your items at an auction with insider's advice from Christie's Jewellery Specialist Lyne Kaddoura.
Location
The first step is to identify a reliable and discrete auction house. International names such as Christie's, Bonhams, and Sotheby's have either representative offices or consultants operating in Dubai.
Valuation
The next step is to obtain a valuation. This is a free assessment by a specialist on the item's worth. Specialists travel all over the world and the Middle East for valuations. Visit the auction house online to check the valuation calendar and confirm the days on which a specialist operating near you.
Alternatively, you can contact the valuation department by email or post with a description and photo of the item and they will connect you with the appropriate specialist.
Another option is to fill out a Complimentary Auction Estimate form online and attach a picture of your property.
Finally, you can contact the nearest auction office in Dubai directly.
Specialists from some auction houses, such as Bonhams, even make "house calls" if the item is too large to carry.
The specialists are well-trained and educated experts in their fields with years of experience.
Criteria
Specialists estimate the value of your property based on a set of criteria. When they value jewellery they first consider the market. For instance, a diamond is valued according to the Rapaport List, which states the current diamond price on the market.
Then they look at the worth and condition of the piece. Chipped or broken pieces will make a difference in value compared to ones in perfect condition.
Specialists also keep track of the sales results for a similar piece sold in the past and then adjust for market prices today.
According to Mathew Girling, Bonhams Chief Executive for UK, Europe, and the Middle East, valuation of art items is not an exact science but an estimate that also takes into account the rarity of the item, it's provenance or its history of interesting and well-known owners, and its commercial appeal.
Pricing
Meet with the specialist to agree on the estimated price of the piece if it has been deemed auction-worthy. Auction catalogues usually list the highest and lowest price for each item. You, the vendor or consignor, and the specialist must also set the reserve price. This secret price agreed on with the vendor is a limit price under which the auctioneer will not sell. The reserve price is either at the lowest price listed in the catalogue or below it by 10 per cent for jewellery and 20 per cent for other items.
Drawing a contract
Once the item is accepted for auction, the specialist and vendor discuss the terms of the contract. This includes various charges to seal the deal. First there is a vendor's commission. This is a ten per cent charged removed from the hammer price of the item. It covers the costs of sending catalogues to clients worldwide, organising exhibitions to show case the piece, write press releases and target potential buyers globally.
Other charges include catalogue illustration, marketing, shipping and certification fees.
The vendor and specialist also agree on the buyer's commission which is a service fee added to the hammer price of the item.
Auction results
If you're on the run, you can view the auction sale live online or use an iPhone application to view your auction sale results even before the auction house contacts you. If the goods sell successfully, the auction house will send you a sales result notification and you can expect payment about two or three weeks after the sale (this varies with each auction house). If the item fails to sell, some auction houses will charge an unsold fee per lot. In this case, you can collect your property from the auction house or choose to re-offer it for sale in the next auction.
Upcoming auctions
- Christie's auction of International Modern and Contemporary Art takes place at the Jumeirah Emirates Towers Hotel on Tuesday, 27 April 2010 at 7pm
- Christie's auction of Jewels and Watches; The Dubai Sale, takes place at the Jumeirah Emirates Towers Hotel on Wednesday, 28 April 2010 at 7pm
- Bonhams Orientalist Pictures & Works of Art auction on Thursday 13 May at the Royal Mirage, Dubai
- Preview of Highlights: Monday 10 May, The Beach Rotana, Abu Dhabi, 7pm to 9pm
The writer is a freelancer based in the UAE.
