Philip Hoffman, CEO, FAFG (right), speaks during the Emirates NBD press conference. At left is Gary Dugan, Chief Invesment Officer of Private Banking Emirates NBD. Image Credit: Francois Nel/Gulf News

Dubai: Emirates NBD yesterday announced the launch of art advisory services for its private banking clients in association with the Fine Art Fund Group (FAFG), a London-headquartered international art investment specialist.

According to the agreement, experts from the FAFG will work closely with Emirates NBD Private Banking to provide advisory services to the bank's high net worth clients who wish to invest in art as an asset class. Emirates NBD Private Banking clients will also gain privileged access to art events regionally and globally.

Tangible asset

"Art as a tangible asset continues to attract international investor attention in the post-recession world and the market for art has remained strong in 2010," Gary Dugan, Acting General Manager and Chief Investment Officer of Private Banking at Emirates NBD, said.

"Middle East investors are also expressing greater interest in art, and recent estimates show that last year approximately 25 per cent by value of the 100,000 plus works of art sold went to buyers from Russia, Asia and the Middle East."

The international art market is estimated to be worth more than $3 trillion and has an annual turnover of $50 billion.

"In addition to the opportunity for portfolio diversification, art has traditionally yielded high returns and shown a low correlation to other asset classes, thus proving to be a remarkable store of value and effective hedge against inflation," Philip Hoffman, CEO of FAFG, said.

The partnership between Emirates NBD and FAFG will be commission based. While the bank will refer its private banking clients keen on investing in art to FAFG, these investors will be guided by FAFG in selecting the best investment opportunities available in the market. "We have a strong research and due-diligence team that can help investors in getting exposure to the art market," Hoffman said.

Part of the profit

FAFG charges 2 per cent (of the value) as a management fee and takes 20 per cent of the profits.

Dugan said Emirates NBD's decision to launch art advisory services is timely given the results of the latest Royal Institution of Chartered Surveyors Art and Antiques Survey, which states that in the last quarter of 2010, prices of art objects in the £50,000 price bracket rose rather sharply from 20 per cent in the previous quarter.

With the upcoming launch of a number of international art museums in the region, Hoffman said he expects to see a steady increase in the number of art investors from the region.