Dubai: Art is widely viewed as a high-profile investment. Art offers an alternative to park excess funds, which you might not want to put in the bank.
Analysts have often evaluated how art provides the highest long-term return of any asset class and enjoys the least dependency or correlation with traditional assets, which facilitates portfolio diversification. Tradable in different currencies, art also makes it easier to move funds.
As art has no inherent worth unlike gold or real estate, art valuation is subjective while prices are volatile. Some indices claim that art can give annualised returns of 10-12 per cent while others estimate it much lower at around 4 per cent.
What drives an art’s pricing?
The interest towards a particular art work, artist or movement and in turn pricing is largely out of the investor’s control. The cost of buying, selling and owning art are often found to be steep.
However, in this article we ask art dealers if that’s the reality, how potential investors can access the UAE art market, what are the related costs and what are the factors one should weigh when starting out.
“Art collectors nowadays want to firstly, build an important contemporary or post-war collection to keep for generations to come and potentially donate to museums or institutions. Secondly, to invest their assets into art wisely as an investment,” said Julia Pavlovska, a London-based art advisor with a business and arts education from Italy’s Bocconi, UK’s Sotheby’s and Christies.
If you are just starting out, gather market knowledge. Study the careers and pricing of artists that grab your attention. Most importantly, beware of dealers and pieces that cannot be authenticated.
How do I discover the next art star early on?
When it comes to finding the next art star for instance, ‘Julie Curtiss’ (White Cube) or ‘Vojtech Kovarik’ (Gallerie Derouillon)– who were both recently emerging contemporary artists and had a fantastic rise to international art stardom in the last years – Pavlovska, says:
“It is key to be in the right art network” She adds that the artists success is measured on his or her network of curators, art dealers, art critics, art advisors or galleries who support the artist and put them into the right art collections.
Dubai's art market is really picking up. I am certain it is just the beginning for the UAE art market. We see huge potential for the region.
“When you decide to build an art collection, it is recommended to first connect with an art advisor and educate yourself and visit the different galleries and artists in and outside the UAE. More and more international galleries see the potential of a new art market and look into opening their galleries in Dubai or Abu Dhabi due to wealth creation and a growing international collector base.
“Smaller galleries in Dubai sometimes represent important artist names such as Andre Butzer, as does Carbon 12 in Alserkal Avenue – a great gallery to visit when in the UAE,” Pavlovska added.
How is the art scene in the UAE currently?
“Dubai's art market is really picking up,” Pavlovska explained. “It is great to see the growth of the UAE art market and international blue-chip galleries such as Perrotin (Paris, Hong Kong, New York and Tokyo) and Templon (Paris, Brussels) joining Art Dubai this year.
“I am certain it is just the beginning for the UAE art market. We see huge potential for the region. It brings back memories of the growth of the Chinese market many years ago, which now boasts some of the world top art collectors,” Julia added.
“The UAE is now investing more than ever into the arts. It is amazing to see more art spaces like the art space Foundry x EMAAR in Dubai Downtown opening and giving new collectors the chance to discover and start buying artwork.
“Dubai culture and tourism support these art programs and from end of May until July there will be a new group show of international artists, including Madrid based Kico Camacho represented by Arts Consultancy ArtKōrero, making it a great time to start into exploring international art talent showing in the UAE,” Julia added.
“It is never too early or too late to look into collecting, even with a smaller investment budget, once you start you are hooked,” added Julia.
“You will enjoy going to the Arts Club, a new Dubai venue which gives its members the opportunity to enjoy educational art talks for example on how to build their first art collection,” Pavlovska added.
“They currently showcase one of the best art collections I have seen in Dubai - Elie Khouri's art collection.”
Chimere Cissé, art collector and publicist, said the UAE is thriving with “world-class” art and design, from Art Dubai to the Sharjah Art Foundation, viewing works by India’s Mohan Samant, Lebanon’s Hugette Caland through to Japan’s Kusama, and the Louvre in Abu Dhabi.
“The UAE is spoilt for choice in terms of access to, and education on, both local and international artists,” Cissé added. “The talent and availability of art in this region continues to grow and should not be overlooked.”
When it comes whether buying art in the UAE, matching the experience of purchasing work in say London, Hong Kong or New York, Cissé opines that it depends on the piece you’re acquiring, where it’s from and for what purpose.
“Christie’s has an annual auction here in Dubai. Foundry just opened as a new downtown art space by EMAAR which will soon present Spanish artist Kico Camacho.”
Alserkal Avenue in Al Quoz is a brilliant example of the ingenuity and creativity of the region
“Alserkal Avenue in Al Quoz is a brilliant example of the ingenuity and creativity of the region; Rem Koolhaas designed art spaces sit alongside galleries such as Leila Heller and Firetti Contemporary who will soon be exhibiting Irvin Pascal, a British artist of Nigerian descent who I have my eye on.”
“In addition, with the UAE art market and collector base being in its infancy, the potential for expansion and growth is huge.
How do art advisors really assist a buyer?
“An advisor’s goal is to educate clients and understand first what they love. Is it abstract or figurative art?
Or, do they want to start with collecting emerging artists typically fresh from art school who had a few group or solo shows or already a mid- career or blue chip artist which has a different price tag and is represented by world- known galleries like Hauser & Wirth, White Cube or Gagosian,” noted Pavlovska.
“Relationships with other art dealers and galleries are key, the art world is all about the network and if you have access to the right works, you can make a difference.”
Always keep in mind supply and demand and a budget. The price of art is based on what somebody is willing to pay.
“Advisors often get approached to help clients who need advice on what next so-called hot artist to invest in,” Pavlovska explains. “The key is to find an art star before he gets known by the art market as then you have long waiting lists and need to have strong long year relationships with galleries and support their artist program.”
“It is also all about managing the right artist,” Pavlovska added.
“As an art advisor I guide collectors both in the UAE, Europe and the UK on their journey to build a unique collection, focusing on their personal taste, markets trends to build something special.”
Dubai is still a young art market and merging luxury and art is a good way to approach the new UAE based collectors, explains Pavlovska.
It is advisable to register with an art advisory or gallery whereby advisors can guide on the artist, the value, the provenance and so the client is well qualified with their requirements, noted Alina Hannah, head of Middle East and Russia at White Cube, a contemporary art gallery with spaces in London and Hong Kong.
“An art advisory can navigate the buying process and find art not available on the open market through a global network of collectors and gallery contacts.”
“Always keep in mind supply and demand and a budget. The price of art is based on what somebody is willing to pay and it’s always important to ensure you know the full history and origin before making any art investment.”
Has the pandemic evolved the art scene?
“The pandemic has not changed much for extraordinary art talent,” added Pavlovska, an art advisor who splits her time between London and Dubai is following the art-market since many years.
There are more collectors today than 10 years ago due to new wealth coming from markets like technology and cryptocurrency and the auction houses like Sotheby’s and Christie’s show record sales in 2021,” Pavlovska further explained.
“Of course, there’s something to be said for the excitement of globe trotting to art fairs to discover new artists and ideas, winning a work of art in a hotly contested auction or visiting the studio of an artist in a far-off city,” explained Chimere Cissé. “However, these experiences can also be found in the UAE.”
“I think the recent lockdowns and travel restrictions presented this clearly. The art community and collectors based here were forced to explore opportunities to engage with art closer to home, many for the first time.”
The art community and collectors based here were forced to explore opportunities to engage with art closer to home, many for the first time
What challenges occur on the way and how to get educated?
“But the question many collectors have is – which challenges can occur on the way to the right art purchase and how can you get educated to make the right purchase?” explained Pavlovska.
Investing in an emerging artist can be both financially risky and also very rewarding, Pavlovska added. “In some cases like with American painter Loie Hollowell, who is now represented by US-based PACE gallery, her prices rose more than 1,200 per cent in just 3 years.”
“Other ‘hot contemporary’ artists like Salman Toor from Pakistan or Vojtech Kovarik from Czech Republic for example have been selling for $6,000 (Dh22,039) only 3 years ago and now fetch prices around the $100,000 (Dh367,320) mark on the secondary market,” added Pavlovska.
Here are three steps to discover the new art star and build an art collection for investment: Pavlovska
Step #1: Find out what is their art education?
“It is important to connect with the artist but also to look at their art education, if the artist you like went to one of the best art schools, like Goldsmith University, Slade’s fine Art or the likes it’s a great sign. The school they went to is often an indicator of a well-developing career, especially as the school has a large career network after graduation.”
Speak to fellow collectors, advisors, curators and art people in general to exchange ideas before a purchase.
Step #2: Look at the exhibition history
“You have to see if the emerging artists you are looking at - have shown their work to the public and if they did, at which capacity. If the artist has shown in a public exhibition curated by a museum like UK’s Tate Modern or Barbican or a larger foundation this is a very good sign for future success. Another sign for growing success is a group show in an institution or A+ gallery, which means their work is starting to get acknowledged.”
Step #3: Go through your art network
“Network is key in the art world. Speak to fellow collectors, advisors, curators and art people in general to exchange ideas before a purchase. Art should be enjoyed and not always be seen as an investment, as it is a work you want to live with for a long time and also when you grow your collection. Keeping art connections with other collectors with shared interest may prove to be a great source of information and an indicator for future tendencies in collecting.”
FAQ #1: If I was a UAE resident just looking to buy art for the first time – what are my current options, and what are the starting price ranges and the highest price ranges? If I cannot afford it, are there other financing measures he or she can initiate.
“In the world of art, the UAE are not an emerging market anymore,” said Aldo Garbagnati, CEO of Emicapital in Dubai, and chairman of the Polyseum Art Foundation in London.
“The recent success of Art Dubai, the Middle East’s contemporary art fair presenting the work of hundreds of globally recognised artists, and the way in which other initiatives survived the pandemic online, are an indicator of a market alive and growing.”
“Furthermore, art is moving online, in a territory with no borders that makes the location where you buy your pieces irrelevant.”
If you do decide to invest in art, you should insure this high-value asset against theft, fire and other natural calamities. You can approach AXA, Zurich, and AIG among others.
If you are skeptical of dealing in art directly, you can opt for art funds, which may also offer advisory services.
In the Middle East, you have several funds including Daman Middle East Art Fund, Emirates NBD’s Managed Art Portfolio Service (MAPS) or the Fine Art Investment and Research Service (FAIR).
Is there a starting price for art?
“There is no starting price for art,” said Garbagnati. “Young contemporary artists in the Gulf are injecting life in the market, presenting interesting and affordable pieces that may spark one’s interest and curiosity. However, growing a collection may become an expensive exercise.
“Art and finance have always experienced a difficult relationship. In the financial world, art is considered an illiquid asset class, like real estate, vintage cars or old wine - driven primarily by personal passion, art collections are seen as a long-term investments, exposed to price uncertainty, volatility and risk. “
How art is evolving in this day and age?
“Historically, art was an indicator of wealth and power: the majority of Renaissance masterpieces we see in our museums were commissioned by the Church, the State or Royalty,” said Garbagnati. “Collectors were extremely jealous of their trophies, often acquired through confidential personal negotiations.”
“In the age of zoom videos and conferences, this tendency is evaporating, leaving space to digital fruition media, free conversation and cultural enhancement.”
There is no starting price for art. Young contemporary artists in the Gulf are injecting life in the market, presenting interesting and affordable pieces.
Can art be affordable to the average investor?
“Modernity is challenging the concept that art is expensive. First-time investors, whenever properly assisted, can find new avenues to finance their collections,” noted Garbagnati.
Crowdfunding and shared ownership platforms based on block-chain are becoming increasingly popular, particularly among millennials and Generation Z, whose members consider ownership of an artwork just part of a wider conversation, Garbagnati added.
“These digital instruments, particularly suitable for distribution on social network platforms, are overtaking regulatory challenges and becoming a new standard.”
“Particularly for contemporary art, authenticity of the artworks and shared ownership are certified by a distributed ledger infrastructure that was simply not available a few years ago. In the UAE, financial free zones are supporting this change offering innovative licensing structures and incubators.
FAQ #2: When buying art from an under-developed market like the UAE, should the buyer keep in mind specific legal pitfalls or risks? If yes, what are they, and how does he or she avoid them?
“The purchase of a work of art by either a resident of the UAE, who buys art in the UAE or outside the UAE, or as a non-resident who buys from the UAE, is unfortunately more often than not, a complicated operation,” explained Nawel Bellour, art and finance lawyer, owner of Consigny Monclin Bellour Law Firm based in Dubai and Paris.
The first obstacle a collector faces is legal and fiscal, noted Nawel Bellour. “The Emirati tax authority (FTA) never having really decided the tax fate of works of art, and Value-added Tax (VAT) liability can turn to be a tax challenge especially for international operations.
“Therefore it is helpful to look into the law in the UAE and work alongside art advisors and lawyers when building your first collection,” adds Nawel, who helps high net worth individuals who often have their own collections in legal questions and tax advantages in the UAE. “This money is well invested as it will help to invest in the right art assets for a long term profit.”
The second obstacle, Nawel further explains is banking, which further underlines the novelty of this market in the UAE.
“Beyond supporting art acquisitions with specialised departments such as those found in London or Paris, bank compliances are sometimes even cautious when it comes to art transactions.
The first obstacle an art collector faces is legal and fiscal. The second obstacle is banking.
FAQ #3: How does the art market look like in the Middle East, versus the rest of the world? Also, what are the current top art markets globally and are there credible platforms investors can access to buy paintings overseas? What should he or she keep in mind when doing so?
“The art market in the Middle East remains robust,” added Hannah, who advises high net worth individuals on building their art collections.
“New collectors are keen to be educated in the different categories from contemporary to old masters and are buying some of the world’s most desirable and high value art.”
The top markets globally today remain New York, Hong Kong and London where Middle Eastern buyers also purchase their art
Saudi Arabia has an incredible new art scene with new museums and art galleries opening and is expected be the largest art market in the region by 2030 with a rise in new collectors; and the UAE is seeing an impressive increase in interest in regional and international contemporary art, added Hannah.
“The top markets globally today remain New York, Hong Kong and London where Middle Eastern buyers also purchase their art.”