Art for investment's sake?
The Mei Moses® All Art index, which tracks the New York art market through watching the prices at Sotheby's and Christie's auction houses, showed a fall of approximately 23.5 percent in 2009, the largest decline in the All Art index since 1991 and the second largest decline since the Great Depression!
Another widely quoted indicator of art market performance, the Artprice Global Index, showed a contraction of 37.4 per cent between the end of 2007 and the first quarter of 2009. Artprice also noted the impact of the Dubai World announcement in the last quarter of 2009. That news hit financial markets around the world; and it knocked 20 points off the Artprice Confidence Index although the impact was short-lived and a gradual recovery clawed the loss back.
The art market downturn was not without benefits for some according to Matthew Girling, Bonhams Chief Executive Officer, Europe and the Middle East, “Auctions have returned to providing a means for private collectors and dealers to buy and sell works that are otherwise unavailable to the market. Also, as with any trough in the market, smart investors see this as an opportunity. Orientalist art in particular has not been significantly affected. Orientalist works are far less accessible and were infrequently produced compared to other genres, therefore their importance and rarity summon the most elite of collectors and demand top prices.”
Bonhams sees the profile of buyers moving towards individuals who are keen art enthusiasts, who wish to debate works, mix with like-minded individuals, learn about the traditional form of buying fine art at auction and wish to make an intelligent investment at the same time.
“What we have noticed most clearly is that as an auction house we rely on not just what people are buying but what people are selling. Clearly when you have got a downturn that it so well-documented, people are reluctant to sell. So there has been a shortage of good things coming on to the market. That creates a rather odd environment where there are still collectors out there who are hungry to buy things because they sense that the art market is still an area where they can put their money. Over the course of the past year overall, we have seen a downturn in volume but when quality items come on to the market they have made exceptionally high prices which is a slightly curious environment to have created,” explained Girling.
'The skill in 19th Century Orientalist art is a definitive quality, like a diamond' - Taline Aynilian
Art as an investment is correlated to stock market performance. When stock markets fall, so too do the funds available for spending on art. Nevetheless, during a period when investors are increasingly eager to diversify their asset allocation and investment strategies, the fine art market represents a potentially high-return asset class over the long term, according to Gary Dugan, Chief Investment Officer of Private Banking at Emirates NBD.
Speaking at a private dinner held on the sidelines of Art Dubai 2010, the largest contemporary art fair in the Middle East, Gary Dugan said, “Like the global real estate market, the international art market was significantly impacted by the worldwide financial crisis, which led to a general decline in prices at auction and increased consolidation among sector participants,” said Dugan. “The correction in the art market, however, has proved relatively short and shallow. At the same time, consolidation will lead to increased price stability, benefiting long-term investors.
“Despite the impact of the global financial crisis, we see rising levels of interest in investing in Middle Eastern art as well as increased investment in fine art from Middle East-based collectors.
“The tangibility of art makes it an appealing asset class to many regional investors – and that is especially true during a period of global financial volatility,” he said. “Based on expert advice and as part of a broadly diversified portfolio, I am convinced that fine art has a place in the portfolios of many of our clients.”
Dugan was joined at the invitation-only dinner for Emirates NBD Private Banking clients by Philip Hoffman, Chief Executive of The Fine Art Fund Group, the first fund of its type to invest in art as an asset class worldwide, which served as co-sponsor of the event.
The major auction houses are present in the Middle East: Bonhams and Christie’s hold auctions in Dubai and Sotheby’s in Doha. However, the art market is global and serious collectors will doubtless look to auctions elsewhere in the world as well. For example, on Wednesday, 14 April 2010, Sotheby’s held its bi-annual Arts of the Islamic World Sale in London, presenting an array of fine and rare works of art that span from the rise of Islam in the 7th century through to the 19th century. The auction featured important examples of ancient manuscripts, ceramics, metalwork, weaponry, textiles, ceramics and paintings from North Africa, the Middle East, Turkey, Islamic Spain and South Asia,. However, the highlight was the second part of ‘The Tipu Sultan Collection’ (the first part was offered at Sotheby’s London in May 2005 and brought £1,239,240 [$2,267,437]).
'People who collect with a passion because they love the thing that they buy tend to put together great collections that turn into great investments' - Matthew Girling
Here in the United Arab Emirates, the Orientalist Pictures and Works of Art Auction will take place on Thursday 13 May 2010, at the Royal Ballroom at the One & Only Royal Mirage, Dubai. The event will be the fifth auction held by Bonhams in Dubai since the auction house opened its doors in the UAE in October 2007.
However, should you really be looking to fine art to appreciate in value or first and foremost as something to appreciate aesthetically? Matthew Girling commented, “The ‘I word’ [investor] always crops up. I prefer to use the word ‘collector’. Over the 200 years that Bonhams has been around, people who have bought from us have put together amazing collections. Good collectors make good investors. People who collect with a passion because they love the thing that they buy tend to put together great collections that turn into great investments. Those people who made great investments have done it from the heart because they love the art.”
The market for quality Orientalist and Middle Eastern paintings has seen spectacular growth in the last few years. Indeed, despite these gains Orientalism has not seen the overvaluation to which most genres have been exposed. Bonhams is the only auction house to provide stand-alone Orientalist sales in the region.
Bonhams’ Senior Specialist in Orientalist Art, Taline Aynilian, commented, “In general we have seen a bit of a fading in the contemporary art market, highlighting the quality of more traditional market areas, like Orientalist art. These (the Orientalists) are 19th century works that you may see in museums and major collections. You can either spend $50,000 buying a contemporary artist who may or may not appreciate in value in 10 years or you may buy an artist already established and already in museums and important private collections.
“The skill in 19th century Orientalist art is a definitive quality, like a diamond. It is not a matter of fashion – a flawless diamond is always a flawless diamond! Likewise in Orientalist art if you have an artist who is very talented and comes from the academic tradition and is accurate and can produce a photorealistic image, that’s quality and there’s really no subjectivity there.”
Matthew Girling concludes, “There are fine art funds that might appeal to somebody who wants to invest but doesn’t want the hassle of looking at the pictures, enjoying the pictures, getting pleasure out of the pictures – those are not the people that we are good at talking to! We went into our business because we love something and we have passion for something. If we had been interested in investment, Taline and I would be working in the City or Wall Street. We are quite good at talking to collectors and people who are passionate about a subject and not so good at talking to people who understand yields and yields on growth and all the rest of it that drives an investor – if that is all you get a kick out of, go to one of the art investment funds rather than actually dabble your toe in the waters of this crazy thing called the art market!”
| Orientalist Art
Orientalism is a genre which refers to the art produced by Western artists inspired by the Near and Middle East, whether through travel, photographs, or artifacts. These depictions, fantastical or accurate, share the common thread of beauty, exoticism, allure, and historical relevance. This movement, which spans centuries, still exists today.
The rarity of Orientalist works often prohibits buyers from assembling a collection in one shot. As the market is dominated by private buyers who truly enjoy the works they purchase, often an Orientalist work will not return to the market place. In 2009 Forbes featured an article entitled Why Orientalist Art is Hot, citing that 'to these new collectors, the works constitute their heritage, a living history captured by respectful, awed travelers.' There are two groups of Orientalist collectors: first there is the Westerner who is still very much fascinated and attracted to the mystery and allure of “the unknown” or aspects of Middle Eastern culture and sites. Second, there is the Middle Easterner who finds the beauty and historically accurate renditions of their traditions, lands and religion irresistible.
The scenes rendered in Orientalist paintings are often specific cities, streets, mosques, cafes, and memorial sites which either still exist today or act as evidence and propaganda of their greatness in history. Although it is European and American artists applying the academic skills learned in the studios and academies in major European cities, they preserved vital details of architecture, wardrobe and artefact in luxuriant colour and form from the Orient.
At times theatrical, filled with measures of rumour and imagination, these pictures remain things of extreme beauty. In sum, the West’s naive pursuit of the East’s essence has left us both with beautiful images of what the West imagined as the East, and truthful renderings of sights, sounds and colours that these artists virtuosic talent could not help but record with exquisite care. The art acts as reference of the West looking East for inspiration.
Although there are major Orientalist art collections in America and Europe, the buyer base has swiftly refocused to the Middle East. Almost every major Orientalist picture sold through auction in the last few years finds its home in the Middle East.
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| Appreciating Art
I personally believe there are six words that encompass the process of the art of art appreciation: personality, eye, passion, education, intelligence and aesthetics – the savvy collector will put all of these together to build a collection of true significance.
Personality
You need to have a driven personality to collect. Those who do are part of an exclusive group and do us all a service. They travel the world seeking artefacts which they often generously share with others, for whom all the work has been done. Collectors help to educate us in the fields that interest them. We are all in their debt.
Eye and aesthetics
You cannot spend much time in the art world before becoming aware of the term ‘to have an eye’. All the truly great collectors have an intrinsic understanding of beauty, colour, balance and aesthetics when looking at an object. To have an eye is something that may be as specific as the ability to choose bloodlines for breeding racehorses, or it can be the ability to select gems or old masters or glass, silver or ceramics. It is hard to define this quality, but it is relatively easy to understand its presence when looking at a collection brought together by someone with this great gift.
Passion
What is it that affects us so powerfully, that emotion that makes us stop mid-stride – that feeling deep within our soul that is hard to name when looking at a really beautiful artefact or work of art? We call it passion, a word that has to serve, but is perhaps inadequate to describe the strength in its emotional power.
Education and intelligence
I combine these two qualities not because they are the same or similar but because they complement each other. In my experience you need an education to understand and appreciate art effectively. If you are blessed with intelligence you are doubly fortunate in that education has the power to accelerate and deepen your love of art. An education can provide a valuable skeleton of information upon which to hang and develop the skill of art appreciation.
These are the qualities I believe will provide you with an understanding of the real art of art appreciation.
Matthew Girling, Bonhams Chief Executive Officer, Europe and the Middle East
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