It has beaten stocks in times of war and in times of recession in the past. And it's done so in times of peace and economic growth. While stocks in the regional bourses have lost up to two-thirds of their values since the beginning of this year, this investment has only appreciated - in some cases by over 200 per cent. Vicky Kapur looks at art as an investment through the prism of Christie's recent inaugural auction in Dubai.
May 24, 2006 went down as a red-lettered day in the history of auctions in the UAE. On that eventful day (rather evening) Dubai witnessed Christie's - the international auction house - inaugural auction of modern and contemporary works of art in the region - a first for Dubai which had been hitherto witness to just two kinds of auctions: those of thoroughbred camels and of customised car licence plates.
The event, considered a major success by Christie's and the local media, managed to auction 111 of the 128 lots put up for sale that day, collecting a neat $8.5 million from local, regional and international art connoisseurs. The auction was led by an exciting, diverse and dynamic selection of international modern and contemporary works of art from the Arab world, Iran, India, Pakistan and the West.
When a 1979 painting titled Numbers by India's Rameshwar Broota went for a staggering $912,000 during the course of the evening, it marked an important milestone in the quest to assert the Middle East as a pivotal player in the international art market. It marked the coming of age of Dubai, which is set to emerge as a hub for regional and indeed international art.
"I've been to Dubai a number of times and I find it fantastic," says Edward Dolman, CEO of Christie's International. "Some of our most important, well-established clients are based here. That sort of understanding of art and the fact that Dubai was setting itself up as a hub for the whole region in terms of commercial and financial services made it a pretty seductive proposition for us to come here and have sales," he asserts.
With Arabs constituting a significant proportion of buyers of international art, it made commercial sense too.
When asked how much of Christie's overall sales was accounted for by buyers from the region, Dolman replied that it was "difficult to say because we do not have precise data on them as our art buyers come from all over the world, and it isn't always easy for us to track exactly where our clients come from as they have so many addresses around the world."
However, he added, that his guess was that "somewhere around $100 million of the total $3.2 billion in sales was spent in our auctions over the last year by clients from this region. A significant amount of that was on jewellery." With the region becoming richer by at least $750 billion in the last two years thanks to the consistently high oil prices, Christie's was quick to spot an opportunity when it set up base in Dubai its first in the Middle East last year.
Sold out on Dubai
"We've been in the business for a very long time since 1776," says Dolman, referring to the year when James Christie, the founder of the auction house, conducted his first sale on December 5, 1766. "Since then, we have slowly developed our business worldwide. We don't rush into things before giving them a great deal of thought," avers Dolman.
"I think that the work that is being done here in the UAE and in Dubai in particular, gave us the encouragement that there is a genuine commitment to international trade and to make this particular place a centre for commercial activities in the region," he says. "We supported that and felt comfortable coming here with our business, which is essentially a totally international business because we bring clients from all over the world. We needed to ensure that when we do that, we could trust the environment in which we're working. And we believe Dubai right now gives us exactly what we need."
Christie's presence in the GCC was established in April 2005. The opening of a representative office in the Middle East which makes it the first international auction house to have a permanent base in the region reflects the growing activity in the international art market, as well as the mounting demand and the importance of the Middle East to this sector.
"The auction offers an unparalleled opportunity to assert Christie's as a principal player in the new and exciting art market which is immerging in the region," said Dolman before the auction. "It will provide a unique chance to acquire works of art that, with their noticeable references to the individual artist's rich artistic and cultural heritage, afford both enjoyment, as well as thought provoking engagement," Dolman added.
Art for investments sake
With the stock markets down in the doldrums and commodities crashing, the timing may have worked extremely favourably for Christie's, considering that the cash-flush region is suddenly experiencing a lack of viable investment opportunities. Dolman is sanguine about Christie's, and the art world's, growth prospects in the region. "One of the main areas of interest that we have seen in the past has been Islamic works of art, associated with the cultural heritage of the region. Some of works that we have sold are in museums throughout this region.
"But then the other side has been the interest in jewellery that hasn't necessarily reflected a regional taste as opposed to an international taste in jewellery. And we are now seeing a strong interest in contemporary works of art as the younger, next generation of collectors develops its interest in art."
He is quick to refute claims that it took this long for the global auctioneer to set up a base in the region solely due to commercial considerations. "I don't think the region has been ignored at all. We forget how new this process of globalisation is and the ability of companies to start doing business outside their home areas.
It has taken a while for the right business environment to be created," he asserts.
Nevertheless, while the international media has largely ignored contemporary art originating from the Middle East and Iran, these vibrant centres have steadily been producing works of an exceptional standard and it is only recently that the rest of the world has taken note. "During the second half of the 20th century, following the post-war and post-colonial experience, modern art of the Middle East and North Africa blossomed," said William Lawrie, specialist, Islamic Art Department, Christie's.
"Informed by a multitude of new pressures including the fragmentation and consolidation of communities and states combined with a renewed quest for cultural, national and spiritual identity art from this region provides an engaging and eloquent commentary on the times," Lawrie continued.
So how long before Dubai emerges as a hub for international art sale much on the lines of London and New York? "I think times have changed in the art world. There is a great deal more interest internationally in contemporary works of art. And the very nature of contemporary works of art the way the work is created, the way that the artists are run and managed and the way we handle our sales means the markets can develop fairly quickly. So, I am hoping that this successful sale will be a springboard for our business here for many years to come," concludes Dolman.
"Dubai offers the right environment"
Edward Dolman, CEO, Christie's International, shares his thoughts on the international auction house's first sale in the Middle East, on Dubai's emergence as a regional art hub, and why this region holds such importance for it.
New York and London have been the two centres for world art thus far. Do you see a shift happening towards other centres anytime soon?
Certainly Hong Kong is beginning to emerge as one of our most important auction centres, obviously linked with the growing importance of the Asian economies on the world picture. We are seeing unprecedented increases in the value of our sales from Hong Kong, which has become a very serious part of our international network.
We are hoping to do the same here in Dubai because we believe that the conditions are right to develop a truly international forum in this region to highlight the artworks from within the region.
How long before Dubai emerges as an international art hub?
I think times have changed in the art world. There is a great deal of more interest internationally in contemporary works of art. And the very nature of contemporary works of art the way the work is created, the way that the artists are run and managed and the way we handle our sales means the markets can develop fairly quickly. So, I am hoping that this successful sale will be a springboard for our business here for many years to come.
Why didn't Christie's open an office here earlier?
We've been in the business for a very long time since 1776. We have slowly developed our business worldwide. We don't rush into things before giving them a great deal of thought. I think that the work that is being done here in the UAE and in Dubai in particular gave us the encouragement that there is a genuine commitment to international trade and to make this particular place a centre for commercial activities in the region.
We supported that and felt comfortable coming here with our business, which is essentially a totally international business because we bring clients from all over the world. We needed to ensure that when we do that, we could trust the environment in which we're working. And we believe Dubai right now gives us exactly what we need.
You set up your Dubai office in April last year and are already holding your first auction now. That's pretty prompt... what should we expect next from Christie's in the Middle East?
As we are in the process of establishing Dubai as a sales centre, we are thinking about other categories of art, peer and jewellery perhaps expanding sales to include other categories. We have been making plans for this region for many years out of London and New York.
We decided the time was right to open an office here a year ago, and it was during the course of my visit here to open an office and meet people that made me realise the huge potential that Dubai has. So, we decided to move quite quickly because the art market is very strong at the moment and there is a real global interest now in contemporary works of art.
How much of your sales are accounted for by buyers from this region?
It's difficult to say because we do not have precise data on them as our art buyers come from all over the world. It's not always easy for us to track exactly where our clients come from as they have so many addresses around the world. But our guess is that somewhere around $100 million of the total $3.2 billion in sales - was spent in our auctions over the last year by clients from this region. A significant amount of that was on jewellery.
One of the main areas of interest that we have seen in the past has been Islamic works of art, associated with the cultural heritage of the region. Some of works that we have sold are in museums throughout this region. But then the other side has been the interest in jewellery that hasn't necessarily reflected a regional taste as opposed to an international taste in jewellery. And we are now seeing a strong interest in contemporary works of art as the younger, next generation of collectors develop their interest in art.
You're a specialist... what are your thoughts on the calibre and worth of works from the local artists in the region? Where would you rank them in terms of international saleability?
Well, I think they are extremely high up. The quality of contemporary works of art from the Middle East in particular is very high indeed. In fact, if you look at the importance of places like Iran in terms of the creation of art, the creative drive there is very tangible - some Iranian artists have already sold [their works] in major international contemporary art circuits; so they've been accepted as very important artists internationally. But I've been incredibly impressed by the quality of work we have in this auction there are some exceptional artists here.
Why do you think international investors and media largely ignored contemporary art originating from the region?
I don't think the region has been ignored at all. We forget how new this process of globalisation is and the ability of companies to start doing business outside their home areas. It has taken a while for the right business environment to be created.
How do you evaluate the price of a piece of art whether it is worth a dollar or a billion?
In terms of contemporary art, it is the idea expressed and how original it is. When you're looking at the contemporary arts market, you're looking for leaders who've developed new themes or ideas, and decided to present things in a new way. In terms of the Middle Eastern contemporary art, it is a mixture of the traditions of calligraphy and putting into a modern context is particularly appealing.
Trade in stolen and illegally exported art is on the rise. What are your safeguards against it? How can you be sure that the artefact you're auctioning is genuine, legitimate, and that it hasn't been stolen?
This is a very important issue for us and it's something that we've been dealing with for quite a long time.
We have some strict internal rules with regard to provenance knowing where the things have come from.
We also use various databases to check everything we sell, the most obvious being the Art Loss Register, which scans all our catalogues. People who've lost items can register that loss on that database, which then scans our items to see if there is a match and alerts us if there is.
The provenance issues are very important for items that have cultural heritage importance, especially archaeological ones. We all know that this region has suffered such turbulence recently and we are on a very high alert for anything that might appear from the region that looks as though it has been acquired illegally. It would be commercial suicide for Christie's to offer works like this in our international sales. That's the last thing we'd want to do. So we have very stringent controls in place to prevent such things to happen.
How do you ensure that your online auctions are not involved in any way in money laundering?
Well we don't run online auctions so that isn't something that concerns us. We have regulations that control the amount of cash that can be spent in our sales. And we also comply with all the local money laundering regulations of the land.
Why don't you run online auctions?
There are two different types of online auctions the auctions with people bidding over the web into the bidding room is something that we do do and are going to embrace more fully in the next few months once we have the systems up and running to support that. We think it has a tremendous future in expanding the number of people bidding in our sales by allowing them to bid over the Internet.
But the traditional online auction the eBay model is something that we don't subscribe to at all and couldn't support because the value that we bring to an auction is our due diligence of the objects we're selling and the expertise that we bring to bear when assessing whether something is fake or forgery is incredibly important especially as you get to values that we talk about in our sales.
So, the added value we bring to bear is our expertise and the vetting of every object that goes into sale and we also guarantee the objects. So, if you buy an object at our auction and it turns out to be fake something that happens very rarely we will have to put that amount, whereas the eBay model relies on no due diligence of any real mention and on descriptions from the vendor only and you buy on your own risks.
Christie's and Sotheby's are responsible for over 90 per cent of the world auctions. Why aren't there more big players in the market?
There are very very high barriers to entry, the most obvious being our relationships with our clients that we have built over generations hundreds of years. When you sell a high value object, we know where all the clients are worldwide for that object and because of that, we are able to maximise the value for that object.
That knowledge and client-base is not easily acquired by a new competitor. So any new competitors have trouble matching the prices we can get at auctions because they don't have the reach to the clients that we do. That's one aspect.
The other is that because have been in existence for so long, we have information about important works of art that go back literally hundreds of years. When we sell, say, a picture, we can sometimes trace the provenance of that picture back to the beginning of the 19th century and track it through our sales... when you have that ability to know the object and supply its provenance, it's crazy for anyone to sell it anywhere else.
What do you have to say about the accusations levelled at Christie's about overcharging the clients with a high fee?
Whenever anybody charges a fee for their work, there are people who might say that that's too much. We work in a very competitive marketplace. We have to make sure that our fees allow us to compete. The due diligence, the process, the expertise, the guarantees of the lots we sell does require substantial cost. Most people, when they are involved in a significant transaction in terms of money, are happy to pay a reasonable fee to get the comfort and assurance that we are able to give them.
It's a common notion that valuables come to an auction house as a result of 'death, divorce or debt.' What's your take on this?
Yes, that's undoubtedly the case. There is a further 'd' discretion. There is definitely a growing element of investment in the art market with people buying in markets they think are undervalued and selling when they think the market is full of value. So it's death, divorce, debt and discretion and they have been for centuries the main drivers of our business.
The regional art scene
Lebanon, with its cultural diversity and cosmopolitan nature remains at the centre of Middle Eastern/European intellectual and artistic exchange and dynamism. Beirut is often referred to as the Paris of the Middle East and it is in this international environment that some of the greatest works of art have been produced by Lebanese artists, several of which features prominently in Christie's inaugural auction.
"Paul Guiragossian's (Lebanon 1926-1993) Spring Festival and Serenity are superb and rare examples from this very prominent late Lebanese artist," said William Lawrie, specialist, Islamic Art Department, Christie's.
"Similarly, Chafic Abboud's (1926-2004) Fleur de Rouge, 1961 and Fadia Haddad's (b. 1959) Songeurs de Synonymes, which epitomise a certain style of painting and use of brushwork inherent to the region, make an outstanding contribution to this exciting sale," Lawrie continued.
The juxtaposition of traditional forms and materials used in Arabic calligraphy and contemporary themes characterise the work of the Tunisian artist Nja Madhaoui (b.1937). Just as in 9th century North African Qu'rans, Madhaoui uses Indian ink on vellum, while his fluid letter forms are reminiscent of Far Eastern design. Examples in the sale by this artist include Calligrams, 1993 executed in Indian ink and gold ink on vellum.
With its roots in Islamic and pre-Islamic art, abstract art in the Middle East has always found a strong following and the Dubai auction showcased the work of the Jordanian artist Mona Saudi (b. 1945), whose beautifully worked stone sculptures demonstrate her profound understanding of the medium. Resembling layered marble worked so that its many veins of colour are an integral part of the presentation, two of Saudi's most acclaimed works, carved from a green stone she has called Jordanian Jade were included in the sale: Growth and Palestine in Green.
While the political and social climate of Iraq, Syria and Egypt has produced some of the most memorable images in all of Arab contemporary art - notable works in this sale include that of Dia Al-Azzawi (Iraq. B. 1939), Fateh Moudarres (Syria 1922-1999) and Ahmed Moustafa (Egypt B. 1943) - Iran has seen perhaps the greatest change during the second half of the 20th century.
Despite the tensions between the secular and religious communities in modern day Iran, cultural life in the Post-Khomeini era has remained strong and this is eloquently expressed in the idiosyncratic photographs by female artist Shadi Ghadirian (b.1974). In her untitled print from the Qajar Series, she uses the photographic style of a formal 19th century portrait, with the sitter ironically holding a can of Pepsi.
Modern Indian artists have also taken stock of the fast changing political and ethnographic atmosphere in their region and there are several universal themes prevalent in the art of the second half of the 20th century. The year 1947 was an historic year for India, witnessing the country's independence from Great Britain and its partition into three - modern day India, Pakistan and Bangladesh. The resulting social challenges fostered new ideas of artistic expression within a group of artists.
Collectively known as the Progressive Artists Group (PAG), the Indian set was led by Francis Newton Souza who sought to divorce himself from the academic painting traditions and sentimental themes historically prevalent in Indian art. The resultant stylistic devices of Post-Impressionism, Expressionism, Fauvism, Cubism, Surrealism, and Abstraction were married with Indian subject-matter and colour palettes to form a new movement in Indian art.
"The Green Landscape from 1960 and Monsoon from 1958 represent the highpoint of Francis Newton Souza's career, with his use of thick energetic brushstrokes almost violently applied to the surface," said Lawrie.
Major artists from Pakistan and Bangladesh were also represented in the sale, which includes a large and powerful work by Sadequain (1937-1987) who takes inspiration from the Pakistani poet, Faiz Ahmed Faiz, with a vivid depiction of hanged figures under a blazing sun that also resembles a mushroom cloud. The painting takes its title from verses written by Faiz to commemorate Julius and Ethel Rosenberg, who were executed for treason after being convicted of passing nuclear secrets to the Soviet Union.
Finally, the dialogue between East and West continues in the selection of modern and contemporary western art included in the sale. While many Arab, Indian and Iranian artists derive inspiration from Western movements in modern art, there are several noticeable examples of Western artists looking to the culture and tradition of the East for their motivation.
"The embroidered tapestries of the Italian artist, Alighiero Boetti who called Kabul his home until the Soviet invasion in the late 1970s drew upon the ancient tradition of embroidering to tell 'his' story, incorporating Farsi texts within his works," continued Lawrie. "Similarly, Andy Warhol (1928-1987) also embraced similar themes to those seen in the art of Egyptian artist, Chant Avedissian (b.1951), bringing commonplace and everyday items to new heights by depicting them in his work," added Lawrie.
Dolman concluded: "We hope that the layering of dialogues in the sale East intersecting with West, and modernity overlapping with tradition will complement the newest and perhaps the most diverse platform on the international art market stage."
© Gulf Business 2006
