Painting for profit

VISION: John Martin, director, Art Dubai.

SUPPORT: Bijan Khezri, CEO and president, Artists Pension Trust.

PROMISING: Prominent UK artist Sacha Jafri believes that Dubai is on the verge of becoming the cultural hub of the Middle East.

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EYECATCHING: Amir Fallah’s exhibit piece has gained critical acclaim.

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EYECATCHING: Farhad Moshir’s ‘Barbie in hejab’ was also a hit among art enthusiasts.

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The same thing is happening in China, according to Martin. International collectors have noticed a recent explosion in Chinese art because "amazing talent is suddenly being untapped," he says. "For the first time, these artists are getting a chance to do shows and this has a huge significance on the market and culturally."

But while it's clear in Dubai that art is good for business and business is good for art, some auctioneers, gallery owners and financiers are still advising caution about overhyping what is still a relatively small market, both in terms of its comparative size globally and art's viability as an investment alternative to the world's slumping stocks.

While Michael Jeha, managing director of Christies, agrees that Dubai and the region's art industry is growing exponentially, he points out that the Middle East auction market was only worth US$20m in 2007, compared to its fellow emerging market India, which was worth US$115m in 2007, and the global auction industry which is worth US$6.5bn.

He says that art is on the rise worldwide, noting that Western contemporary art, which was worth US$50bn five years ago, is now worth US$500bn.

"The increase is a global phenomenon, art buyers are using excess liquidity as a means of diversifying their investments, which in turn drives up the value of paintings," says Jeha. "Tastes are moving towards the modern and contemporary - there is also a trend for minimalism. But the notion that a few people buying a few more paintings here will drive up the global market isn't true. Still, it all helps."

Aalaeddine Chahbi, fund manager at Evolvence, one of the region's largest hedge fund firms, agrees that while the industry is growing, art is not quite ready to storm the markets as a viable alternative to private equity.

"Art, especially local art, is scarce; it's simply not available in big enough values. As a hedge fund investment, it's very niche - even internationally. There are only a handful of sizable significant art investment companies, the world over. It's not like there are even 100 of them," Chahbi explains. "There's not trillions of dollars of paintings on the market - because not every painting is of value. There's not enough to go around, it will never be as wide as the general equities market."

In recent years, financial whizzes have created investment products surrounding all kinds of stock, bond and commodity indices. But there's been little effort the world over to turn art into a security. There are only a few notable examples, where funds have been dabbled in to allow rich people to invest in a portfolio of fine art assets.

One of the funds, Fernwood Art Investments, created by Merrill Lynch, inspired a Harvard Business School case study. But even in this fertile environment, it failed to launch. The London-based Fine Art Fund, created by a former Christie's boss, is still in business but has yet to set the world alight.

But this could be changing. As data has shown, the world's people are getting richer, and when they get richer they buy more paintings. Some experts predict a tipping point, particularly when considering the region's impressive overall growth rate.

Bijan Khezri, boss of the States-founded Artists Pension Trust, is positive about art's potentially vertiginous economic climb.

"While established art is still very expensive, a lot of new Middle East art is coming to the fore that wasn't on the scene before - from Iraq, Gaza Strip, Iran. It wasn't possible to see it before. It's all about visibility platforms, such as galleries and art funds. There are now physically more available paintings," he says. "It's possible that art funds will eventually list on the stock exchange as a way for those who have money to diversify their assets without actually owning the paintings, or having to learn about them. The creation of a specific art fund on the stock exchange in Dubai would be a great way to leapfrog New York and London."

While the momentum behind the region's fledgling but thriving contemporary art industry is building, experts predict that the market will dampen without increased government intervention and support. It's true that the DIFC has taken a lead in hosting exhibitions and investing in art, and to some extent the government has identified culture as a priority, but the local art scene has so far developed organically, led by gallerists, artists and collectors.

What the city needs now is direct institutional or government investment. Dubai has a first-mover advantage when it comes to art commerce but it is behind on building a museum and art school, or commissioning public art - this is what has helped to form the world's true art hotspots, from London, to Paris, to New York - which house some of the earth's greatest artworks in public museums.

Dubai must take heed of its neighbours, who are raising the stakes, investing heavily in the business of culture. Qatar opens its Islamic Art Musuem soon, while Abu Dhabi has devoted a whole island to cultural projects, including regional offshoots of the Guggenheim and Louvre.

It's only when art is taken seriously by governments and investors alike that Nasser Al Shaali from DIFC will achieve his bold dream of using ‘Dubai to act as a bridge for culture and art across the East and West'; and that Ghassan from JPMorgan will fully realise his vision of seeing ‘economic success trickle over into art and culture.'

Once government commitment is in place, the region is set to reap the rewards of prolifically fast-growing art market and general economy.

Nowhere else in the world is growing as fast as Dubai - why should the art market be any different?

"Economics and art are natural bedfellows. As one grows in size and sophistication, so does the other," says Shaali.

"The world of finance does not have to be grey; it can be filled with the vibrant colours of art."

And, as Shaali's JPMorgan business partner rises from delivering his launch speech for the firm's inaugural art display in Dubai, it seems that one day, in the not too distant future, the city might find a prosperous balance between its moneymen and its artists.

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