The necessary market maturity and support infrastructure is now in place to consider art as a viable standalone asset class for Middle East retail investors. This was the consensus view of a panel of industry experts from Christie’s, the Fine Art Fund and Zurich when they spoke at “The Zurich Forum: An insight into investing, collecting and protecting fine art,” held at the Capital Club in Dubai.
While the region has a well-established group of high-net-worth collectors, the panel identified the emergence of a broader base of retail investors who are now confident about spending $20,000 and above on pieces of art. They have been attracted by the rise of support services for art investors, such as the “Art Net” pricing tool, and the proliferation of ways to participate in the market, from purchasing art directly from studios, galleries and auction houses through to investing via specialist art funds.
Hala Khayat, Head of Christie’s Dubai sale, said: “Ahead of the most important week in the Middle East’s art calendar, The Zurich Forum is an important opportunity to offer advice to those new to buying art about the different tools available to help them build and protect their collections. Over the past 8 years Dubai has become the centre of the art market in the Middle East and now attracts an equal number of local and international visitors during March. As we at Christie’s hold our 16th season of sales in the region, we can see just how far we have all come, art fairs, galleries, museums and collectors, in such a relatively short period of time.”
Attended by art collectors as well as asset managers and investment advisors, The Zurich Forum panel characterised Middle Eastern art as an emerging asset class, with a corresponding risk and reward profile. They noted that while investors must accept a level of price volatility, it is typically less than an asset such as gold. Furthermore, as the Middle East market has matured and local artists have established track records, it is now possible to provide much more accurate pricing benchmarks.
Salma Shaheem, Head of The Fine Art Fund Group’s Middle East division, said: “Art is a globally recognised alternative asset class that has grown in popularity in this region to become a viable component of a diversified portfolio of assets. Like any asset class, however, investing in art requires thorough research and professional advice.”
The importance of protecting art works to ensure they stay in pristine condition and retain their value was another topic discussed at the forum. While theft and fire are the risks most often associated with art, simple accidental damage from something as simple as water dripping from an air conditioning unit is actually far more likely. The panel also highlighted the importance of taking market appreciation into account when insuring a piece.
Brian Reilly, CEO for Zurich’s General Insurance business in the Middle East, said: “Like any asset, art needs to be protected to ensure it retains its value. However, in a part of the world as free from crime as the GCC, this is not always front of mind. Yet just as the market for art has developed considerably in recent years, so too has the specialised art insurance industry. Thanks to the increasing availability of professional risk management advice, collectors are also much better informed about keeping their artworks safe while at home or in transit.”
The Zurich Forum panel offered advice to investors new to the market: “Begin by thoroughly researching the market to get a feel for the artwork you want to buy, before speaking to an expert for their professional opinion. Most importantly, always buy something that you like and then you have always made a good investment. Once you have identified a piece you want to buy, negotiate with the seller. With the artwork in your possession, you need to protect it just as you would any other investment, so seek out specialist insurance cover. Finally, be prepared to hold on to your investment for the long-term and simply enjoy the artwork in the meantime.”
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.
For further information, please contact:
Head of Communications, Middle East & Africa
Zurich Insurance Group
Direct: +971 4 455 7552
Liam Turner / Ajith Henry