Investors In The UAE Turning To Art As An Alternative Investment Option

Vasu Jit Kalia
Vasu Jit Kalia

Slowly but gradually art as an investment option is gaining popularity as an investment option for investors. Art as an investment option may not be as liquid as equities, bonds, cash, commodities and the cost involved in sale and purchase of artwork are many just including appraisals, insurance, transport, storage and auction fees.

But then let’s explore why so many investors are turning to art as an alternative source of investment when there is no tangible investment associated with it like it is in the case of shares and stocks. The value of art is not generally affected by the global conditions like war, famine etc.

Right investment in the art will get you the benefits as the demand for the rare and distinct artwork is increasing over the time.

According to the Art Basel/UBS Art Market 2020 report the art market has experienced significant growth for several years, reaching an estimated value of $64.1 billion in 2019.

At the backdrop of the art preview “Enjoy the color”organized at Mondoir Gallery on Wednesday, July 31, 2024 where French artists Amelie Beral and John Thery displaced their artworks host of art enthusiasts gathered to a appreciate the art and shared their views on this topic. This is the new project of renowned lawyer and collector Romain Gerardin-Fresse, who represents many artists and has now opened his first gallery in the Emirates at an inauguration attended by nearly 60 people from all walks of life, including art lovers, celebrities, members of the government and VIPs.

Yaqoob Al Ali, Executive Director and private advisor to the office of HH Sheikh Juma Bin Maktoum Al Maktoum

Yaqoob Al Ali, Executive Director and private advisor to the office of HH Sheikh Juma Bin Maktoum Al Maktoum, who graced the occasion as dignitary said,” Thanks a lot for inviting me to this place and I really enjoyed this evening paintings displayed are wonderful and do feel that the art as an alternative investment option as compared to crypto and stocks is a safer bet.”

art-investment

Romain Gerardin-Fresse, a renowned French lawyer and founder of the alliance “GFK Strategies”

The renowned lawyer Romain Gerardin-Fresse, one of the world’s top 5 most powerful strategists and ardent art lover and collector spoke at length about art as an investment option and said, “There are two ways of investing properly. Either by grasping its purely speculative nature, or by considering it as a diversified asset in one’s invested capital. There are now some 75 million art collectors worldwide, five times as many as at the end of the 1990s. This veritable craze can be explained in part by the growing number of artists and styles on the market, by greater education and awareness, and by the widespread access to culture in our modern societies, which in the past was reserved for a certain elite. The average annual return on a safe investment is almost 7% per annum, with a particularly optimized tax system. For the diversified investor who wants to add to a relatively large initial investment, the return can be as high as 11%. This is by far one of the most profitable investment segments.”

Speaking about the investment funds which specialize in art Romain said, “Various investment funds have specialized in art, such as Sgam AI Art Fund or Art Collection Fund, with financial engineers who also have a real awareness of art and who have included in their teams experts who can identify pieces that are tending to increase in value. Each fund diversifies its assets in its own way, always favoring modern and contemporary art – which has a much better chance of increasing in value than classic works whose prices have often already passed the 4 or 5 million dollars mark. In practical terms, the initial investment can be doubled if the work is kept for a dozen years. This is the recommended period of conservation to benefit from the effect of compound interest. Based on a conservative yield of 7% per annum, the capital gain on resale can be as much as 80 to 150% in the case of a purchase – recommended – over the counter, and potentially as much as 250 to 300% in the case of a global deal negotiated by an investment fund.”

Romains advice to the novice investors in art is as follows, “Novice investors looking for a profitable but risk-free investment should buy canvases or works by artists who are already quoted, and who have a track record that allows them to accurately assess the evolution of their prices and the economic projections that can be made. It is worth remembering that more than half the world’s earnings (64%) come from just 50 artists. An artist who sells between 30 and 40 works a year and whose unsold rate does not exceed 50% is considered to have a good sales performance.”

art-investment

Dr. Krishnan Nair, Managing Director, Dr. Krish Esthetik Studio Dental Clinic

An ardent follower of the art and exhibition Dr. Krishnan Nair, Managing Director, Dr. Krish Esthetik Studio Dental Clinic who was seen enjoying the paintings said, “I can see some beautiful art here and yes it’s a profitable investment in the long run and someone who is really passionate about the art it is the best way to invest.”

art-investment

Noted Russian artist Dasha Vong

Seen echoing the similar sentiments was noted Russian artist Dasha Vong, who organized her Solo exhibition of abstract paintings at Dusit Thani Dubai earlier this year, titled Borisova stated, “Investing in art is a reliable way to preserve and grow capital in the medium term, measured over five to ten years. It is particularly worth paying attention to contemporary artists, as the one who recognizes talent first will benefit the most. To achieve this, it is useful to follow rankings on popular platforms such as Artsy, attend exhibitions and openings, and stay informed about global trends. Understanding current directions and styles helps predict which art will be in demand in the future. These are not short-term investments for quick profit but rather an opportunity to earn not $10-20 thousand, but $100-200 thousand in five to ten years.”