Middle Eastern Market Woes

Stefania Bianchi of the Wall Street Journal reports on the Middle Eastern art market. After much investment and anticipation it is now struggling for a  firm financial foundation, although it is proving allusive. Bianchi discusses the current state of art affairs in the Middle East with Matthew Girling, Bonhams' regional chief executive. Girling believes the Middle Eastern market is soft for several reasons, first the economic impact has been greater than what has been felt in the US and Europe, and the market is not nearly as deep as other regions with fewer sophisticated collectors.

This poor news follows on the heels of today's other post on the positive outlook of the RICS Art and Antique Survey in England. Of course markets and collecting habits are unique and different, but it does show there is still a ways to go before the art markets return to a more stable environment.

Bianchi reports

To tap a growing appetite for art, jewelry and other luxury items in the oil-rich Gulf, international auction houses have in recent years moved their businesses to the region.

Dubai has become a center for galleries and auction houses hoping to tap into the region's wealthy.

Christie's was the first international auction house to have a permanent office in the Middle East, opening in Dubai in 2005. Phillips de Pury & Co. also has an office in the emirate, while Sotheby's has an office in Qatar.

But in recent months, as the global downturn has moved in on the Persian Gulf's boomtown, its auction houses have struggled to drum up interest at art events targeting the mega rich.

"The last thing the art market in this region was a downturn and it's been very hard to withstand a knock like that," Girling said.

The 216-year old British auction house, which will hold its fourth Middle Eastern Art auction in Dubai next week, expects that as the global and regional economic downturn eases, the appetite for art in the Gulf region will return, but warns "it could take a while to build back up."

Bonhams set up a Dubai office in 2007 and an inaugural sale for contemporary art here in March 2008 took $13 million - almost three times the expected result, with 94% of lots sold.

However, at Bonhams' most recent Dubai auction last May only 70% of lots were sold.

Girling says the Bonhams sale of predominantly Iranian, Arab and Pakistani contemporary art on Oct. 12 will "test the waters" for appetite in the region. With the pre-auction estimate at a modest $1.5 million to $2 million for the 100 pieces up for sale, Girling says there are plenty of opportunities for bargain hunters.

"Sellers have had to reduce their expectations," he said. "The huge prices we once saw won't come around again quickly."

To read the WSJ article, click HERE. (If the full article does not come up and you wish to read the full article search Google News for Stefania Bianchi.