InwestCo Founder & CEO, Aaron Dabbaghzadeh, has witnessed a surge in fine art expenditures by Middle Eastern investors, reflecting a transformative cultural resurgence in the region. In the first quarter of 2023, there was a noticeable increase in temporary art exhibitions, talent, and investors gathering in the Middle East. As a family office with a presence in the United Arab Emirates, Dabbaghzadeh has observed a growing trend toward investments in alternative assets, particularly fine art, within the region.
Investors in the Middle East are diversifying their portfolios beyond oil-based products, seeking opportunities in various sectors including real estate, technology, healthcare, renewable energy, and the art market. Notable fine art investments in the region include the acquisition of Leonardo da Vinci’s masterpiece “Salvator Mundi” by Saudi Arabia’s Crown Prince Mohammed bin Salman in 2017. Major auction houses such as Sotheby’s have also seen significant interest in Middle Eastern art, setting records for Egyptian artists in recent sales.
The establishment of major museums and cultural institutions in the Middle East, such as the Louvre Abu Dhabi, highlights the region’s growing influence in the art market and the role of art in promoting cross-cultural dialogue. Dabbaghzadeh anticipates that fine art expenditures will continue to increase, offering strategic benefits for investors beyond aesthetic enjoyment. Family offices can play a crucial role in assisting clients with navigating the fine art space, providing education on risks and rewards, conducting due diligence, and advocating for market transparency.
Challenges such as extended liquidation times, subjective valuation, transaction costs, market volatility, and preservation expenses require careful consideration when investing in art. Educating clients on factors that can affect artwork value, such as scarcity, economic prosperity, and the use of rare materials, is essential for making informed investment decisions. Employing a thorough strategy that integrates theoretical knowledge with practical experience, including workshops, gallery tours, case studies, and ongoing support, can help clients navigate the complex landscape of art investment.
The expansive canvas of opportunity for fine art investments in the Middle East reflects a blend of tradition, innovation, and visionary financial decision-making. While investing in art can be fulfilling and offer returns, taking a prudent approach is crucial. Dabbaghzadeh emphasizes the importance of investing in assets that endure and providing clients with ongoing support throughout the investment process. Consulting a licensed professional for personalized advice concerning individual situations is recommended.
