Emirates NBD Private Banking CIO highlights long-term appeal of art as asset class

Published March 21st, 2010 - 03:28 GMT

During a period when investors are increasingly eager to diversify their asset allocation and investment strategies, the fine art market represents a potentially high-return asset class over the long term, according to the Chief Investment Officer of Private Banking at Emirates NBD, the largest banking group in the Middle East in terms of assets.

Speaking at a recent private dinner sponsored by Emirates NBD and held on the sidelines of Art Dubai 2010, the largest contemporary art fair in the Middle East, Gary Dugan told an audience of invited Emirates NBD Private Banking clients that building a strategic portfolio of fine art can provide significant personal and financial rewards.

“Like the global real estate market, the international art market was significantly impacted by the worldwide financial crisis, which led to a general decline in prices at auction and increased consolidation among sector participants,” said Dugan. “The correction in the art market, however, has proved relatively short and shallow. At the same time, consolidation will lead to increased price stability, benefiting long-term investors.”

Highlighting the significant appeal of emerging art markets – including the Middle East – Dugan pointed out that increased investor attention to fine art from the Arab world comes at a time when the region is itself increasingly seen as core a component of the global financial market.

“Despite the impact of the global financial crisis, we see rising levels of interest in investing in Middle Eastern art as well as increased investment in fine art from Middle East-based collectors,” he said. “Indeed, according to Christie’s, registrations from their Middle East clients rose by some 30 per cent last year, the highest increase among all geographic regions for the international auction house.”

Considering the historical preference of Middle Eastern and Asian investors for real assets, especially commodities such as gold, it comes as little surprise that the regional art market has suffered less significant price declines than the Western art market, according to Dugan.

“The tangibility of art makes it an appealing asset class to many regional investors – and that is especially true during a period of global financial volatility,” he said. “Based on expert advice and as part of a broadly diversified portfolio, I am convinced that fine art has a place in the portfolios of many of our clients.”

Dugan was joined at this invitation-only dinner for Emirates NBD Private Banking clients by Philip Hoffman, Chief Executive of The Fine Art Fund Group, the first fund of its type to invest in art as an asset class worldwide, which served as co-sponsor of the event.

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