magpie: What’s happening in the local art market? At the top end there doesn’t seem to be enough art around to cater for demand, so prices for selected artists are going up. Then, in the mid-range, there seems to be an excess of supply, though, maybe even too much. Artprice’s latest report suggests that the auction business is growing again after two years of rebalancing – especially for Contemporary Art. What are your thoughts on this?
Sylvain Gaillard: We’ve observed this pattern over the last 18 months. Over that period, I’ve generally sold fewer pieces in absolute terms, but the distribution has become extremely skewed.
There is definitely increased demand on the high end. The markets (both art and financial) have been uncertain, so collectors are focusing on bigger names with an established track record.
It does make sense from a collecting perspective, but it’s also affecting our capacity to properly address the demand. Nice, well-priced pieces tend to go fast, leaving us unable to fulfil our collector’s first pick.
At the end of the day, it’s a good problem for a gallery to have. But it’s counterbalanced with the problem of finding good artworks at the right price to keep up with the demand.
I think these combined factors have been driving prices up on the high end. At the other end of the spectrum, we’ve also sold a lot more artworks from emerging and recently established artists. The conversation with our collectors is easier here – they buy the art because they genuinely love the piece and the direction of the artist. Price appreciation comes a distant second in their motivations.
This leaves us with the mid range, which is really hurting. Demand has been steadily decreasing, with the exception of a few artists who are still spurring interest.
From a business perspective, this has not affected my bottom end, so I can’t complain. We’ve just had to make some tweaks in our offering and the way we present the artworks to the clients.
Personally, I’ve always been more comfortable pitching the opposite ends of the spectrum. So, to put it selfishly, this makes my life easier. I’m Swiss and so very cautious (by definition or nature); the uncertainty of the mid range sometimes made me slightly uncomfortable. You need to have a very deep understanding of what the collector wants, and manage their expectations very carefully.
m: Is it the case that the buyers are changing? Are there more speculators out there treating art as an alternative investment asset class? Artprice says there are yields of 10% to 15% per year on works valued over $100,000 …
SG: Long-time buyers and seasoned collectors have not changed, because they know the ropes. We do see a change in buying behaviours with newcomers, though. More people are approaching their art purchase as a pure investment. The headlines generated by record-breaking auction prices have sent the wrong message; people walk into the gallery wanting to buy a $10,000 piece, thinking that it will pay for a house in 10 years.
This leaves us – the gallerists, dealers etc. – the painful task of putting everything back into perspective and managing expectations. A lot of education has to be done at the ground level. I can give you a very long list of artworks valued at $100,000 a couple of years ago that are now trading for $20,000.
Yes, you can make money using art as an asset class; but it needs active management, and just like any other regulated asset class, it should say that past performances are no guarantee of future performances (the one-time asset manager in me is smiling).
Art as an investment is only for a few type of clients. For the rest of them, I always preach the same thing: buy what you love. The emotional return of owning a piece will often outweigh the financial one.
m: So does the Dubai art market have its own identifiable buying patterns?
SG: I can only speak for my gallery and my clients. First, we sell Modern Masters and contemporary artists, and each of these has a distinct collector base (with a bit of overlap). Second, we sell to expat, locals, and people passing through the UAE.
All of these have different buying patterns and preferences. For us, this is great because we hedge the business. There is always a mix of product and collector that gets traction, which allows us to strive even when the market is a bit bumpy.
I’m a former banker, so when I was given the direction of the gallery I tried to make some sense and statistics out of seven years of operations.
I quickly gave up because nothing was of statistical significance.
This being said, we operate in a very seasonal market. The good months stretch from September through May; this is when we need to be active with our collectors. Other than that, we’ve realized that most of the purchases are concentrated after the 20th of the month. And honestly these are the only observable patterns that I can share with confidence.
Founded in 1994, Opera Gallery Group is one of the rare international art gallery networks with international reach: it has 11 locations around the world, offering works of Modern Masters from the 20th century as well as contemporary artists.
m: Is there a local art market in Dubai, beyond the ‘interior design’ requirement for something pretty to put on a wall of a newly acquired villa? Are there genuine collectors here?
SG: Yes indeed, there are some great collections in Dubai. I’ve had the chance to visit some villas and apartments filled with a perfectly curated selection of first grade art pieces. Unfortunately, there are marginally too few of these considering the wealth and the population of the region.
Another factor affecting the perception of the local art market is the anonymity. In some more mature markets, people who have acquired a top grade collection are more inclined to share it or be vocal about it. They open private museum, foundations, or simply go public with their purchase. Locally, that hasn’t become the norm yet, so a lot of gorgeous artworks currently in Dubai are still hidden.
This boils down to the relative new age of the market, and I’m confident Dubai is headed in the right direction. We’re about to see a lot more people showing their art, and wanting to offer the public a unique chance to discover great collections; it will just take a bit of time.
m: What does the immediate future hold for the art market generally and Dubai in particular? Is it a tough market for art overall, globally?
SG: Well, we are still a small market, which means we are highly dependent on the health of the global art market; and this year it is a bit difficult.
So yes, the market for art globally is going through a small correction; and the region is also affected, which is normal.
After stints with the group in Geneva, Hong Kong and Monaco, Sylvain Gaillard started overseeing the DIFC branch of the Opera Gallery in September 2014. He comes with degree in Business Administration from Northeastern University, Boston and a MBA from the same institution as well as more than ten years’ senior experience in asset management and private banking; but he says Opera Gallery gives him the opportunity to share his passion for art while at the same time providing best-in-class investment advice for long-term buyers. He has a passion for travelling and is an avid collector of watches and sneakers.
On the bright side, external events – Expo 2020, the opening of the Louvre Abu Dhabi, Art Dubai and Abu Dhabi Art, and so on – will always bring a spike in our business.
For us, it’s very easy to take the pulse of the market since we have 11 other galleries scattered worldwide. There is no doubt that this year is a bit slower for everybody, but it’s nothing alarming.
The art world has gone through minor corrections time and time again, and it is nothing to be afraid of. We just have to be smart and proactive rather than reactive.
m: What does the local market need? More people doing art, more fine art students to fuel the need for emerging artists? More and better art criticism rather than the current style of ill-informed sycophancy? More locally based galleries to develop relationships with local buyers and local artists? More international galleries setting up a satellite here to confirm Dubai’s credibility as an art centre? More emphasis on Dubai as a regional hub, finding and showing more art from Iran, Pakistan and Jordan as well as the GCC?
SG: I would go for all of the above – you’ve successfully listed every key ingredient to make a buoyant art market.
On a more personal level, there are two things that hold a special place in my heart; public art and private museums.
Public art is always good and tends to elevate the conversation at all levels. Some amazing initiatives have been taken locally, and continue to be developed. This is great and I hope that this trend will keep growing, as it is key the overall health of art in the region. I want to see even more art in public spaces, building lobbies, malls, parks …
One of my favourite things to do when I’m in New York is to walk down 5th Avenue from Central Park. Almost every building lobby on the route features a very nice selection of art, and I’m talking million-dollar pieces. How great it is to be able to walk around a city, and discover art from major contemporary artists.
Private museums are also a good thing. It’s a defining moment for any region, when people decide to go public and share the amazing collection they have acquired. To me, this is the ultimate way of giving back to the community, and it’s only fair given the joy art brings to your life. I am looking forward to seeing great collections come to light in the near future.
Top: Ahmet Nejat, Kaligrafi Bezemeli Hic 2. From the current GOLD show at the Opera Gallery