Middle East auction market could touch $100m

Auction fever in the Middle East could see the market double in size over the next five years, says Bonhams CEO Matthew Girling.

The firm, which is holding its sixth auction in Dubai on Monday night with a first-ever sale of classic collectors’ cars, believes there’s enough depth in the region’s fledgling market to both support regional representative offices and increase revenue despite the effects of the recession.

“It’s a very small market, about $50 million (Dh183.5m) in magnitude right now but I think it could and should hit $100m annually in the not too distant future – five years’ time could be realistic,” Girling tells Emirates 24|7, in the boardroom of the Jumeirah Beach Road villa that serves as his firm’s Dubai office.

At the moment, auction activity in the region is largely restricted to the big international sale houses, such as Bonhams, Christie’s and Sotheby’s.

And despite taking a hit in 2008 in the wake of the recession, Bonhams’ international business bounced back last year. Girling says 2009 was the firm’s second-best year after 2007, and 2010 looks even better -- on the back of the company is now looking at opening new offices and signing representative deals around the world.

“We’ve had a very strong first half, and I’d say we’re set to outstrip last year,” he says.

Regionally, though, things are a little bleaker. Although Sotheby’s held a rather unsuccessful sale of Islamic art in Dubai in 1985, auctions have only really taken off in the region over the last four or five years – since the majors opened offices in the UAE.

The first sales in 2006 and 2007 were superlative affairs, with records being set and broken, with an uptake of close to 100 per cent, well above industry norms of between 65 to 70 per cent.

“What happened there was not the normality of the auction business,” Girling says. “You don’t normally expect things to sell at five to ten times their estimate – but that’s what was happening here. It was fantastic, it meant huge headlines and of course, it was great financially, but it meant that local expectations were set at unrealistic levels from the word go.”

Even though sales were hit by the recession, he believes think the market has emerged relatively unscathed. “The scale of the crisis would have finished off some markets, crushed them, but that hasn’t happened here.”

He says the market has now recovered enough for between 60 and 70 per cent of items on offer to be sold at prices within or around their estimates – a performance completely in line with the norm. “I think the important thing from my point of view is I believe the Middle East is going to become an important trading centre for art and antiques – and that remains unchanged,” he says.

The sellers, too, are coming back. While the recession drove them into more established sale cities such as London, Girling says sellers are now committing to Dubai again: “There’s more optimism now. And people’s expectations have readjusted both globally and regionally.”

To take advantage of that appetite, then, he's expanding, eyeing new markets for offices or representation agreements. Representatives in Saudi Arabia and Lebanon, he says, are the sensible way to grow, and by the end of 2011, he hopes to have a presence in at least three, possibly four other countries across the region. Russia is another area of focus for the brand -- he says Bonhams could have someone in place there by the end of the year -- while Latin America is another area he's looking at.

Double dip

Which is all very well -- but what of the dreaded double dip recession, I ask? How would that impact future sales?

While recessions often mean that corporate bean counters are only too happy to dump the expensive art in the office lobby in an attempt to free up some capital, the wealthier individual buyers, he says, may not be affected at all. While an increased amount of objects may come up for sale in hard times, quality pieces valued at $1m and above are less likely to be sold when the perceived appetite is lower – particularly if their owners can afford to keep them gathering dust a little bit longer.

Here Girling points out that auction records have nevertheless been broken even in these comparatively straitened times. At an auction of the designer Yves Saint Laurent’s personal collection in Paris in February 2009, a wooden sculpture by the Romanian artist Constantin Brancusi sold for $37.2m, a record for the artist’s works at auction. That particular sale itself, spread over three days, brought in more than $484m, well over the $250m-$380m expected.

At the time, Pierre Bergé, Saint Laurent’s long-time partner, said the results proved he was right to ignore the advice of friends telling to hold onto the collection until the crisis abated. “When we provide buyers with quality works of art, the buyers are there,” he told reporters.

“Although sales of contemporary art saw a rather sharp spike and dip, overall, auction records have been broken even in these tough times,” Girling says. “At the top end, that’s a reflection of the fact that there is money out there, and it’s going to have to go somewhere.

“And if you look at American and European interest rates -- they're half a percentage point in the UK -- if you put your money in banks, what chance would you have of beating the spectre of inflation? But if you put that money in objects, it's performance could quite likely outstrip the banks."

Read about tonight's sale here: Bonhams to auction ‘Batmobile’ in $6m Dubai sale

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