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UAE: How a new wave of cost-conscious collectors is reshaping art investment market
Some exciting new trends are emerging among collectors and investors in art. Investing in art has become increasingly attractive as a long-term strategy, and billions of dollars are pouring into the sector from private individuals. Last year, the global art market was valued at approximately $57.5 billion (Dh211 billion), although this was a 12 per cent decline on the previous year, according to the Art Basel and UBS Global Art Market Report 2025.
However, while the value of the art market dropped, the number of transactions actually rose, which signifies a shift in the market. It means that more art is changing hands at a lower price point, driven by a more cost-conscious art buyer. The report also found that almost half of online art sales last year were made by first-time collectors. Could we be seeing a new kind of art buyer emerging?
While art is considered an 'alternative investment', behind more traditional assets like stocks and shares and property, art investment has an extremely long track record. Auction houses Christie's and Sotheby's were set up in the mid-1700s to value, sell and resell artworks for collectors, investors and sponsors. 'There's growing global interest in alternative investments, especially among younger investors seeking portfolio diversification,' says Matt Sutherland, who heads communications at Masterworks, which offers fractional ownership of iconic, multi-million-dollar artworks. 'Art is gaining traction as a stable, uncorrelated asset — and investors are increasingly drawn to its cultural significance as well as its financial potential.'
Artists
The first step of art investing is understanding why you want to do it — is it strong returns, personal interest, or both? Like all financial decisions, research is vital. What kind of artist and style do you like, how much does their work cost to buy and does it sell well on the market?
Maddox Advisory, an art investment specialist, groups artists into three broad categories. These include 'blue-chip' artists (think Monet or Picasso) who have well-known styles, constant interest from buyers but come with extremely high prices. Next are 'established' or 'mid-career' artists who are still producing art and have a strong reputation in the art world. Then there are 'emerging' artists.
Natascha Reihl is the head of business development and private sales at Artemundi, a boutique art investment firm. 'Contemporary/emerging art often promises higher returns but also comes at greater risk: many contemporary/emerging artists have yet to stand the test of time and many will remain a shortlived trend rather than establish a stable mid- and long-term market for themselves,' she says.
Established and blue chip artists come with decades of recognition that adds to their long-term market value. However, as Philip Hoffman, the founder and CEO of The Fine Art Group, contends that paying a lot of money for an established name doesn't guarantee a financial return. 'Aside from intricacies surrounding the condition and authenticity of an artwork, values can move in both directions. I tend to ask myself: 'What will tomorrow's generation collect and who, among the established figures, is still undervalued?'' he says.
Last year was a tough time for high-end art, with sales of artworks priced between $10 million and $100 million dropping 45 per cent. Whereas works under $1 million saw a smaller decline of 13 per cent, highlighting resilience in the lower-priced segments. But blue chip artists continue to dominate collector interest due to their stable market performance. 'We've observed particularly strong demand for surrealist works in the post-pandemic era — perhaps reflecting a broader cultural desire for escapism and imaginative expression. Post-Impressionist masterpieces, especially select works by Claude Monet, have demonstrated remarkable resilience, maintaining steady price appreciation despite economic headwinds like rising interest rates and market volatility,' adds Hoffman.
While established artists remain the cornerstone of art investment, emerging talent is an exciting area that gains a lot of interest as investors bet on the next big star of the art world. Lorenzo Amos, a New York-based painter, has caught the attention of art collectors with works that blend Lucian Freud's psychological depth with Cy Twombly's expressive energy.
Some up-and-coming artists adopt sales strategies to attract early investors. John Russo, CEO at Maddox, explained: 'Certain artists use tiered pricing, whereby the cost of an artwork increases as the edition approaches its sell-out, resulting in greater returns for early investors.'
Time frame
The Fine Art Group, which caters to collectors and investors across the US, UK, Asia, the Middle East and Australia, clearly explains to its clients the time frames associated with different types of artists. 'Ultra-contemporary works can be volatile, often tied to short-term trends (2-3 years),' says Hoffman. 'For stable, long-term growth, we recommend blue-chip artists, where a 5-10 year horizon allows the market to mature.'
Surprisingly, art is not considered a very liquid asset – it can be hard to sell. However, this is changing as the blockchain makes it easier to buy and sell fractions of art works rather than whole paintings. The Fine Art Group has a different approach and has introduced art-backed lending solutions that allow collectors to unlock liquidity from their collections within days — without needing to sell.
You can buy and sell art in several ways — directly with a dealer or gallery or at one of the many art fairs taking place around the world. Events like Art Basel, Frieze, or TEFAF are popular ones to network directly with dealers and advisors. Art Basel will make its Middle East debut with a new art fair in Doha in February next year. It's the event's first foray into the MENA region and joins its established fairs in Switzerland, Hong Kong and Miami.
Another popular route is art auctions, although these are not recommended for first-time investors. Auction prices can be influenced by various factors, and you need a deep understanding of an artist's body of work, along with rigorous evaluation of provenance and condition, to be able to make an accurate valuation.
Breaking it up
Technological advancements, predominantly the development of the blockchain and tokenisation, have paved the way for investors to invest in fractions of artworks. This allows them to sell their fractions and exit the investment any time, and no longer ties investors to the artwork until its eventual sale. This not only makes art more accessible and affordable for retail investors, but also makes it easier to diversify a portfolio by spreading investment across multiple works and artists.
Masterworks, which offers fractional ownership of artworks, acquires blue-chip paintings, files them with the Securities and Exchange Commission (SEC) in the US and then allows individuals to invest in shares. When the artwork is sold, investors receive their share of the proceeds. 'Every individual who wants to invest first meets with one of our advisors to discuss their portfolios and break down the right amount to invest in the platform based on a number of factors, including liquid assets and tolerance,' says Sutherland.
Having an interest and appreciation of art is strongly recommended by experts. This will help you both evaluate artwork and to enjoy the art while it's in your possession. 'I always emphasise that collecting emerging art should be driven by passion: the thrill of witnessing an artist's journey unfold and the opportunity to support the broader art ecosystem. While it can be deeply rewarding, I never recommend emerging art purely as a financial investment,' adds Hoffman.
