Carrie Bradshaw famously joked that she liked her money right where she could see it—hanging in her closet. But what about hanging your money on your walls? Art as investment is an increasingly popular practice, but one that is quite controversial. While investors are often eager to make a quick buck over a few years and some artists are jumping at the opportunity to cash in on that eagerness, others in the art world are appalled at the notion.
Overall the art market is doing quite well in Lebanon, at least by the looks of this year’s Beirut Art Fair (BAF), Lebanon’s biggest art event. Held from September 21-24, BAF saw an average increase in sales of 19 percent compared to last year, with 88 percent of the 51 participating galleries making sales, including a few who sold more than $500,000 worth of art. Those in the art world, in Lebanon and abroad, undoubtedly want people to buy more art, but intent makes a big difference.
Experts advise that if you’re going to buy art, you should not just “invest” blindly, but look for works of art you genuinely enjoy. Art isn’t a bad investment, but it is one that should be done for the right reasons; if you get lucky you’ll be happy about the financial outcome but if you don’t, at least you’ll like what you see in front of your face every day.
Putting a pricetag on art
In order to talk about investment one must talk about value, and art is notoriously difficult to appraise. In a way, the strength of art–its subjective nature–is also its weakness. The beauty of art lies in the eye of its beholder making its value subject to each individual’s preferences. What we like depends on our perception, background, and references. Basel Dalloul, one of the biggest art collectors in the region, says, “An artwork is worth whatever someone is willing to pay for it.” However the question of what people are willing to pay for art is a very complex one.
Pascal Odille, the artistic director of the BAF, says experienced gallerists will likely know their market and have an idea of what they are willing to pay for specific types of art, so initial pricing for young artists is usually a conversation between artists and gallerists. Saleh Barakat, who has been in the art business for over 25 years and owns two of Beirut’s most prominent spaces, the Agial and Saleh Barakat galleries, says he generally starts by pricing the work of emerging artists at around $1000 per piece and if a collection sells out he increases the price at the next exhibition. Slowly, prices are increased until they stabilize.
Currently representing some of the most celebrated artists in the country, such as Ayman Baalbaki, Nabil Nahas, and Tagreed Darghouth, Barakat says he chooses what artists to work with very carefully and takes his time getting to know them and their work. He meets many aspiring artists and looks for those who share his vision and aesthetic values.
Barakat is adamantly against art purely as investment, calling it a total aberration, “An investment is you buy land, you plant on it. You buy an apartment, you rent it. You put money in the bank, you get interest. You buy stocks, you get a dividend. But when you buy artwork, you get happiness every day. How do you calculate that?”
Art market games
Experts agree prices are a market phenomenon, the subject of supply and demand, and very often high-value art is simply a manipulation of the market, false valuation, and speculation by a few key players. The risks of investing in art are extensive, and the general consensus from experts in Lebanon and internationally is that there is no guarantee your investment will yield any return.
There are numerous international stories of art dealers, auctioneers, gallerists, and even the artists themselves involved in schemes to increase the value of works. Fake bidders are sent to auctions to increase prices of specific artworks, which will then be used as a benchmark by others in pricing and purchasing other works by that artist. Fake art sometimes manages to sell, even at the biggest auctions. Dalloul warns of fakes—though this is less likely to happen with contemporary artists t because you can verify pieces with the artists themselves—stressing on the importance of certificates of authenticity that come directly from artists or their foundations. Also, when you’re ready to sell an artwork on there’s no guarantee you’ll find a buyer, and you have to consider insurance and taxes before calculating your gains.
These are risks that you wouldn’t have to deal with if you were investing in, say, equities or mutual funds, and the art market is unregulated so buyers can’t even complain if their investment goes wrong. For someone simply looking to make a profit, with no regard for the actual art, the general consensus is to look for another investment.
This situation is tough on the artists too. Art is already a difficult field to break into and only some artists get their five minutes of fame, if that. Being pressured by money matters isn’t good for creativity. According to Barakat when the prices of art become a market phenomenon rather something set by art experts, it’s dangerous for all involved. “The decision is then out of the hands of the artists, gallerists, art critics and art historians, and goes into the hands of investors, bankers, and those who buy and sell based on when they feel that this artist’s value is not increasing anymore,” he says, warning that artists are creatives who need financial and moral support, especially when they’ve hit hard times.
Doing it right
In order to gain the kind of insight that helps discern artworks that are more likely to grow in value, one must begin to understand art, artists, global and local trends, and attend events like fairs, gallery and exhibition openings, talks, and auctions.This year the Ecole Supérieure des Affaires (ESA) launched a program to help collectors, would-be collectors, as well as others in the field, learn best practices in collaboration with top global art advisors Gurr Johns.
However the number one piece of advice everyone gives is to buy something you like looking at. Buying a piece by a trendy artist from a big gallery might make you feel that you have an “important” piece of art on your wall, but it looks very silly if you can’t have a conversation about it.
Odille, like Barakat, says buying art as an investment is completely against his beliefs. However for those hoping to get lucky with an artwork, he suggests the following: Consider whether the artist is already well-known or just starting out, and beware of artists that aren’t in it for the long-run, since an artist that’s no longer producing new work will likely be worth less in the future. Another factor is the quality of the specific artwork you are considering—sometimes one exceptional piece of art will have high-value but the rest of the artist’s work isn’t as good. Dalloul agrees, “Sometimes you have an isolated artwork here or there, an artist may have created a masterpiece that runs the price up because it’s a masterpiece and a few people really want it, but that doesn’t mean the rest of his work is worth that much.”
The gallery the artist works with is a third important component, as more established galleries will have more funds and connections to propel their artists forward and help them become more exposed internationally, including getting them solo shows and exhibitions at respected institutions and public spaces. Odille also says rarity is a factor, as the works of less-prolific artists may be worth more sometimes. Yet even if an artist meets all the right criteria and seems like a sure thing, nothing is certain. Some artists make it big and then disappear for various reasons, which drops the value of their art.
Though Odille says there is no formula, buyers are more likely to get lucky if they invest a lot of money in many artists with the hope that one of them hits it big. His general advice for would-be art investors is to select a few trusted and established galleries and look at a handful of their younger artists, whose prices would still be on the lower end. He suggests working with galleries that have a lot of visibility and participate in international fairs, giving their artists exposure all over the world, not just in Lebanon.
He also warns against buying directly from artists as this jeopardizes the role of galleries: “Galleries protect artists, and the day a gallery closes because no one is buying from them anymore, who’s going to give visibility to artists? Older artists might be ok for a short time but they will never survive. Where do they find new clients and how will they work with institutions?”
Experts also warn against buying at auctions. If you’re going to an auction you have just one or maybe a few pieces by an artist, which may be unwanted works that never sold–but going to a gallery or show where several works are on display gives you more options to choose what you really like, explains Odille.
To investors, the general advice is also to not spend too much. That means, according to Odille, around 3 percent of your heritage value. Dalloul says the sweet spot is less than $10,000.
Collect, don’t invest
According to the experts, the practical side of investment in art should be secondary to buying art you love. Choose pieces, whether by famous names or complete unknowns, because they give you joy, they echo. Ultimately, become a collector of art rather than an investor.
“See what you like and what draws you in, whatever grabs you by the heart or soul, whatever speaks to you,” says Dalloul, adding you should buy things you want to live with. “Typically what I tell people—and this how I started when I was younger—is to buy a piece of art that you actually love. That will get you started,” he explains.
The businessman’s family has amassed around 4,000 pieces of art from the Arab World—The Ramzi and Saeda Dalloul Art Foundation is the largest collection of its kind in the world. His love of art was instilled in him by his late mother, who was a big art lover and constantly took him to museums as a child. His father began the collection around 40 years ago, so he grew up around artists. Today he says most of his friends are artists too.
Only about 10 percent of their collection is on display (the rest, in storage) and Dalloul himself rearranges the pieces a couple of times a year. He knows, by heart, every piece that hangs on display in their residential building in Beirut and offers extensive tours of the private space, giving detailed accounts of the artworks and artists, telling stories about them and their various periods, as well as the specific works, their themes, and the materials and techniques that were used to produce them. He often hosts parties in the space, and personally guides school and university students through the displayed collection.
In terms of who to buy Dalloul says, “There is a bunch of really good, young talent out there. Go buy their art and buy something you love and can afford. Don’t worry about the investment value.”
Reluctantly, the experts drop a few names when pressed to divulge who the current hot artists are. Almost unanimously, Ayman Baalbaki is considered one of Lebanon’s most talented, but his pieces can be worth up to half a million dollars. Another popular artist is Nabil Nahas, whose work also often goes for six figures. Several of them mentioned Tagreed Darghouth, and the young Guiragossian brothers Paul and Marc, as well as Mohamad Said Baalbaki, Oussama Baalbaki, Christine Kettaneh, and others. Abdul Rahman Katanani, a Palestinian refugee residing in Lebanon, is also on the list of ones to watch. “For such a small country there is such a wide range of good quality artists,” says Odille.
Investing in art is a gamble but buying art for reasons beyond investment comes with beautiful benefits. While you wait and hope for its value to grow, there is a masterpiece hanging before your eyes. Visitors may be impressed by your choice and conversations will be sparked. By all means buy art, but become a true collector rather than call it an investment.