Art trumps diamonds when it comes to luxury investment

Supplied/Opera Gallery

• Artworks double in value in 10 years
• Strongest sector in 2023
• Whisky and cars fall as investment

For Middle East investors, works of art are worth hanging on to.

Artworks have more than doubled in value over the past decade, the latest edition of the Knight Frank Global Wealth Report reveals.

It was a mixed year for luxury investments last year. Whisky, cars, handbags, furniture and wine lost value. Diamonds, coins and watches saw minor growth.

But the strongest performer in 2023, ahead of jewellery, was art, which increased 11 percent year on year.

The Knight Frank report revealed that although the sector reached double-digit growth last year, all of the gains were made in the first half of the year, with values “sliding significantly” later on, according to AMR’s All Art Index.

At the auction house Sotheby’s, 2023 was one of the Middle East department’s most successful years. Its 20th Century Art/Middle East sale took the highest total since its introduction as a regular fixture of the London auction calendar, back in 2016.

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Among the impressive results, a record was set for the highest price paid for any Saudi artist ever to be offered at auction, with a painting by Mohammed Al Saleem from 1986 reaching $1.1 million.

In the spring, Sothebys offered the eclectic Al Zayani collection, which doubled its pre-sale estimates, with a total of almost $3 million.

Sylvain P. Gaillard, director of the Opera Gallery, which has 16 venues across the world including the UAE, said: “For the longest time we were never in the top tier galleries in terms of revenue because we operate in very mature markets.

Supplied/Sotheby's

“The London gallery consistently does amazing, the Paris gallery as well, like Geneva, New York and Singapore, just because these are much more important destinations for art.

“But, over the year, the Dubai gallery has posted some excellent returns. For us it’s a growing company.”

Opera Gallery deals in modern masters, starting at the beginning of the 19th century and including the greats such as Picasso and Renoir, and post-war contemporary works.

Pieces available are valued at up to $50 million, while Gaillard said the record for the gallery to date was an eight-figure sale “upwards of $20 million”.

“My collector base is very diverse. I sell to royal families, to local non-royals and to expats,” he said.

While art topped the charts in the Knight Frank report, colour diamonds were also among the positive investment assets, growing 8 percent in the last 10 years and 2 percent year on year.

Supplied/Opera Gallery

Earlier this week, Dubai Multi-Commodities Centre (DMCC) reported that the emirate’s trade in rough and polished diamonds rose 2 percent year on year to $38 billion.

It was a more subdued year for other collectables – notably bottles of rare whisky, which fell by 9 percent after previously almost quadrupling in value over 10 years.

The worst performing 50 bottles lost 26 percent of their combined value, while the 20 best performers increased by 20 percent, according to the report. 

Andy Simpson, a founder of the consultancy Rare Whisky 101 in the UK, said: “In my opinion, some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued.”

Classic cars also lost some of their investment allure, falling by 6 percent over the last 12 months, although the report revealed that marques like BMW saw a 9 percent increase and Lamborghini 18 percent, “which appeal to a younger breed of collector”, Simpson said.