Put it down to extravagance, shrewdness or just plain lunacy, but when the gavel fell at a Christie's auction last May, an anonymous bidder agreed to pay US$106.5 million (Dh391.1m) for Pablo Picasso's Nude, Green Leaves and Bust - a record for any single piece of art.
The sale was remarkable for its price, but also for its timing. It came during the worst global downturn in generations, one that ate into plenty of wealthy art patrons' savings and led to decreased spending on luxury goods worldwide.
To some observers, though, last year's sale of the Picasso and many other pieces at headline-grabbing prices was not so surprising. It was, they say, merely proof of art's resilience in tough economic times.
The robust sales also served as a reminder that investors around the world, including in the Gulf, are increasingly viewing art not only for its aesthetic value, but also as an asset. Investors like art's tangibility, its tendency to hold value over time and its lack of correlation with other assets - an important factor for wealthy people who want diverse portfolios.
"There's a lot of evidence of investor-collectors who are using art as an alternative investment," says Dr Clare McAndrew, the founder of Arts Economics, a consultancy and research house that focuses on the art market. "They're using it as a means of diversification. It does not always act the same way as other markets."
Emirates NBD, the UAE's largest bank, announced last week it was starting an art fund to tap the art investment market. The bank has also signed up The Fine Art Fund Group, which runs one of the world's biggest funds, to advise wealthy clients on their art investments.
The fund's establishment comes amid the rapid growth of the Middle East art market and the construction of new branches of the Louvre and Guggenheim museums in Abu Dhabi, which is positioning itself as a cultural capital in the region. Galleries and art fairs such as Art Dubai, which started in 2007 in the heat of the global boom, have also propagated across the region. According to figures from Christie's, one of the world's biggest art auction houses, art sales at auction in Dubai last year topped $51m, a rise of more than 150 per cent compared with 2009.
"Art is very tangible, and I think in the current climate where there is so much uncertainty in the world, people like the fact that with art it is something very tangible," said Michael Jeha, the managing director of Christie's Middle East, which opened offices in Dubai about six years ago. "It has inherent value that is very stable over time."
Art sales in the Gulf still comprise a fraction of the approximately $50 billion worth of pieces sold globally every year. Sales in the region remain lower than in Norway and Austria, which have never been major players in the trade, Dr McAndrew says. Nevertheless, buyers in the UAE and across the region are clearly getting the art bug, with sales doubling every year for the past few years.
Mr Jeha attributes the increase in demand partly to the globalisation of the art market and the emergence of new hubs outside London and New York, the long-time centres of the trade. As wealth grows in Asia's emerging markets, art sales are picking up in Hong Kong, Singapore and now Dubai. Both the number of artists selling work and the number of buyers are increasing in those areas, he says.
"At Christie's last auction in October we had over 200 buyers and bidders, which was the highest number ever," he says. "That shows there is a deepening of the market."
That has not been entirely due to investors sweeping in and buying. The vast majority of acquirers are collectors and appreciators first and investors a distant second, analysts and observers say. Growth also has to do with technology. With more information available on more artists worldwide, buyers are coming to auctions and galleries armed with more knowledge and moving into more obscure markets than ever before.
Art investment, though, is clearly on the rise. Several dozen art funds have been formed during the past two decades, and more are likely to be on the way if last year's brisk sales and high prices continue.
"Art has traditionally yielded high returns and shown a low correlation to other asset classes, thus proving to be a remarkable store of value," said Philip Hoffman, the chief executive of the Fine Art Fund Group. "It is, however, critical to evaluate and assess the art objects effectively in order to guarantee high returns on investment."
Few figures exist for returns on art acquired during a long period of time because the market has only recently come to be viewed as one for investment. A few art funds were forced to liquidate after the financial crisis led to plunging values in some types of work. The Art Trading Fund, the first and only hedge fund investing in art, went bust at the end of 2009.
Because high-end pieces can be hard to sell at short notice, combined with the risks inherent in an asset that does not have a long history of being treated as such, Dr McAndrew cautions that art investment is not for everybody. It is best suited to wealthy investors who can take on art as a small part of their allocation to alternative investments, she says. It can also function as a convenient way to transfer wealth between generations while avoiding crippling taxes.
"It's a very illiquid marketplace compared to the financial markets," she says. "The average piece of art takes 30 years to turn over on the art market. If you need some cash and need to bail out, it's not necessarily good."
And despite the rise of art as investment, Mr Jeha says Christie's urges its clients to put aesthetics before profit potential.
"We always advise people to buy things first and foremost because they like it, because they want to live with it," he says.
