Thursday, May 31, 2007

Islamic Art Market Makes Miraculous Recovery
(Or Does It?)

I know I've been going on about how there are no tried-and-true indicators that account for the new reality of a much expanded art market in determining whether we're witnessing a bubble or not, but even I was a bit taken back by the miraculous recovery of the Islamic art market suggested by a recent revaluation.

What am I on about?
Georgina Adam has the lowdown:
How can a collection of Islamic art valued at £500m ($850m) a year ago be worth £4.5bn ($9bn) this year? The Sunday Times estimates the holdings of the Jewish-Iranian property mogul David Khalili at a “tentative £4.5bn” ($9bn), in its 2007 Rich List, published last month (see below). Dr Khalili is now Britain’s fifth richest man, says the newspaper, following its “revaluation” of his Islamic art. Dr Khalili was in 99th place in the 2006 list, with a fortune of £610m ($1.16bn). This year, The Sunday Times estimates he is worth £5.8bn ($11.6bn).
Islamic art has not been keeping pace with other sections because of a scandal that landed Sheikh Saud Al-Thani of Qatar in legal hotwater:
The world's biggest art collector, Sheikh Saud Al Thani of Qatar, who has spent hundreds of millions of pounds during the last decade buying some of the most important works, has been placed under house arrest after being abruptly removed as head of his country's national council for culture.

According to a report today on the internet site of The Art Newspaper, Sheikh Saud, whose collections include millions of pounds' worth of British art, has been held incommunicado since the end of February on the orders of his cousin, the Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, who has asked Qatari authorities to investigate his cousin's acquisitions.

News of his arrest has astonished the international art scene, where Sheikh Saud had a reputation for paying as much as 113 times the estimated price for items he particularly wanted. [emphasis mine]
As I noted in this blog post back in August 2005 (I've been doing this that long???) this scandal effectively caused the Islamic art market to crumble. So this latest vaulation is, to my mind, rather incredible. In fact, the Times has already, sort of, admitted they made a mistake here:
Philip Beresford, the editor of the Rich List, said: “Talking to various art people and Islamic scholars, the view was that the collection has huge potential value. In retrospect I will almost certainly cut it back next year as any price would be far less if the market was flooded with the giant collection. This will bring it into line with the other art fortunes of the old aristocracy.” [emphasis mine]
Khalili's people are standing by the vaulation, mind you (and why wouldn't they?):
Dr Khalili’s PR, Sue Bond, said that: “We never discuss the value of the collection,” but suggested that The Sunday Times valuation is accurate. “The newspaper clearly did its research,” she added.
But as Georgina writes, there's little market evidence to support this hike, and actually a bit that disputes it:

This month the Art Gallery of New South Wales in Sydney is showing “Treasures from the Nasser D. Khalili Collection” (22 June-23 September). We understand that this has been insured for £400m. As this is the cream of the collection, it is hard to see where the extra £4bn comes from.
What could, conceiveably, account for the extra £4bn is the possibility that one of the, as Adam calls them, "Middle Eastern countries ... engaged in a frenetic rush to create museums" might simply buy the collection outright, giving them an instant world-class collection. There are also rumors that Khalili is negotiating to sell part of his collection to the planned branch of the Louvre in Abu Dhabi, but Khalili denies that.

So what does he have in this controversially appraised collection? The Art Newspaper reports:
The star holding in the collection, the Khalili portion of the fabled manuscript of Jami’ al-Tawarikh, the “universal history” of Rashid al-Din, produced in Tabriz (today in Iran) in 1314, is of huge significance [see image above (I'm assuming this is from the portion owned by Kahlili, but I'm not entirely sure it's not from the Edinburgh portion): Pursuit Scene from the Battle of Badr, Jami' al-Tawarikh ('Universal History' of Rashid al-din). Rashidiyya, 1314. Hazine 1653, folio 165b.] The other portion is in the University Library, Edinburgh. It is considered the finest medieval manuscript ever produced in East or West, and is reportedly the most expensive ever sold, although the price has never been revealed. This, according to one scholar, could be worth well over £4.5m ($8m). But many of the objects in the collection—which includes 8,000 coins—could be worth less than £100,000 each.
Of course, I would love to believe such a recovery were possible. I'm thrilled to think Islamic art is on the rebound and will come back stronger than ever, but there's an important difference between actual demand (as we saw with the Contemporary art auctions recently) and potential demand. As evidenced by the value placed on the bulk of the collection heading for Australia at £400m, it honestly seems unlikely to me that anyone would tack on an additional £4bn just to get the complete collection. I can't believe that's not a good dose of wishful thinking on someone's part.

Labels: art market


Blogger George said...

The Sunday Times estimates... bla, bla, bla.

The other valuation analysis' seem to make some sense, which means it's a case of bad reporting.

Also, while an individual artwork might appreciate by a factor of 9x or 10x in a year, no collection, or group of similar objects, would exhibit this type of price behavior. In the most recent auctions, we like to take note of the 70 million dollar painting, certainly it’s a trophy price. Whatever that 70 million represents financially or conceptually, isn’t evenly distributed amongst all the "lesser" works which sold, or didn’t sell, within the estimated price ranges.

The reporter at the Sunday Times was obviously a bit over excited in her estimate. This might have been the result of some other shenanigans, or just ‘it’s all going up, whee!’ exuberance.

PS, if you want a good ‘bubble’ warning… Follow the price of Sothbys stock (NYSE:BID). Sothbys will hit $100 a share before it’s over.

5/31/2007 10:48:00 AM  
Blogger T said...

I am not certain that your take of the Al-Thani issue is exactly spot on. If you dig into the Telegraph article a bit more, you will find a reference to the Jenkins Venus. I recall reading somewhere (maybe an article on Artnet about one of those Gulf art fairs) that the real reason the sheikh is under house arrest is not his profligacy in the Islamic art market (now condmening profligacy per se would be a bit rich in those Gulf states) but because he had moved on to buying decadent western art featuring (horror of horrors) female nudity and other western naughtiness. The background story is that, like all of the Arab princelings, his un-Islamic decadence had moved out of the quiet confines of Mayfair and was becoming too open for the ruler to allow it to continue, hence the house arrest (quite similar to what used to happen in the USSR post-Stalin and in China post-Mao, when internal exile and house arrest replaced a bullet in the head after a fake trial or the gulag).

So the absence of the sheikh does not necessarily mean the market has crashed, there are plenty of other sheiks who may follow the Chinese/Indian market example and start buying up with those petrodollars inwhat Sotheby's attempts to whitewash as "repatriation" (which of course is a monstrous nonsense). The Islamic art scene is by definition Islamic so less likely to get a corrupt princeling into Islam-trouble.

The points you otherwise make are valid and probably just another example fo the current artworld hyperinflation and big dick worship that is more and more prevalent as the non-art press and the rich lists get intot he sexy social climbing that art bestows.

5/31/2007 10:18:00 PM  
Blogger Edward_ said...

that the real reason the sheikh is under house arrest is not his profligacy in the Islamic art market (now condmening profligacy per se would be a bit rich in those Gulf states) but because he had moved on to buying decadent western art featuring (horror of horrors) female nudity and other western naughtiness

The effect was the same, though, T. Without that money pouring in to support inflated prices, the market took a nose dive. From [8/2/2005]:

The Islamic art market took a major hit back in April, following the arrest in March of Sheik Saud al-Thani, 38, a member of the royal family of Qatar and one of the big buyers in the field. According to a report in the Wall Street Journal, sales at the April Islamic art auctions at Christie’s and Sotheby’s in London plunged 70 percent from the year before. At Sotheby’s, only a little more than one-third of the lots found buyers, a dramatically low rate of sell-through.

6/01/2007 09:15:00 AM  
Anonymous said...

There certainly does seem to be an increased interest in Islamic art as can be seen by the exhibition about to open at the AGNSW in Sydney, Australia

6/18/2007 07:16:00 PM  

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