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Despite the economic crisis, which was a game-changer on many levels, the art market in Lebanon has been witnessing a steady increase in sales figures over the years. Be it collectors, speculators, or aficionados seeking to diversify or safeguard their savings, art has proven to be an attractive investment during these troubled times.
Much less vulnerable to economic crises than the stock market or real estate, artworks have become, over the past twenty years, a true safe haven. Disassociated from stock markets, art is a tangible asset that has long-term value. Historically, during times of crisis or inflation, the art market has widely softened the blow of the economic fall.
“The sector has been more resilient and has outperformed others. Art has become a valuable well, a safe haven that provides diversification and allows the safeguarding of one’s wealth with minimal risk while offering enticing profits,” acknowledges Saleh Barakat, owner of the eponymous gallery and of Agial Gallery. Barakat is a key player in the local and regional art markets and has been actively expanding them for over 33 years. The gallery owner, who sees himself as one of the custodians of the Lebanese art scene, bemoans the extent of this phenomenon. “The true interest in art lies in passion and creativity,” he asserts. “We ask eager art fans to mainly become patrons and be involved in supporting the artist and the creative process.”
Among this new category of buyers, some have been caught up in the game, realizing, moreover, that beyond the aesthetic pleasure they could derive from owning artworks, the latter bestow a certain social recognition. “It’s an elegant way to showcase one’s success and culture,” comments Abraham Karabajakian, art collector and co-founder of the KA collection dedicated to local artists. In addition, he has presided for a while over two investment funds specializing in the art sector.
Artistic melting pot
Lebanon has always been the hotbed and shopfront of artistic creation in the Middle East. Major international auction houses such as Christie’s, Sotheby’s, and Bonhams lend Lebanon a distinguished place in their periodic sales dedicated to modern and contemporary Middle Eastern art. “It is no coincidence that, during last year’s Sotheby’s auction sale dedicated to Middle Eastern and Iranian art, nearly 50% of the items sold by value were by Lebanese artists,” says Farouk Abillama, founder of the auction house FA Auctions. The enthusiasm is palpable, as on May 24th, at the Bonhams auction, an abstract painting by artist Saliba Douaihy was sold for $250,000. “A price that went well above the estimated price range of $50,000–74,000.”
Despite today’s agonizing economy, art remains one of its last strongholds and still exhibits some signs of vitality. The consolidation of public sales figures in recent years—private transactions being rather hazy and hard to estimate—shows a clear shift in market dynamics. According to Artprice, secondary market sales in Lebanon amounted to approximately 1 million dollars in 2010. Just over a decade later, that same figure reflects a staggering increase of 350%.
Interconnected markets
Several explanations can account for this growth, some of which are rooted in the United Arab Emirates. Indeed, the establishment of Christie’s in Dubai in 2006 and Sotheby’s in Qatar in 2009 has bolstered the Gulf countries as the new regional art hubs. 2010 was especially prosperous. That year witnessed a peak in sales that nearly reached 35 million dollars in the secondary market.
“The presence of these two major auction houses in the Middle East has undoubtedly sparked an awareness of art and culture in a region that was primarily focused on luxury and opulence,” explains Abraham Karabajakian. However, the euphoria was short-lived. Between 2016 and 2019, sales plummeted, dropping from 23 million to 6 million dollars, representing a staggering 74% decline, according to Artprice. This ultimately led to Christie’s withdrawal from Dubai’s art scene in 2019.
One of the reasons for Christie’s exit can be attributed to the scarcity of high-quality Middle Eastern artworks available for sale. “It was during that same time that the Lebanese art market began to flourish. There is surely a correlation between the decline of one market and the emergence of another,” says Farouk Abillama. Artworks started to be more frequently consigned to Lebanon, where a solid client base already existed. This gave customers the opportunity to have easy viewing access to the pieces for sale, to pay lower commissions, and to avoid expensive shipping costs.”
These major advantages undoubtedly contributed to the reinforcement of the Lebanese secondary market, which exhibited an impressive growth of 250% between 2016 and 2019 (Artprice).
The re-emergence of Lebanese art
The real catalyst, however, was the onset of the 2019 financial crisis, which brought along a greater mix of buyers, including novice aficionados and speculators, who not only sought art as a “safe haven”, but also wanted to exchange their locked-up bank dollars, which had become virtual currency, for valuable objects. Since the market accepted transactions in “lollar” checks, some depositors rushed towards this channel, similar to others turning to real estate, gold, or luxury watches, in an attempt to salvage a portion of their savings. As a result, art sales skyrocketed from 2.2 to 5 million dollars, representing a 128% increase on a year-over-year basis as of January 1, 2022, according to Artprice.
“The face values of the checks represented up to 4 times the actual value of an acquisition. In fact, I organized a sale in November 2020 that generated a record of 1.9 million dollars in checks,” says Farouk Abillama. Some artists, like Jamil Molaeb, Hassan Jouni, or Raouf Rifai, experienced dazzling rises, creating a substantial increase in value for their works. “The crisis certainly contributed to the uncovering and re-emergence of the wealth and diversity of Lebanese art,” he emphasizes.
The rise of digital auctions
On the other hand, the COVID-19 pandemic has imposed a digital shift in the market. A compulsory digitalization that had a positive international impact, subsequently boosting sales records. “Before the rise of technology, sales were aimed at people familiar with the art scene who attended in person to place their bids,” says Saleh Barakat. “Today, with a simple click, a buyer in the United States can acquire a piece in Beirut.”
In fact, the gallery owner’s activity has been strongly affected by this new challenge, one of the results of which has been the increasing number of auction houses. “Today, between Nada Boulos Auction, Artscoops, Arcache Auction, Ans Azura, and mine, nearly 18 sales are organized yearly in Beirut. It’s actually a high number compared to Lebanon’s small market,” says Farouk Abillama. Moreover, thanks to the database of online art indicators such as Artprice and Artnet, which have broken down information barriers and allowed access to art market prices and indices, today there is greater visibility and increased competitiveness.
“Auction houses have gobbled up a significant portion of our market share,” laments Saleh Barakat. “They capture available budgets through the same method followed in auctions, which stresses immediate purchases and banks on the psychology of competition. However, if the primary market loses its potential, the secondary market will follow because, ultimately, everything is interconnected.”
Emerging markets
Despite a slight annual decline of 11% as of January 1, 2023—a logical readjustment following the return of cash dollar payments—the art market upholds its vital and robust presence with nearly 4.4 million dollars in turnover. The same goes for the first semester of 2023, where impressive pieces were auctioned off: $180,000 for a piece by Etel Adnan, sold at Arcache Auction Showroom; $155,000 for a painting by Huguette Caland, sold at FA Auction; and finally, another artwork by Etel Adnan went for $150,000 at Nada Boulos.
“These are the record-breaking transactions made over the past three years,” says Farouk Abillama. According to art specialist and collector Abraham Karabajakian, the local market is healthy due to actual demand. “Even though some artists have recorded an unjustified and somewhat manipulated price increase for their work, we are still within a very reasonable range of a few hundred thousand dollars for some highly regarded artists,” he comments. “Art, in terms of investment, is undeniably more appealing in an emerging market such as the Middle East because the potential for long-term gains remains more significant than anywhere else.”
The new art hot spot
However, there is another side to the coin: the influx of new stakeholders who see this growing interest in art as an opportunity to get their share of the pie. As such, currently, the estimated number of art galleries in Beirut nears forty, which is four times what it was before the economic crisis. For Saleh Barakat, the presence of these galleries is not a sign of opulence. It is rather a parallel market that one must acknowledge and learn to deal with.
“While the crisis is at its peak, art remains one of the few sectors with low barriers to entry,” he explains. “All it takes is for one to find a small space, fix it up, hang artworks, and put them up for sale. Their contribution is unrivaled in terms of the groundwork and investment provided by the few galleries like ours that constitute the backbone of the local art scene.”
However, it is safe to say that most of these new-style boutique galleries and the aspiring artists exhibiting there will die out. “There is no doubt that art is a flourishing business, Abraham Karabajakian points out. It is an ecosystem that encompasses galleries, auction houses, artists, etc. But over time, this will have to be readjusted. People will eventually understand what to buy and what not to buy. The market will mature and sort itself out.”
Financial asset
And just like any lucrative market that offers quick profitability, the art sector is luring investors and an increasingly wider audience—often young—who, captivated by the frenzy of numbers and the fluctuations in artists’ ratings, are continuously seeking to optimize their acquisitions in a form of stock market logic. “Some are short-term speculators who are looking for quick gains,” says Farouk Abillama.
Lucrative back-and-forth regarding various emerging artists has thereby allowed for substantial short- and medium-term gains. In 2021, art was the ultimate safe haven that offered a lifeline to many depositors caught in the grip of the financial crisis. But today, this trend is less popular. “We have moved from a tight-knit group to a whole realm of people looking to invest and capitalize on their wealth,” says Saleh Barakat. “But I’m not worried, as probably a good portion of this new generation of buyers will get hooked on the game and turn into full-fledged collectors.”
Trendsetters
Another significant factor pertains to the reflection of society on the art market and the mood of a given time. “Some major museums, institutions, and renowned collectors in the Middle East, including Sultan Sooud Al-Qassemi (founder of the Barjeel Art Foundation), have rightly decided to showcase more female artists in their collection. This decision aims to be equitable to both genders,” explains Abraham Karabajakian. These trendsetters, through their stance, are setting the tone. “Paintings by Etel Adnan, Huguette Caland, or Helen Khal, to name a few, are highly sought after today. Others, like Juliana Seraphim, are starting to increase in artistic value,” adds Farouk Abillama.
Lebanese art is on the rise. Even though a growing portion of acquisitions may not necessarily be driven by a sheer passion for art, local artists are nonetheless enjoying renewed interest and significant exposure. This is evident in exhibitions like “Beirut and the Golden Sixties: A Manifesto of Fragility,” which took place in 2022 from Berlin to Lyon and put forward numerous Lebanese artists.
“People falsely believe that the Lebanese market is limited to Lebanon,” notes Abraham Karabajakian. “The beautiful art pieces are hard to find and are often sold to expatriates.” The painting “California” (1970) by Etel Adnan, which went for almost half a million dollars at Sotheby’s in 2022, is a perfect example. However, beyond this well-read and active diaspora, there is a strong pan-Arab attraction to the richness of the Lebanese artistic heritage. “The true value of a Lebanese artist is measured on a regional scale and in relation to the hundreds of millions of Arabs that make up this market,” concludes the collector. In sum, there is immense untapped potential waiting to be fully explored.
