As per BCG, The amount of private wealth held by households globally surged more than 14% to $152 trillion (£90tn) last year, boosted mainly by rising stock markets.

The number of millionaire households also rose sharply. Overall, the total number of millionaire households in the world rose to 16.3 million in 2013, from 13.7 million in 2012. The report takes into account cash, deposits, shares and other assets held by households. But businesses, real estate and luxury goods are excluded.

According to the report, private wealth in:

• North America rose by 15.6% to $50.3tn
• Western Europe, which includes UK, Germany and France, rose by 5.2% to $37.9tn
• Asia Pacific Ex Japan led the surge with a 31% jump to US$ 37 Trillion
• Eastern Europe, which includes Russia, Poland and Czech Republic, jumped by 17.2% to $2.7tn
• Latin America rose by 11.1% to $3.9tn
• Middle East region increased by 11.6% to reach $5.2tn

There is some relevance to these numbers, With the history of people in emerging economies exposure to the finer tastes in life extending not more than 30 years We see a surge in demand for symbolic luxury. This will give a significant boost to alternative investments, especially art and art related investments. Due to various views about patronage of art in Muslim world, Islamic calligraphy has taken centre stage of bulk investments.

To link all the pieces together first we need to know what art investments are and what are the current trends then think of strategies

 The Art

The main characteristics used to define art market are:

• High-risk investment
• Illiquid
• Opaque
• Un regulated
• High transactions costs
• At the mercy of erratic public taste and short-lived trends.

Artworks do not generate any cash flows that can be discounted, except to the extent that income can be obtained through lending and incurring expenses in the form of storage, insurance and associated costs. The art markets are also currently virtually ‘unhedgeable’. This short description of the art markets might be enough to discourage many to look at it.

However, if we take a closer look at the latest trends which are directly or indirectly affecting the art markets’ environment, they suggest the emergence of a financial fine art market where fine art is considered as a new asset class. The simultaneity of those trends creates an environment that in the past has never been very favourable to supporting the materialisation of such a transformation.

While this analysis mainly focuses on paintings, a similar phenomenon is experienced by other groups of collectible assets, rare watches, precious stones or stamps.

‘Paintings’ is one of the categories of the fine art markets which includes various subcategories, such as drawing watercolour, painting, tapestry, prints, posters, sculpture-installation, photography as well as audiovisual and multimedia. The fine art markets are a subset of the arts and antiques market. Which in totality is very big. 

Global Art Market – An overview

• The Global fine art & decoratives (Including installations) as per Art economics should be estimated to be at US$ 65 Billion in 2013 and US$ 81 Billion by end 2014, This is based on estimates of Global GDP growth also including the private wealth growth (Other various estimates by Bain & co. Merril Lynch Cap Gemini amongst others.

• US, UK & China account for approximately 70% of the global sales. With France at 14% and Italy, Switzerland, Germany account for approximately 8% together 

Islamic  Art Markets

With the increase in Asian and Middle East wealth in last decade there has been a surge in activity in Islamic Art and Objects. Even in the United States, where the field has been neglected since the 1979 Iranian revolution, it’s gaining buyers. It was reported in November 2011, the Metropolitan Museum of Art opened new galleries for Islamic art that in less than eight months attracted 593,000 visitors and helped boost annual attendance to a record-setting 6.3 million.

Around the globe, other museums are also spotlighting Islamic art and augmenting their collections. Louvre a grand pavilion for Islamic art and Aga Khan Museum has debuted in Toronto.

The record price at auction for an Islamic work of art is just under £7.4 million for an illustrated folio from the famed Shahnameh, a 16th-century manuscript chronicling Persian history, which sold at Sotheby’s in London in April 2011. That’s a small fraction of the prices that many contemporary and modern works of art have been fetching.

The Center of the Islamic art market is London, where the biggest dealers are located and where Christie’s, Sotheby’s and Bonhams (a smaller auction house) hold auctions of Islamic art each spring and fall.

Apart from the accepted fine art and antiques, one of the biggest market for Islamic Art is Calligraphy which is gaining prominence and acceptance. Further the strategies in Islamic Art are not limited to fine art but includes whole spectrum of avenues 

Segments 

The segments of investment strategies in Islamic Art can be wide as below, I intend to cover them in detail in My coming blogs

Wealth management:

Islamic Luxury, fashion & Life Style:

Entertainment:

Islamic Art training & education:

*This article was originally published on Love Yadav Blogs on 18 June 2014. Read the original article here.