Business

Russia's art market offers investment opportunities

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Media captionArt dealer Marat Gelman talks about Russia's contemporary art market

For those investors ready to gamble on little-known artists, Russia's young but growing contemporary art market could be the place to look.

And it is not just private collectors but also financial institutions that are looking at art as a very good investment opportunity, as well as something aesthetic.

From a business perspective, their extensive and expensive art collections could be used, for example, to raise funds for creditors - as in the recent case of Lehman Brothers.

When buying an artwork as an investment, it is important to make sure there is the possibility that it can rise in value, explains Judith Selkowitz, president of Art Advisory Services Inc, a US-based art consultancy for corporations and private collectors.

And this is where the Russian contemporary art market comes into picture.

'Anti-Soviet'

In the Soviet Union, contemporary art was not well liked by the state as it was seen as being anti-Soviet, says Marat Gelman, one of Russia's best known gallery owners and art dealers.

Back then, collectors of contemporary art were heroic people, Mr Gelman told the BBC's Russia Business Report, speaking in the city of Perm's Museum for Contemporary Art which he established last year.

For many years after the collapse of the USSR two decades ago, the Russian contemporary art market was concentrated in Moscow and St Petersburg.

Bearing in mind the size of Russia, it meant that the market was quite small compared with its potential.

"Only 2-3 years ago museums, institutions and private collectors really started surfacing outside Moscow and St Petersburg," says Mr Gelman.

Raising awareness

Ms Selkowitz believes that it is "terrific" that new galleries are opening in Russia.

Showing more contemporary artworks in the country does local artists good, she says, as "people become more aware of them".

It is also an important factor for those who dream of showing their works in London or New York.

Mr Gelman says that Russian contemporary art is attracting more and more attention from collectors, both in Russia and abroad.

As Russia's contemporary art market is still growing, even a few new collectors entering the market can provide quite a boost.

"It is a very active but small market, and as a result art prices [in Russia] are not that high," he explains.

Ms Selkowitz agrees that the Russian contemporary art market is likely to see growing demand, and she believes that most of the money will be coming from inside Russia.

"Globally people look at their own country to buy," she says.

Reputation

But there is some foreign money ready to be spent on Russian contemporary artworks.

For example, at the latest art sale at MacDougall's, a London auction house specialising in Russian art, contemporary paintings fetched almost £744,000 ($1.09m), although still much less than classic art's £6.82m.

Among contemporary paintings, a work by Oleg Tselkov, who left the USSR in the 1970s, was auctioned for £120,231.

In recent years, international auction houses such as Sotheby's and Phillips de Pury have also sold many Russian contemporary artworks for good money.

The record among living USSR-born artists belongs to Ilya Kabakov, whose 1982 painting The Beetle was sold for almost £3m at an auction in 2008. Mr Kabakov moved to the West at the end of the 1980s.

Meanwhile, new artists in Russia could benefit from the reputation the country's art has had around the world for many decades.

"In general, the Russians have always been good painters," Ms Selkowitz notes.

For more about the city of Perm and the Russian economy watch Russia Business Report on BBC World News this weekend: on Saturday, 30 October at 0430 GMT and 1730 GMT and on Sunday, 31 October at 1030 GMT and 2330 GMT.

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