Copious amounts of champagne soothed the nerves of crisis-addled gallerists at the inaugural party of the third annual Art Dubai. But then the sheiks floated in, and organizers quickly hid the booze and covered up the few racy artworks on view. Any buzz had certainly faded by the end of the fair — which ran from March 18 through 21 at the Madinat Jumeirah resort — with a number of dealers reporting disappointing sales.

In recent years, auction houses and dealers have invested time and money in the United Arab Emirates, hoping to capitalize on the emergence of an oil-rich collecting class in the region. Christie’s set up shop in April 2005 in Dubai, where it has since held four to five well publicized sales each year. Fairs followed quickly in the auction house’s footsteps, with Art Dubai debuting in 2007 and Anna and Brian Haughton’s Art Antiques Design Dubai appearing in 2008. Sotheby’s is the latest to establish a presence, launching a series of auctions in March in nearby Doha, Qatar. With the global market contracting, however, many wonder whether the Middle East is able to sustain a thriving art trade.

Grumblings about diminished business in the region began last October, when the two-day auction of paintings and jewelry at Christie’s earned just $16.9 million, well below the expected $32 million to $43 million. In November participants blamed sluggish sales at artparis-AbuDhabi on an agenda packed with fair-sponsored events that kept collectors too busy to shop. In February, Art Antiques Design Dubai was plagued by disappointingly small crowds and, according to widespread accounts, lackluster earnings.

On the brighter side, in March several records were broken at the Sotheby’s Doha sales of contemporary, Islamic and Orientalist art, and watches. And the house’s one-lot sale of the Pearl carpet of Baroda — an Indian rug covered with millions of Basra pearls, diamonds and colored glass beads — realized $5.5 million, the top price not just for a carpet but for any work sold at auction in the Middle East. Nevertheless, totals for the week were underwhelming, coming to a collective $18 million against an estimate of $25 million.

"It’s not as if the Middle East is a microcosm. The market here has behaved similarly to the other sales centers in the world," says Henry Howard-Sneyd, the deputy chairman of Europe and Asia and international director for new markets at Sotheby’s, who still expresses optimism about the region’s potential. "With the petrodollar remaining an important part of the world economy, Qatar is obviously a country with a high degree of wealth, and they have put a focus on art with the new Museum of Islamic Art."

Also in March, Art Dubai reaped mixed reviews. "Sales were down for many galleries this year. But, as one of our specialties is the Middle Eastern market, business was extremely healthy for us," says the New York gallerist Leila Taghinia-Milani Heller. Galerie Almine Rech, of Paris and Brussels, sold two pieces by Sylvie Fleury — a Chanel bag and a resin- and-fiberglass sculpture — an Anselm Reyle foil painting and a work by Aaron Young. "We made great contacts," says Bérénice Chef, the director of the gallery’s Brussels branch. Other participants were less enthusiastic. "The result was not as pleasing as it was the last two years," says the Viennese dealer Mario Mauroner, who brought photographs by Claudia Rogge and an installation by Fabrizio Plessi involving red yarn and wooden shelves.

The London-based gallery Waterhouse and Dodd also reported slow sales in Dubai, but had a relatively strong showing in their booth at the concurrent TEFAF Maastricht. In addition to work by such big-name Middle Eastern artists as the Iranian sculptor Parviz Tanavoli, the gallery brought British artists — among them Mark Quinn, whose painting Blue Sphinx, 2006, depicting the model Kate Moss, with her legs bound up like a pretzel, offended the sensibilities of the authorities and had to be shown on a less prominent wall. "There was an awful lot of bargaining. People were expecting exceptional deals and went for works that didn’t require too much of a decision," says the gallery’s Jemimah Patterson.

Art Dubai overlapped with the ninth annual Sharjah Biennial, which runs from March 19 through May 16 at the Sharjah Art Museum and other venues in the happening’s namesake city. The biennial’s artistic director, Jack Persekian, a Palestinian curator who oversees the Al-Ma’mal Foundation, in Jerusalem, has placed a particular emphasis on supporting local artists and encouraging process over product. The Italian conceptualist Alberto Duman contributed Decoder, 2009, a tower of inverted shopping carts inspired by Russian artist Vladimir Tatlin’s unrealized 1919 Monument to the Third International. With its echoes of the Louvre’s and the Guggenheim Museum’s unfinished projects in Abu Dhabi, Duman’s piece offers a searing critique of consumerism, as well as of the country’s unbridled ambitions to become the cultural hub of the Middle East. Its message may have resonated with gallerists at Art Dubai.

"All Dried Up?" originally appeared in the May 2009 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's May 2009 Table of Contents.