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Iran's domestic art scene thrives despite economic sanctions

* Tehran Art Auction raises record $5.1 mln this year

* Wealthy Iranians see art as safe haven investment

* Economic sanctions a catalyst for domestic art market

DUBAI, June 1 (Reuters) - Iran's smart set turned out in force for this year's Tehran Art Auction, spending a record amount as the country's modern and contemporary art scene thrives despite economic sanctions.

The annual event on Friday was a sell-out, raising $5.1 million from the auction of works by Iranian artists, more than double the amount fetched last year.

While Western sanctions since 2010 on Iran's oil and financial sectors have sapped Iranian collectors' purchasing power, and forced them to retreat from international art auctions such as Christie's, they have also been a catalyst to building up the domestic art market.

Since its launch three years ago the Tehran Art Auction has gained social cachet and most of the 90 items sold on Friday went for at least two times their predicted values, pushing total sales $2.4 million above forecasts, according to the Tehran Art Auction website.

The highest-selling pieces were two works by notable Iranian poet and painter, Sohrab Sepehri (1928-1980), "Untitled (from the tree trunk series)" and "Untitled" sold for $680,000 and $604,000 respectively.

With no other comparable event in the Iranian capital, the auction is very much a place to see and be seen.

Prominent Iranian actor, Reza Kianian, was the auctioneer at the Hotel Parsian, one of Tehran's top hotels, on Friday and the event drew an audience of more than 1,000 - although "only about 100 of the people who attended actually bid," said Zahra Jahan-Bakhsh, the Tehran Art Auction's co-head of international sales.

"Iranians like to show off and this is the best way to do so," a participant told Reuters.

Indeed, many works by the same artists could be found at private galleries for half the price. "I can tell by the cars parked in the lots that the attendees are very rich," she said.

Other notable works on sale were "The Hunting Blue Sky" by Reza Derakhshani (1952), which fetched $227,000, and "Love" by Mohammad Ehsai (1939), which went for $219,000.

Sales at the auction have risen from about $1.7 million at the first auction in 2012 when 73 lots were sold. Last year 80 works went on the block, raising $2 million.

"The economic crisis was the whole reason we started Tehran Art Auction," said Alireza Sami Azar, a former managing director of the Museum of Contemporary Art in Tehran who is the founder and director of the Tehran Art Auction.

He is also credited with bringing Iran's contemporary art collection out of hiding. "We've had to look to the private sector for support," he said.

Tehran boasts more than 200 privately owned galleries, most of which have opened over the past 10 years.

SAFE HAVEN

Iranian art attracted attention in 2008, when a work by the sculptor Parviz Tanavoli fetched $2.8 million at Christie's in Dubai. That remains an auction record for any Middle Eastern artist, said Michael Jeha, Christie's managing director in the Middle East.

"Iranian art is very rich in heritage, you have a very strong (pool) of Iranian modern artists from the 30s, 40s onwards," said Jeha. "Over the last seven years since we've been holding our auctions, Iranian art has been one of the strongest."

Today, Tanavoli's work is on display in New York's Metropolitan Museum of Art and at the Tate Gallery in London. In Tehran on Friday his work "Heech Lovers" was valued between $38,000 and $51,000, but sold for $64,000.

"We owe a lot to Christie's for having pushed Iranian art into the international spotlight," Tanavoli told Reuters.

"Young artists who were scared of the future and filled with doubt are a lot more hopeful these days," he added, pointing to the importance of Iranians' greater appreciation of contemporary and modern art.

"Iranians used to buy cars, but now they buy art," he said.

The Iranian government has not promoted Iranian art domestically or internationally, leaving the private sector to fill the gap through galleries and auctions. But officials in President Hassan Rouhani's 11-month old administration say they want to become more active.

"Iran is more than just carpets," said Majid Mollanoroozi, newly appointed by the government as director of Tehran's Museum of Contemporary Art.

"But, we've done a bad job with regards to marketing Iranian art," he said. He hopes to increase the recognition of Iranian artists internationally and welcomed collaboration with museums such as the Museum of Modern Art (MOMA) in New York.

As Iran's economy struggles under the weight of economic sanctions, with inflation running at about 40 percent, art is being seen as a safe haven for wealthy Iranians that is also capable of generating significant profits.

"We are looking for places to invest our money," said an Iranian collector during Christie's auction of Middle East art in Dubai in March. "For many other sectors like real estate, metals, foreign currency, they don't provide the same rate of return as they used to, so we are turning to art."

(A full price listing and images of the pictures can be found here (http://tehranauction.com/artworklist.aspx?Id=10))

(http://tehranauction.com/default.aspx)

(Editing by William Maclean and Susan Fenton)