Globalaffairs

Issue 12/December-January 2009
By Sushil Srivastava

The two words art and investment taken together create an intellectual contradiction and force us to think as to how an art object is termed as an investment.

An art object is a soulful expression of the artistic sensibilities that has an intrinsic value. Which is not just because of the interlaced creative and aesthetic juices but also because of it’s relevance in the time frame of an era. And it is due to these attributes that an art object acquires a financial value.

And since art is very subjective it needs deeper understanding with regard to its financial aspect.

The Indian art is today being recognized on the global platform and at home the Indian art market is annually growing at 30-35%. It is being predicted that this trend would continue. It is not just because of the surge in Indian economy that has had a trickle effect and triggered the boom in Indian art market but also because Indian art has a long way to go. It is far behind if one was to draw a comparison with others in Asian art market itself. Thus with a potent economy to support, international exposure, the ever growing awareness and the knowledge of art just a click away, it all mounts to the long awaited big bang in Indian art industry. And since our art industry is still in an emerging state those who understand this transition will benefit the most.

In 2005, at a Christie’s auction, Tyeb Mehta’s “Mahisasura” sold for nearly $1.6 million, marking the first time an Indian contemporary painting crossed the $1 million barrier. Since then, a few other artists have joined the million-dollar club, among them F.N. Souza and S.H. Raza.

A sale of a painting by the late Indian painter Francis Newton Souza has set a record for an Indian work of art. Souza’s 1955 work, Birth, was sold for £1,273,250 ($2,519,762) at an auction of modern South Asian art at Christie’s earlier in 2008. Subodh Gupta’s ‘Saat Samundar Paar’ fetched a record bid of $11, 906,058 in Christie’s Asian Art Sale in HK.

Art is an inherent part of Indian culture. Its presence plays an important role in Indian history and society.

The following are the trends in the current Indian art market scenario:

-Contemporary art grows as economies globalize: it is happening here and now
-Growth of GDP & and the economy as a whole
-An immense increase in purchasing power of HNI’s & NRI’s
-Art is regarded as a trend for safe haven emulated by HNI’s & NRI’s
-NRI’s looking for identity
-Indian affluent looking for a new status symbol
-Availability of documentation and authenticity of works of art.
-Awareness about artistic significance and pricing of paintings
-Growth of services and expertise within the art world
-Market infrastructure is falling into place
-Growing secondary market has resulted in liquidity.
-No secondary market for any other collectable category
-‘Never sell culture’ resulting in limited supply
-Increasingly being viewed as a component of portfolio analysis and investment
-An increasing realization regarding the limited supply situation for great works of art; hence they tend to command a high premium in price.
-Investment in a new age market. Enter in early growth phase
-Supply side has matured over 3 decades with established art history, artists and galleries
-Buy side is consolidating after a break out
-Market is firmly in the sight of affluent Indian Diaspora
-Early mover scenario is still on offer
-Asset has a long term investment perspective
-Established artists have sustainable value
-Younger artists have higher risk/higher return
-Best value as an investment in times of economic depression.

With a simple buy and hold investment strategy, Indian Art has given a 2000% return over the last 5 years. This figure has been calculated by taking an average appreciation in value of paintings by 50 artists over the last five years. The best Equity Mutual Funds have given a return of 1100% over the same period as compared with the Sensex which has appreciated by only 200% and property which is considered a safe investment has given a return of 250% over the same term. Thus, compared to the other asset classes Art has out performed them considerably giving the highest returns.

Art of buying art:

The first step to start off is to know as much about the subject as possible. Apart from regular research through books, magazine and Internet, visit as many art exhibitions as possible to understand the nuances of art appreciation and to know more about the artist.

An art investor must also be clear about the horizons and gestation time in purchasing art. The quality of painting, provenance, condition and period of painting are also important considerations.

If possible try to talk to the artist to find out about their vision and insights.
Also, when you want to sell art, visit a good art gallery, who will be able to evaluate the work properly and advise you. Considering the number of fakes and cheap copies floating around in the market, one needs to be careful that he or she is buying authentic works of art.

Following Points might be helpful before investing in the Art :

1. Know the artist - Art buyers should know the history of the artist’s work apart from the quality. Also check the provenance, condition and period in which it was painted before investing.

2. Have a clear idea about the time horizon and gestation period for a particular work to appreciate in value.

3. Buy works of well-known artists if you are looking for returns in the short term. However, if you can spot talent early, your returns can grow manifold over a period of time if you are prepared for the wait.

4. Last but not the least; buy art only if you like the quality of work and not just the artist. And take good care of your purchase. A work of art can never be replicated

Sushil Shriwastwa
CEO, Prince of India Arts Pvt.Ltd
www.princeofindiaarts.com

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