New Delhi: Maher Dadha never imagined it would happen.
A few weeks ago, at a Christie’s auction of Indian art in London, many paintings of M.F. Husain and S.H. Raza remained unsold as there were no bids for them at their minimum sale prices although F.N. Souza’s Birth did fetch a record Rs10.6 crore.
“Even last year, every one of those paintings would have sold out,” says Dadha, chairman of the Bangalore-based auctioneers Bid and Hammer.
The Indian art market has exploded from $2 million (Rs8.4 crore) to $400 million in the past seven years, a growth only surpassed by the Chinese market. But the heat has tended to mask recent internal dynamics — a shift in buyer tastes, less frenzied buying and suspicions of price manipulation at auctions.
The Christie’s auction was a clear signpost of changing preferences: dipping interest in the works of modern masters such as Husain and Raza and a move towards contemporaries such as Subodh Gupta, Justin Ponmany and Atul Dodiya.
The broad labels of modern and contemporary refer to artists from specific time periods. The modern art movement in India began before independence and stretches through into the post-colonial period, to include progressives such as Husain and Raza. The contemporaries, of more recent vintage, include artists who began working in the 1980s and 1990s.
The shift from modern to contemporary reappeared at a Saffronart online auction on 19 June, where Gupta’s untitled installation of steel vessels sold for $1.43 million, beating Raza’s Germination, which sold for $1.05 million. Three out of 12 Husain paintings remained unsold, and the highest bid for a Husain was around $379,000.
“Earlier, people wanted a Husain, no matter which Husain it was,” says Arun Vadehra, managing director of Vadehra Art Gallery in New Delhi. “Quality was totally overlooked. There was no knowledge, and the price difference between a mediocre and an extraordinary painting was not high.”
At that fevered peak, Vadehra says, one buyer came into his office asking for a Raza, not even recognizing that it was on display right in front of him. But today, Vadehra says, the prices of the mediocre paintings of the moderns have dropped drastically.
A lot of the declining interest has been shown by art funds, which have refused to buy overpriced modern-period works simply because they have been executed by the biggest names. Although he refuses to name figures, V. Sanjay Kumar, trustee of Yatra Art Fund, says there has been a “shift in focus” in fresh investments from moderns to contemporaries. “Overseas interest in Indian art is also being concentrated more in the contemporary side of the market.”
Does this imply a bubble has burst? Alka Pande, curator of Visual Arts Gallery in New Delhi, thinks it does. “The big burst has happened,” she says. “Since last year, an inbuilt correction has set in. You could have bought a low-income house with some of the money that was being spent. It was a bubble.”
Minal Vazirani, co-founder of the Saffronart auction house, sees it differently. “As with other asset classes, what’s happening is a search for top quality.” But she added: “Two years ago, there was a euphoric sense that you have to buy art, because it will go up. Now people are more grounded.”
A couple of years ago, almost every major auction sold 80-90% of its lots. That has come down to around 65-70%. “I think people are not as willing any more to bid as competitively on mid-quality as on top quality,” says Vazirani.
At the same time, the subjective nature of the quality of art has begun to churn a frothy wake of suspicion about price manipulation. The manipulation works thus: To inflate an emerging artist’s prices, a gallery submits a single work for auction. It then buys back the work at a high price, either by itself or as part of a group of profit-minded backers.
Once such a precedent is set, other works by the same artist auction — or will even be sold by the gallery — for higher prices that are not always commensurate with quality. The artist, in turn, is committed to produce “a certain number of works or a specific yardage of work, allowing each of the backers to build up a collection of such work,” says Ranjit Hoskote, a Mumbai-based art critic and curator.
“This is how one artist, who sold a work for a couple of lakhs five years ago, is now able to auction works for crores,” says another curator who wished to remain unnamed.
Vazirani says authentic pricing information is difficult to obtain because galleries, artists and auction houses work so closely that there are cases of conflict of interest. One gallery owner, for instance, himself said he also works as an auction house consultant, blurring the line between vendor and auctioneer.
“Some artists have witnessed a very rapid jump in appreciation that simply isn’t justified,” another industry expert, requesting anonymity, says. “For emerging artists, an appreciation of 15-20% is fairly good.” In comparison, some artists’ prices have risen by more than 100% each year.
Industry experts named specific inflated artists only on condition of anonymity. One art critic for a national newspaper says: “I would invite you to consider Jagannath Panda and Hema Upadhyay among the key examples.” Another expert named Gupta and Bharti Kher, whose works feature bindis pasted on metal sculptures and wall panels.
Panda’s highest sale price in recent times came in a March 2008 Saffronart auction, when a canvas estimated at $78,950 went for $353,625. His previous acrylic on canvas, of a similar size and estimate, sold for $83,375 in an auction September 2007, according to ArtNet, an online auction database.
Upadhyay’s works auctioned for an average of around $20,000 before March. In a New York auction in March, one work titled Killing Site, with an upper estimate of $30,000, sold for $61,000. Two out of her three works auctioned since then, in India and abroad, have yielded upwards of $130,000. The names of the buyers in each case were not publicly announced.
The manipulation strategy is new to India, but it is an old art dealer’s trick. “It happens all over the world,” says Peter Nagy, co-founder of the Nature Morte gallery in New Delhi. He remembers having seen similar techniques in the New York City art boom of the 1980s, when he was working there.
In a March article, Forbes magazine dubbed the strategy “Pump and Dump”, writing about its extensive operation in the booming Chinese art market. “If it were penny stocks being peddled, all this would go under the label of market manipulation,” Forbes noted. “In the art world it’s business as usual.”
While it may be unethical, in the unregulated art market the strategy is technically legal, and very difficult to pin down. After all, as Nagy says, for prices to rocket upwards, “you just need two maniacs in an auction house.”
Nagy has heard of specific cases where this has happened with Indian art. “But in a way, it’s marketing, and you can do what you want,” Nagy says. “Until now, the Indian art market was not big enough, but now it’s getting there, so it’s starting to happen.”
The success of pump and dump plays heavily on the ignorance of buyers, which still plagues the Indian art market.
Panda, who insists he does not maintain auction records and has only heard of cases of manipulation with other artists, finds himself urging buyers to really look at his work, and not just go by the name or the price. “There is no real understanding of art,” he says.
But even as they chart the contours of pump and dump, many point out that it has little future as the Indian market expands and deepens. While the manipulators may benefit in the short run, they are setting themselves up for a hard fall in the longer term.
Prices manipulated to great heights, while easy to set up, are difficult to sustain.
“People who invest study art keenly to see whether the returns will be worth it,” Visual Art Gallery’s Pande says. “So, I don’t think the bubble will repeat itself.
“It’s still a great time for Indian art,” Pande adds. “Some of the shoddiest work is coming out now, but also some of the best. Really, it’s like India in full motion.”