The art affair
In the past few years, investment in art has increased, mostly due to higher demand, accessibility and awareness
Aesthetic appeal means a lot, not just to artists, but to art buyers as well. Billionaire Harsh Goenka, chairman of the RPG Group, buys art work not based on its valuation or the name of the artist, but based on what appeals to him about it.
“I collect what I find appealing and relates with me at some level. I also make it a point to interact with the artist; I find that as important as seeing the art work itself. For the well-known names, the quality is a given. It is only a question of whether it relates to me personally,” said Goenka, adding that he really likes an Akbar Padamsee painting that he has.
Personal pleasure remains the main motivation for art acquisitions by the ultra-high-net-worth individuals (UHNIs), according to the 2015 edition of Knight Frank’s report on UHNIs, The Wealth Report. But not all of them look at art as an object of appreciation. For many, art has turned into an instrument for long-term investment.
Art for investment
When art becomes an investment vehicle, how an artwork is valued matters a lot. But that’s not easy to do since art appreciation is very subjective. However, there are certain parameters that art valuators and lovers look at.
“Broadly, the value of art can be determined by looking at parameters such as the year of work, provenance, condition under which the piece of art was made and when it was published,” said Farah Siddiqui, a Mumbai-based art consultant. For instance, she explained, not all the works of M.F. Husain are in great demand. “Depending on factors such as time and publishing date, some will be more valuable than others.”
Is there art that will always fetch you a high value? Modern art, which is roughly the art (paintings) produced between 1860s and 1970s, remains a perennial favourite for those looking to invest in high-value work. Classic paintings are also always in vogue. In case a piece of work by a particular artist is a rarity or it denotes how she broke away from the norms of that particular period to produce her work, it adds significant value to the piece of art.
“Early works by Indian artists such as Francis Newton Souza, M.F. Husain, Jagdish Swaminathan, S.H. Raza and a few others like Manjit Bawa are favourites among Indian buyers,” said Anupa Mehta, director, The Loft—a project of Artwork, a Mumbai-based art management consultancy. Younger collectors tend to veer towards edgier work by young contemporaries, she added, including the works of artists who use photography and videos.
Like any other asset class, if there are high returns, then there are risks involved in investing in art as well. “Art is neither a liquid asset nor a short-term investment. Even if you buy the work of a very famous artist, at the time of selling it, you might not immediately find a buyer at a price you want,” said Kajal Jain, an art gallery owner based in Mumbai. She advised that one should hold on to a piece for a minimum of five years and be patient with the investment.
The art market in India is not very organized, but is very dynamic. The chances of someone selling a fake are very high. “There is a need to have a regulator in the sector, as someone can easily get away with selling you a fake for a large sum of money,” said Jain.
Demand and access
In the past few years, investment in art has increased. “What we can see from the trends is that investment by UHNIs into art has increased substantially over the past couple of years. One of the two asset classes, apart from the traditional ones, where they are investing more is art,” said Rahul Johri, head, consumer banking group, DBS Bank India, adding that the UHNI investment towards art is 2-5% of the total portfolio.
The increase in art investment is mainly due to higher demand, accessibility and awareness.
The demand for art has moved from the personal space to office space. “Earlier, the rich only splurged on their houses, but now the same individuals buy expensive sculptures for their offices and commercial spaces as well. Owners of multi-speciality hospitals and hotels have made purchases for their hospital premises, a trend never seen before,” said Delhi-based Gayatri Sekhri, creative head at Pomegranate, which makes sculptures, art, home accessories and decorative gifts for top industrialists, businessmen and entrepreneurs.
But houses remain a popular destination for buying art. For instance, owners of farmhouses in Delhi splurge on such purchases to dress up their 15,000–20,000 sq. ft properties. “Their spending on art and sculptures can run into crores,” said Sekhri. To cater to rising demand from various quarters, the world’s largest art business and fine arts auction house Christie’s came to India in 2013.
Speaking on the rising demand in the Indian market, Amin Jaffer, director of Asian art, Christie’s, said: “There has been a consistent increase in the number of new buyers in Indian auctions.” For example, last year’s auction in Mumbai—its second annual event in India—saw a 15% increase in Indian clients to date, and the sales totalled over Rs.75.27 crore.
While established names are always popular, Indian buyers are also looking at diversity.
For instance, photography is picking up as an area of interest and Indian contemporary photographers, including Dayanita Singh, Shilpa Gupta, Chirodeep Chaudhuri, Prabuddha Dasgupta, Raghubir Singh, among others, are to be watched out for, said Jaffer.
With demand rising for various formats of art, more transparent and organized transactions will only grow the market—an appealing scenario in all aspects.
Vivina Vishwanathan contributed to this story .
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