Investing in Art is a Blend of Economics & Passion
KH Ara's 'Untitled'; Ajay Seth (inset). Image courtesy: Copal
Since time immemorial, a good work of art has always been held with high esteem owning to its apparent value. Globally, art attracts a lot of interest from private bankers, HNIs and ultra HNIs, corporates and those who can afford art as an 'investment' option. India's share in global art market - at approximately $250 million, can still be counted at less than even 1 per cent of the total global market, which is currently worth $60.8 billion. The Indian art sector is represented by a very tiny fraction (0.4%) in terms of percentage of market share, with only 500 serious collectors in the country accumulating artifacts consistently.
However, the Indian artscape is evolving; the recently organised India Art Summit 2012, which was a huge crowd-puller, bears testimony to the fact. With 90 per cent of the roughly 90 Indian and international galleries that participated in the fair; the sale varied between one to four works of art.
Also the silver lining in the cloud is that, being highly undervalued, the Indian art sector has tremendous scope. The sector has a massively untapped potential. Indeed, Indian art is receiving growing attention from global markets. After the worldwide financial meltdown of 2008, the art industry was hit across the world. Promisingly, however, interest is now reviving.
Masters vs Modernists
Indian art is slowly but steadily gaining recognition at global level. However, this is applies more to Indian master painters; established contemporary artists still have a long way to go. Even if the current auction trend in the country seems to project contemporaries such as Atul Dodiya, Subodh Gupta, Jitish Kallat and Bharti Kher as enjoying a better scope of appreciation, they are yet to achieve and surpass their pre-recession appreciation levels. Despite the fact that these artists are highly talented, it is difficult to access the possibility of their market performance in the current scenario.
On the other hand, both the demand and performance of India's seasoned masters is quite strong among collectors. They will remain in high demand for their historical value, excellent quality and rarity. Copal's recommendations among masters are SH Raza, KH Ara, Tyeb Mehta, Gaitonde and Hemendranath Mazumdar.
(L-R) H Majumdar's Untitled (Bather), Tyeb Mehta's Figure on Rickshaw
Internationally too, masters are always considered to be priceless. Seasoned collectors of art are always looking for masters such as Picasso, Van Gogh, Chagall, Moore or Dali. The market for younger-generation artists is also well-developed overseas. Artists such as Andy Warhol, Damien Hirst, Jean-Michel Basquiat are sought after for their unique style and eclectic sensibilities (as depicted in their work). Chinese contemporary artists also have a considerable market. In fact, they are now taking the art world by a storm! Names such as Zhang Xiaogang, Yue Minjun, and Liu Xiaodong are internationally acclaimed. Zhang Daqian, who was the world's top selling artist at auction in 2011, has surpassed Pablo Picasso gaining the top spot with a grand auction sale of $506.7 million.
The meteoric rise of China as art market leader, which now controls over 40 per cent of the world's art market share, can be seen as a rise of the Oriental art. It has pushed the US to second position with a 29 per cent market share followed by the UK and France. China's strong economy and the new breed of Chinese collectors, comprising of corporates and HNIs, are aggressively investing in the art of their 'homeland', contributing to China's success story.
The Gulf market is also fast catching up. Qatar is emerging as a key player in the art world, what with Edward Dolmanbeing, chairman of Christie's, being hired by the Qatar government to join the board of Qatar Museums Authority.
With global acceptance and appreciation of these Asian artists, it is only a matter of time that Indian art too will reach the pinnacle. Although the road is long and winding, the Indian art market is steadily picking up. Till 2006, Indian art prices were just 0.8% of the global prices (this rose to 2 % in 2010), and 1/4th of Chinese prices. An interesting detail is that our art market size has multiplied 20 times in less than nine years, though it still hasn't reached its peak, whereas the global art market size has only multiplied less than two times in the same span. Also, Indian collectors are becoming more discerning by the day.
Time to Invest
Investment wise, it is very interesting to note that globally, the appreciation rate of art is 8 - 10% per annum. Indian buyers, however, have huge expectations out of art in terms of ROI. A huge shift in mindset needs to take place. Having a work of art, with an unmatchable aesthetic value, that appreciates within time is a valuable asset in itself. Rather than focusing on short-term gains, Indians need to look at art as a viable mode of long-term investment. In addition, it is important to choose one's art intelligently. With the increasing digitization of today's world multimedia art, or digital art as it is popularly known, is being considered to be the 'in' thing by many now-a-days.
However, the question remains if it can be compared to 'traditional' art forms. The former has a huge array of software packages, tablets, brush options, styles that give an amazing flexibility and vividness to the artist. Nevertheless it lacks historical value, which in the case of traditional art is quite high. In terms of one's personal choice, it would be unreasonable to favor one over the other but from a purely asset point of view, traditional art definitely scores over its counterpart.
With the art market presenting an appealing prospect, the right time to buy Indian art is now. Being highly undervalued at the moment, it is bound to garner its due share of appreciation in times to come. All said and done, art should not be taken as a purely investment option, collection of art should be from an aesthetic angle as passion or collectibles. A good piece of work is a beauty to behold and enjoy for years to come.
(Ajay Seth is Chief Mentor at Copal Art, an art advisory board and bank that researches, procures and makes available Indian artworks to its clients.)