Art Market Is Back
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Image: Christie
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n 2002, Bhupen Khakhar’s Buddha in Thailand sold for $8,963 at Christie’s. The same painting was bought in 2010 for $52,500, having appreciated 486 percent in less than eight years. Never mind that the world went through a recession that saw the art market virtually collapse.
Yes, the good news is that art investment is back in business. The past year has seen a smart recovery in values and the top artists are quoting at the pre-crisis prices again. If you missed the action in 2010, don’t fret. There is a lot of room left for making money in art if you choose well; or listen to us.
“If you buy something you love, chances are that down the road if you want to sell it, there will be others who will also like it and want to buy it,” says Menaka Kumari-Shah, Christie’s Mumbai. Mind you, art doesn’t come with P/E multiples or other measurements of value. It is all about the personal connection which cannot be put in a spreadsheet.
During the art market boom, people looked at art as a commodity and put their money in without assessing quality or price points. Flush with profits from stock markets or real estate, they put money in art purely for a signature and set themselves up for failure.
Then the international markets tanked, and those who partook in such deals panicked, tried to sell the works and realised their loss. From September 2008 (when Lehman Brothers collapsed) to March 2009, the total auction value in the modern and contemporary sectors dropped by 63 percent and 93 percent respectively, according to research firm ArtTactic.
Contours of the Recovery
Modern art has recovered faster due to it irrefutable historical value and decreasing quantity. The modern art market, which includes artists born before 1947, is almost back on track.
Data from ArtTactic shows that the average auction prices that halved between June 2008 ($112,000) and March 2009 ($54,000), bounced back by September 2010 ($92,000). This still lags the 2008 peak and that’s where the opportunity lies. “Works by the Progressives and the Modern masters which are considered blue chip, are commanding very high prices and significant works are selling for world record prices at almost every auction,” says Anuradha Ghosh Mazumdar, specialist in Indian art at Sotheby’s.
The contemporary sector which includes artists born post-independence suffered much more and will take longer to recover. Think of them as mid-cap or small-cap stocks. Before the crisis, they had seen a boom that was cut short, says Anders Petterson, founder and managing director, ArtTactic. In June 2008, the average auction price was $89,000. These prices were unsustainable and the false notions “needed to be brought down to earth,” says Sanjay Kumar, director, Sakshi Art Gallery. Small wonder that they crashed by 84 percent to $14,000 in March 2009. Buyers have now become more selective about the works they buy. The average auction price moved up to $63,000 in September 2010, but many contemporary artists are still languishing at the bottom. This slow revival has made lots of valuable works available at relatively affordable prices.
It is now the best time to buy any art, especially works by the moderns as the supply of good works is not going to remain forever, especially with so many museums coming up. If you buy now, you could reap the benefits in a year or two when the market peaks.
The Sound Portfolio
It is advisable to have a portfolio with both modern and contemporary works as each has its strength and potential. The former illustrates our nation’s history and will continue to appreciate due to this significance, while the latter represents the culture of our times.
However, “an art portfolio should consist mostly of moderns. Their works have surpassed the market movements and sustained. Invest a smaller percentage on contemporaries because a lot of them have shown erratic movements in terms of pricing and many have not been able to sustain their quality. Focus on those whose prices have not been unnaturally volatile,” says Sunaina Anand, director, Art Alive Gallery.
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