Art Market
What would drive you to buy an expensive piece of art? Is it a sense of accomplishment, being seen as a part of the cultured lot, a boost in self-esteem or the investment value. Maybe all of these?
A UBS and Art Basel art market 2023 report highlights that the global art market grew to $ 67.8 billion in 2022. The United States retained its position as the largest art market with a value of $ 30.2 billion. The report states while there has definitely been an impact of a high interest rate environment and the wars in the first half of the year however, collector confidence remains strong for the second half of this year and going into 2024. Interestingly, sale of art related NFTs fell by nearly half in 2022 to $1.5 billion. It hasn’t been a particularly good year for the cryptocurrency universe, many people were left with their faith shaken and disappointed. So, it seems fitting that NFTs lost favour.
Art investment has always been considered a smart financial move. Auction house heads say it is not just for seasoned collectors anymore, the younger affluent lot are also putting their money in art. In a recent interaction, Sonal Singh, MD, Christie’s India speaking about a recent South Asian Modern and Contemporary art auction pointed out that 62 per cent buyers were from the Asia-Pacific (APAC) region and 10 per cent of the buyers were millennials.
“In terms of volumes, we cater to approximately 80 per cent domestic and 20 per cent international buyers”, says Siddanth Shetty, Chief Administrative Officer, Astaguru Auction House. He adds, the market has seen an influx of young buyers in their 30s and 40s who are keen to experiment with their first collections. They are propelled by increasing incomes, and exposure to global art trends. They have a profound interest in contemporary art, probably because it is a lot more accessible. We have also noticed an emergence of buyers from non-metro areas - these are young entrepreneurs and high-net-worth individuals.
Tanvi Kanchan, Head, Corporate Strategy at Anand Rathi Shares and Stock Brokers says they have seen the universe of the art collector grow from the ultra-high net worth individuals to encompass the high-net-worth individuals over time. Further, the younger lot is leaning more towards digital and contemporary art.
If we look at the numbers, the Indian art market has been performing well, of late.
Why should you invest in Indian art?
According to the Indian Art Investor report, the Indian art market clocked a turnover of Rs. 1,145 crore in FY 23. H1FY24 has generated a turnover of Rs. 658 crore, this is a twelve per cent increase when compared to last year. The report states that the modernists generated maximum turnover and number of works sold. Further, 1 per cent of the pieces priced above Rs. 10 crore generated most turnover. And, online auctions trumped physical auctions in terms of works sold and turnover generated. It projects turnover ranging up to 31 per cent for H1FY25.
The stars
The report highlights some of the most expensive works and record breakers for H1FY24. These are, a 1937 oil on canvas by Amrita Sher-Gil that sold for Rs. 61.8 crore, and an acrylic on canvas by S.H. Raza at Rs. 51.7 crore, among others. Some of the artworks that achieved record breaking increase in price were, Homi Jehangir Bhabha with a 289 per cent jump, Thota Vaikuntam recording a 62 per cent increase, A. Ramachandran with a 42 per cent increase over their previous sale values.Sneha Gautam, Senior Vice President, Client Relations, AstaGuru Auction House says, “In the recent auction titled ‘Modern Treasures,’ held in the first week of September, a work by Husain depicting his famous horses was sold at a whopping price of Rs. 7.2 crore. During the same auction, two more distinct works by the artist crossed the mark of Rs 80 lakhs.”
How to go about it?
Experts are of the view that art is a good investment even though it is not a liquid asset and rather opaque as compared to other investment options. If you are one who wants quick returns on your investments then art might not be your thing. Art investment is essentially a long-term investment.
The Knight Frank Wealth Report 2023 found that 59 per cent of ultra-high net worth individuals (UHNWI) globally will likely invest in art in 2023. Shetty says, “art is definitely a sound investment. Findings from the KnightFrank report highlights, affluent individuals realised an impressive annual return of 29 per cent on their art investments in the year 2022. Amongst the various segments, modern and contemporary art have stood out as particularly appealing to investors seeking assets that not only yield substantial returns but also provide diversification advantages.”
As global wealth grows and countries become richer, there will be more interest in art. One can see the state of the economy and interest in artists and investment in their work is linked. The richer the country, the more its people look to invest in assets that will hold value over a longer period of time and even during the cyclical phases of the economy.
The key to making a good investment is always to know the market and the product. If this is your first buy, study the artist of interest, understand the value and provenance of the work you are interested in. Finally, enlist the help of a good art advisor to help you navigate your way through the art market.
