15th July, 2001

ART for money's sake It's official. Art might be safer, and more lucrative investment option than even gold or the stock market
Tyeb Mehta

Anjolie Ela Menon

Jamini Roy

A. R. Chugtai

V. S. Gaitonde
JASMINE SHAH VARMA THERE was a time when the words art and business would never be spoken in the some conversation. But that is clearly a view of the past, because the business of art has become rather lucrative and is here to stay. 
In fact, today, art investment is comparable to putting your money into shares of blue chip companies. While the share market could fluctuate and you would probably not see your money again the value of carefully bought art appreciates several times so over the years. Even if it does not you at least have a beautiful painting that you like instead of a boring scrip certificate.

An interesting revelation has come up from the analysis by international auction house Christi's According to a five year comparison (1996 to 2001) between investments in gold, the Bombay Stock Exchange (BSE), Sensex and art if turns out that the returns on art, though slow, are steady and actually more profitable. It is a safer for investment. (See graph and box.)
In 1996, if one invested in the collection of paintings by A R Chugtai, Jamini Roy, V S Gaitonde, Tyeb Mehta and Anjolie Ela Menon, it would cost Rs 29,46,375. In the same year, 10 grams of gold cost Rs 5,077 and the BSE Sensex was Rs 3,127.94
Figures of the same for 2001 are art Rs 43,68,855, BSE Sensex Rs 3,972.12 and gold Rs 4,240. Quite clearly, the appreciation of these paintings has doubled. 

With the awareness of Indian art growing across the globe, and more and more Indian artist s exhibiting on recognized platforms outside India aside from growth in the home country art has become a serious avenue for investment.

"Today is a great time to buy art. All indicators are positive for its market growth." Says Dinesh Vazirani of Saffronart, a website that sells art online and offline around the world. 

Yet, the question that looms large is how can something as subjective as art be taken seriously for investment. Each work of art unlike any other commodity, is different from the other in terms of imagery, size and medium factors that determine its value. A certain series of paintings done in a particular year may be more appreciated than on another period. In such a case, how is objectivity applied to art investment?

Mallika Sagar, representative of Christie's in India, says, "For auction purposes, art is evaluated on the basis of four criteria: the quality of the painting (this takes into consideration the image, techniques and sill involved) l the condition of the painting;) provenance (where does the art work come from); and the rarity ,or how easy it is to acquire a work in the market. Above all these, you must like the work."

Sagar advises, "If you have a certain amount of money that could allow you to either by the B-grade work of a top artist or A-grade work of slightly lesser know artist, you should go for the letter. You should go for quality." The other cue is the past record of the artist. How have the prices of the works by a particular painter appreciated over time is a question to ask For instance, the hammer price of a Tyeb Mehta's painting sold in an auction in 1996 was Rs 4,82,160. A similar painting (keeping certain constants in mind, such as time of creation, medium, similar subject and more or less same dimensions) sold for Rs 12,14,720 in 2001. Mehta's prices remained steady till 1999, averaging at Rs. 5,54,665 since 1996. 

Established artists do deliver a certain quality of work for collectors to rely on. Yet, in the art market there are plenty of price fluctuation, as frequent as every year. Trends and forces of demand and supply determine the prices. It may so happen that paintings of a certain period by an valued than of another period., As n example, take the creations of M F Husain. 
BSE SENSEX VS GOLD ART INVESTMENT Year 1996 1997 1998 1999 2000 2001 BSE Sensex Rs.3127.94 Rs.3260.56 Rs.3694.62 Rs.3060.34 Rs.5375.11 Rs.3972.12 Gold Rs.5077 Rs.4825 Rs.4000 Rs.4350 Rs.4350 Rs.4240 Art Rs.29,46,375 Rs.35,15,662 Rs.28,44,868 Rs.44,36,665 Rs.43,68,855 Rs.43,68,855
Source for BSE Sensex and gold market is DSP Merrill Lynch Ltd; source for art market is Christie's
NOTE: The figures quoted above are of sales outside India and have been converted from pounds and dollars according to the exchange rates prevalent at that time. The art investment refers to paintings by A R Chugtai, jamini Roy, V S Gaitonde, Tyeb Mehta and Anjolie Ela Menon Graph A shows the fluctuations (listed in the table at the top) in gold, Sensex and art investments from June 96 to April 2001;
Graph B shows the rate of the cumulative price increase for a single art portfolio over a period of 50 years including six artists   His paintings of the 60s and 70s are more sought after than, say, some of his later paintings. There are two approaches to art investment - buying and selling works on an individual artist basis or collecting a portfolio and seeing its value appreciates over time. A portfolio consists of multiple works by different artist collected over a period of time. Following the second method takes care of the risks - such as the value of ascertain artist depreciating for one or the other reason, while other artists are giving good returns. 

According to saffronart a specific portfolio (see bar graph), consisting of a total of 33 paintings by six leading artist of India (including Jogen Chowdhury, V S Gaitonde, M F Husain, Krishen Khanna, Ram Kumar, S H Raza and Laxman Shreshtha) collected in the 1980s, if sold in 2001 would gain an increase of 28 percent compounded annually on the investment. A portfolio of the same artist bought in the 1950s if sold in 2001 would earn a compounded increase of 19 percent. In spite of the periodic fluctuations, Vazirani assures, "You will never see capital erosion, you will get your money back." Of course, this is in the case of carefully selected art, keeping in mind the parameters Sagar sets to judge a sound investment.

While Sagar says that, in general, careful investment in art gives god returns she adds, " My only hesitation would be that you cannot sell art as quickly as stock. To see substantial returns you have to give your investment not less than five years to mature. This is so because it may not be easy to find a buyer at the right price." Another disadvantage going against art investment in monetary terms is that you do not earn any dividend unlike in the case of stocks. But having the painting in you possession and enjoying its beauty everyday certainly has its own value. 

The reasons why a work of art would lose its importance over time are many. As Sagar explains, "Changes in the taste of collectors and the influx of fakes into certain areas of the market, make it risky."

An untitled painting by Tyeb Mehta sold for Rs. 5,91,100 at a Chhristie's auction in London in 1997 For instance, a Jamini Roy that sold for Rs.4,13,280 in '96 would be prices at Rs.1,67,325 in 2001. Certain artists are easy to imitate, and so as soon as something of theirs becomes popular, imitations enter the market, bringing prices down.

Speaking of what is currently popular, Vazirani says, "Contemporary art, especially post Independence art, is popular and easy to authenticate also." Beside the established artist, artists under 50 years of age are also proving to be great investment propositions.

So then, the next time you are sitting with a fortune to be invested and the share market is giving you the jitters, go ahead and buy a painting. Who knows you might just strike gold, oops, a great work of art.

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