Seasoned investors of today have found that diversifying their investments into various categories of assets is a very useful strategy in increasing returns and art investment has become a significant part of the asset portfolio.
 

Due to the increasing demand and limited supply, good art featuring well established and historically important artists will always appreciate, in spite of the surrounding financial and economic situation. Investing in art, like building any asset portfolio, is divided into two clear-cut categories. The first category include low risk and stable return investments, where capital would be committed on a medium to long term basis as part of a carefully curated portfolio, which may include well established Modern and Old Masters such as M.F. Husain, F.N. Souza, S.H. Raza etc. Over a period of time, these works will appreciate at a predictable rate, ensuring a steady and secure return with relatively low risk. The second category involves high risk and high return investments, where a very diverse portfolio covering a wide range of art sectors, including Contemporary and less established Modern artists, is actively managed, making this a more hands-on approach in art investment with a rapid turnover rate. While this approach is considerably riskier, the returns may be significantly higher.

 

While art is increasingly being recognized as a sound investment, successfully investing in art requires a great deal of insight into the art market. For this reason, Gallery 7 has incorporated Art Portfolio Management Services, which will assist investors in building collections and portfolios as an alternate asset class for their investments.

 

Recent figures show that the Indian art market may be worth Rs 1000 – 1200 crore with an increase in the sale price of high-end works being fueled by new HNI, NRI and Corporate Houses from countries across the globe. It is this ferocious demand for expensive, iconic artworks that has resulted in a scenario where the market value of these works is increasing at a rate considerably faster than many other industries.

 

Today, Indian art is being recognized on a global platform, recording huge turnovers at international auction houses Sotheby’s, Christie’s and Bonhams. At home, the Indian art market is growing exponentially. This may be a result of a surge in the Indian economy that has had a trickle effect and triggered a boom in Indian art market. In spite of this, the Indian art has a long way to go as it is far behind if one was to draw a comparison with other markets within Asia.

 

Hence, with a potent economy to support, international exposure the long awaited rise in the Indian art industry is well underway. Since the Indian art industry is still in an emerging state, those who understand this transition will benefit the most.

 

Some of the critical factors of market analysis are as below:

 

The recent globalization of the art market has meant that the art market is bigger than ever thus increasing in stability and longevity.

 

The popularity and acceptance of art investment has meant that more data is available, which gives instills more confidence among investors and allows them to assess the art market based on hard evidence.

 

Contemporary Focus

The current art market is increasing focus on contemporary art, which means that there is a constant flow of new work to feed into the market and fuel interest.

 

The Masters and other 'historical' artists, because of whom the market must rely on the re-circulation and limited supply of works. As the market size increases so does the demand, which exceeds the supply, creating a surge of interest and request.

 

The following are the trends in the current Indian art market scenario:

 

• An immense increase in purchasing power of HNI’s & NRI's.

• Art is regarded as a trend for a safe haven emulated by HNI’s & NRI’s.

• NRI's that are looking for an identity.

• Indian affluence looking for a new status symbol.

• Availability of documentation and authenticity of works of art.

• Awareness about artistic significance and pricing of paintings.

• Growth of services and expertise within the art world.

• Market infrastructure is falling into place.

• A growing secondary market has resulted in liquidity.

• 'Never sell culture' resulting in limited supply.

• Increasingly being viewed as a component of portfolio analysis and investment.

• An increasing realization regarding the limited supply situation for great works of art; hence a tendency to command a high premium.

• Investment in a new age market; entering in the early growth phase.

• The supply has matured over a decade with established art history, artists and galleries.

• Market is firmly in the sight of affluent Indian Diaspora.

• Early mover scenario is still on offer.

• Asset has a long-term investment perspective.

• Established artists have sustainable value.

• Younger artists have higher risk / higher return.

• Best value as an investment in times of economic depression.

 

 

 

• Profiling of artists and their works in recent years with careful attention to emerging artists.

• Age of the artist.

• Academic qualifications.

• Full time / part time / Art teacher.

• Awards / Citations / Merits received.

• Participation in National / International shows / workshops etc.

• Quality of the work.

• Contents of the work.

• Medium of the work.

• Artist’s ability to explain the work.

• Technique & style of work.

• Buyer list.

• Critics' perception of the artist.

• Association with art galleries.

• Analysis of market trends.

• Analysis of acquisition trends.

• Identification of artists bought by distinguished art buyers.

• Review of recent auction results (works of art, if applicable).

• Consideration of the impact of other economic or industry trends.

• Identification by Art Adviser of acquisition opportunities based on the above research.

• Development of acquisition strategies based on timing and works of art to be purchased.

• Beware of sudden fluctuation in prices of young artists.

 

Art is an inherent part of Indian culture and its presence plays an important role in Indian history and society.