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4 tips on investing in art

January 03, 2006 08:48 IST

Agreed, stocks are currently running hot. According to some estimates real estate is even hotter. While these tried and tested investment avenues offer great return potential on your investments, there is also the risk that when the cycle turns the other way, it can leave a gaping hole in your pocket. Not to worry.

There are other offbeat investment options that you can try out. Art for example. Celebrated works of leading Indian artists are selling like hot cakes, yielding big returns for their owners. Away from the hype and hoopla surrounding equities, art has emerged as a niche form of investment.

According to investment advisors, art enjoys a prominent position as a percentage of an investor's portfolio in the West. Though, art in India is still miles away from reaching that stage, the trend slowly seems to be catching up.

Says Dinesh Vazirani, director of online auction site, "In the past few years, works of leading artists have grown by leaps and bounds in value. The values of some paintings have gone up by 5 -10 times in the past five years."

That is no surprise given the fact that Indian artists are increasingly in the limelight even in the West. Leading artists like MF Husain, Tyeb Mehta, SH Raza and Francis Newton Souza have become hot property even on western auction sites like Christie's and Sotheby's. In fact, "Lovers", Souza's seminal work done in 1955, fetched a record-busting $1.5 million (Rs 6.5 crore) at a saffronart online auction recently.

Tyeb Mehta's painting fetches $1.54 million

But even then it was not the highest price ever commanded by an Indian artist. That honour went to Tyeb Mehta's Mahishasura, which holds the record at Rs 6.9 crore (Rs 69 million).

Buy art for art's sake

Investors buy art for two reasons. First, of course is the type who buys art for the love of it. And the second group buys art from an investment angle. Vazirani feels that art should be brought for art's sake.

"I think the primary reason to purchase art should be for its aesthetic value. If you treat it as an investment, you are bound to go wrong. A piece of art becomes a good investment only if it is good work to start with," says he.

The investment value of art increases due to several reasons, say art advisors. The popularity and history of the artist for one can have huge impact on the work of art. Unless an artist is able to sustain its quality of work over a period of time, the value of his works tends to stagnate.

"There are several things that keeps the value of a painting at a high level. The market perception of the artist, the quality of his works and even the number of exhibition done, can have a bearing on the price," says Vazirani.

But more often than not, the value of art never comes down. So if you can spot talent early enough, then your investment in his/her work stands a better chance of appreciation. Some of the current favourites include MF Husain, S H Raza and F N Souza, Ram Kumar, Jitesh Kallat, Akbar Padamsee and Ganesh Pyne.

Experts note that art as investment is a unique proposition. First of all, like real estate it is not as liquid as financial instruments. Also for an investment to appreciate in value, one must be prepared to bide his time.

On a conservative estimate, investments in art can appreciate upto 20 per cent per annum, though in some special cases, it can even double or triple in value.

While works of well-known artists have already acquired a fairly high value, those by young up and coming artists can be a good proposition, as they will accrue in value over the years to come.

Art of buying art

The first step to start off is to know as much about the subject as possible. Apart from regular research through books, magazine and Internet, visit as many art exhibitions as possible to understand the nuances of art appreciation and to know more about the artist.

An art investor must also be clear about the horizons and gestation time in purchasing art. The quality of painting, provenance, condition and period of painting are also important considerations.

If possible try to talk to the artist to find out about their vision and insights. Also scout around for advisory and consultant service providers to know more about the business. Companies like Saffronart, art clubs and investment consultants who specialises in art can be of good help.

Also, when you want to sell art, visit a good art gallery, who will be able to evaluate the work properly and advise you. Considering the number of fakes and cheap copies floating around in the market, one needs to be careful that he or she is buying authentic works of art.

Check list

  • Know thy artist - Art buyers should know the history of the artist's work apart from the quality. Also check the provenance, condition and period in which it was painted before investing.
  • Have a clear idea about the time horizon and gestation period for a particular work to appreciate in value.
  • Buy works of well-known artists if you are looking for returns in the short term. However, if you can spot talent early, your returns can grow manifold over a period of time if you are prepared for the wait.
  • Last but not the least, buy art only if you like the quality of work and not just the artist. And take good care of your purchase. A work of art can never be replicated.
Sunil Nayanar