Right on the money

(While this blog has been converted to one that focusses on food, I did this article for the newspaper I work with and rather liked the way it turned out. As with all newspapers, what you write is not always what gets printed, so this seemed to be a good place to show off all the research that I did for this. So, voila!)

It’s been a rather unsettling time for the art world over the past few months. Even as reports come in of works selling for millions of dollars, it is known that prices of art have been falling – or so it seems. For many, the arena of investment has shifted from contemporary Indian art back to the stock market, where boomtime has encouraged buying. All the while, the fairly restricted and still-elitist circle that buys and sells art has been quietly going through changes – none dramatic, none earthshaking, few even vaguely surprising.

But change, nevertheless. Consider this: At the recent Sotheby’s auction in New York, the sale of contemporary Indian art were on the whole below expectations – of the 114 lots up for bids, only 86 were actually sold, at a total price of about $6.3 million, instead of the high-end figure of $9.4 million originally estimated. Rameshwar Broota’s The Other Space sold for $601,000; an untitled work by Syed Haider Raza commanded $409,000. However, stalwarts like MF Husain are still top-pops – his Pagan Mother sold at a fabulous $658,600 at Sotheby’s. About a year and a half ago, Shibu Natesan’s Existence of Instinct – 1 (2004), fetched £91,000 in an online auction. Paintings by Tyeb Mehta - Falling Figure With Bird (1998), which sold for $1.24 million, and SH Raza’s Tapovan (1972), which brought in $1.47 million - broke records. And a Ram Kumar that sold for about $32,000 in 2003 might have fetched $500,000. Today, prices have dropped perhaps 25 per cent, though exact figures are never spoken, just whispered.

What exactly happened? As Kent Charugundla, owner of the Tamarind Art Gallery in New York says, “The Indian art market is going through a correction now after coming to a point of saturation.” With the Sotheby’s auction, much of the mediocre has been effectively weeded out. Shireen Gandhy of Chemould gallery in Mumbai agrees, “The undersell at Sotheby’s points to the fact that we have overpriced ourselves.” Dadiba Pundole of Mumbai’s Pundole Art Gallery believes that this shakedown is “long overdue. The euphoria seems to have subsided. More than half the people were collecting for the wrong reasons.”

“People have now become far more selective in buying good works. Prices had been driven up by some galleries who were giving works to auction houses and then buying it themselves to establish 'benchmarks',” believes Harsh Goenka, Chairman RPG Enterprises and an avid collector. “A similar trend was when entire exhibitions were supposedly 'sold out' and then some of these works appeared in auctions. This way prices were further driven up and inventories made more valuable. Now, people are aware of such manipulation. As a result, better artists are better rewarded. Manipulation levels are down. So are prices. Christies and Sotheby's are more transparent and fair Therefore there is truer value being discovered."
Contemporary art collector Ashwini Kakkar believes that the inflation of the prices over the last few years was so rapid, “mainly because all the auction houses jumped into the fray about the same time. Also, the number of NRI buyers suddenly increased, as did the homegrown IT millionaires,” all of whom had cash available to make high-end purchases of a commodity that they could “paste on the wall for others to see”. He feels that “The reverse effect happened because there was an oversupply situation. And the government introduced a tax on all transactions related to art, which had a huge dampening effect on prices.”

According to Zara Porter Hill, Head of Indian and South Asian Art at Sotheby's, “Clearly clients are more discerning and spending their money in different ways in the Indian context. They are not just concentrating on buying work by the modern Indian artists. There are new areas showing buoyancy: video, photography and miniature paintings, for instance.” She expects a continued growing of an international group of buyers for contemporary South Asian art – “There is also a growing interest in Anglo-India, which is also undervalued at the moment. These areas should do well mid to long term.”

Dinesh Vazirani of Saffronart feels that the current low period shows a “top end saturation in an existing pool of buyers”. At the same time there has been a slower gestation of new buyers coming in at the top end, he explains, “There is some stability there. In the contemporary section, with younger artists, there is still lots of momentum, with prices still going up.” Much of this comes as a result of these works being placed in international sales, attracting a non-Indian clientele. “In September 2005 the first million dollar painting (Tyeb Mehta’s Mahishasura) was sold. Since then, there have been about 20 more that went at that price.”

Gallery owner Ranjana Steinrucke agrees that the art market is now not as flush with funds as it was even a few months ago. “But it is a soft market situation now, not really a fall per se.” Founder-Chairman of Osian’s Neville Tuli’s opinion is a little different. He explains, “The market is as flush with funds as before, even more so as many more new entrants, but the money has matured.” The market is now “not willing to accept much of the mediocrity that many new players have been sharing with the public”.

This kind of re-evaluation is necessary as a market matures. In addition, the transition from investor to collector is happening on many levels; this needs time. Tuli says, “Given the financial institutions have entered the art market now in a serious manner, the growth and the next boom will be deeper and more sustained.”

In this turmoil, how is the artist who has shot into the limelight doing vis-à-vis sales? Baiju Parthan says without too much worry, “The drop in price is more of a correction. The fall would show up mostly among those whose prices are a bit inflated. A certain amount of collateral damage could happen.”