Art in the time of downturn

(It's not only everyday life that is affected by the global recession. The luxury market, too, is gasping somewhat. This was published yesterday...)

The recession creeping inexorably across the globe has finally arrived in India, according to the money pundits. So even as things seem to be going well for the average consumer, with drops in the prices of various essentials, one group of people is wondering which way the arrow will point, even as they track its ups and downs. The contemporary art market, a distinctly luxury sector, has been turbulent over the past few years and now shows a downward trend that reflects the world economy in general. And Indian art has not been immune. There have been published reports about works by Indian artists not selling at international auctions, or going for prices far below their lower estimates.

According to Zara Porter-Hill, Director and Head of Indian and Southeast Asian Art at Sotheby's in London, “The markets which have experienced the biggest appreciation have been those which are experiencing price adjustments. It has been clear that works of great quality in good condition and soberly estimated, tend to perform well. The Indian market is evolving, growing and adjusting – a process which is very normal.”

The art market is not just about demand and supply, but far more complex, explains Neville Tuli, Founder Chairman of Osian's, talking about assets in general and art in particular: “The asset of high quality Indian art is more and more being seen as a credible one, with many advantages over others.” On the matter of sale prices, he says, “Auctions are planned six months earlier and expectations were different then; thus estimates were higher and so some negativity can result, but the fall in top quality art is much less than any other significant asset (a fall of 15 to 20 per cent for high quality art compared to 60 to 75 per cent for equities and real estate).” Just over a year ago, there was a drop in prices of Indian art, explained as a ‘correction’. “When the correction occurred over one year ago, prices had dipped by over 35 per cent, but volumes had significantly jumped up. A correction is not the same as a global financial meltdown. Currently the Indian economy is in a better state than Europe and US and so is our art market.”

Art buyer-collector Ashwini Kakkar also finds that “Assets are down about 50 to 60 per cent in art. But the prices for art have not dropped that low for sellers, only about 20 per cent. In this, galleries act as a kind of buffer and maximize their own gains; as a result, the customer is not getting the kind of value for money that they should, given the downturn. Even in distress sales, the prices have not fallen too much. But there is big drama happening in the art world; volumes have collapsed and everyone is adopting a wait and watch policy.”

Some artists who have done phenomenally well locally and overseas believe that the downturn could be healthy. Jitish Kallat, for one, says that “I frankly do not think that it is a bad thing to have a drop in activity – until recently work with very little conceptual rigour was being valued the same as works of an artist who would have been at the forefront of the field for many years. Insignificant work was seen on the same level as good work, because speculative money was propping it up – a hugely dangerous trend. All that would stop, and to me that would be a celebration in the long term, since the meaningless numbers game would stop and core fundamentals would take the forefront.” But there is a downside, too. Kallat feels that while galleries that do serious, sustained work will be “bang on top of the art world, with less money coming in, some would be much less adventurous. By this process, some volume would be lost, but flab will leave the art world and it will become fat free!"

Maithili Parekh, Deputy Director, Sothebys, also sees the correction as being “healthy”. According to her, “values had been galloping unrealistically. Mediocre art is now falling by the wayside, but strong works by top artists continue to fetch interest and price.” Critic-curator-writer Ranjit Hoskote knows that “Corrections, when they set in, are not pleasant things. Given the current financial scenario, it seems probable that the prices of art will de-escalate in the next 15 to 18 months. If the upward zoom was dramatic, then the downward ebb is likely to be equally drastic. But the concerted actions of many interlocking interests in the artist-dealer-gallery system will probably slow down or cushion the full, brutal impact of the correction.”

So, in this cost-cutting, fat-trimming stage in the market for Indian art, is it a good time to buy? For any art lover, always, believe many, including Porter-Hill, who says that “There are certainly wonderful opportunities to be had at the moment.” To gauge the future of the Indian art market, Porter-Hill’s eye is firmly fixed on the sales in New York in March. According to Hoskote, “This is a good time to buy art if you happen to be that rare creature, a genuine lover of art - this may be the time to identify artists whose prices have never galloped and whose work continues to be compelling; or genres that were below the radar and now look promising, such as drawing or graphics.”

And Parekh agrees, “The art market has gone from favouring the seller to favouring the buyer. Given this, I believe it is an excellent opportunity to buy, especially art of stellar quality, with good provenance and condition.” However, she is clear that “The foremost premise for buying art should be passion, because a collector must love and live with what he's bought.” Even as the world tries to get back on even economic keel, the art market is trying to understand which direction will take it towards sustained and improved growth. As Parekh says, “The next year will be crucial to the Indian art world – how we choose to weed out the debris (that is, mediocre art), nurture good artists and art and sustain a passion in collecting will determine health and sustainability.”

Kakkar also feels that “while quality works are doing better than names, with a better chance of selling, the sustainability of artists’ works at the overly high levels they were is now being questioned, even as the older artists are holding their own – people like FN Souza, MF Husain, SH Raza and Gaitonde.”

The bubble has been pricked, Hoskote notes. “The obsessive race for auction records and instant validation of art will surely yield to the gradual and sensible accumulation of value. With the feeding frenzy and the maniacal pursuit of prices over, artists will have less demand to distract them from their art, and gallerists can redraft course and focus on their core concerns. Likewise, collectors have the space to assess what they really want from their collections. Speculators will perhaps be encouraged to look elsewhere, which would be a relief.”

Tuli sees the “role of the arts in India's socio-eco-political framework gaining further momentum. The role of art funds will come to dominate the investment platforms, and they will evolve into mutual fund structures.” Most importantly, “Art will always have many advantages over the traditional asset once its nature is better understood.”