Should you buy at an auction?

When it comes to art there are numerous auction houses - both domestic and international - in the fray. We keep reading about reports where a certain painting fetched a record amount or where an artwork was withdrawn from the catalogue, as there were doubts about its authenticity. The latter used to be a fairly rare phenomenon until recently. Still, the important point is that artworks that lack credibility or have even a shadow of doubt attached to them are withdrawn from the sale proceedings. Sotheby, Christies, Bonhams Saffron Art and Osian are just a few of the auction houses that deal with art. There are many more auction houses that are being set up in India.

Should you buy at an auction?
Theoretically auction houses have experts in the field at hand, who carefully assess, evaluate and authenticate each work before adding it to their catalogue. Also, they ensure that the work is of good quality. Another advantage is that a variety of works can be found at an auction. And, in general artists that are represented at auctions are considered to be either established or promising.

Art collector Harish Padmanabha explains, “Anyone who has the desire to collect can buy from an auction.” He adds that reputed auction houses know good art from bad and that helps the buyer. They also assess the condition of the artwork, and provenance and authenticity are also taken care of. Another advantage for the buyer is that there is a transparency in the dealing, which may not happen with some art galleries and dealers.

For serious art collectors, auctions are probably the best way to source works that are rare or not available in the market. Collectors look at auctions to complete their set or own a work that is highly coveted. For new buyers it is always advisable that they attend a few auctions before starting to bid at one. It will help them to get familiar with the proceedings and will also add to their confidence level.

(Published in Financial Times)

Now is the time to be cautious

Investing in art might be a ‘cool’ trend, but one must remember that there is a lot happening in the art market and unless a buyer is properly clued in, one can easily suffer huge losses. According to a recent report in the media, the Indian art market is estimated between Rs 1,000 – Rs 1,400 crores, which is big money.

You just have to look around to realize how many people have turned art dealers, or see the number of galleries that have mushroomed overnight. Art has become a hugely profitable commercial venture and those with the business acumen have been quick to utilise it. Many artists too have been quick to join the bandwagon, and have been churning out works that might as well be factory made – slight variations to their popular themes and you have a collection ready for sale. Pricing? The less said the better. Unfortunately, price now has no connection to any kind of logic. You will see youngsters and fresh graduates not afraid to ask for a lakh or more. And, the strange thing is that they even find buyers for their works. A profusion of fakes - another aspect that is now plaguing the market more than before.

This leads us to the question if one should invest in art at all?
It appears that it would be a good idea to invest only small amounts of money in the market, at least for the moment. Also, one should take all necessary precautions. For instance, when one buys gold, one always looks for the purity of gold and goes to a reputed jewellery shop. For property, one looks for clear titles and checks out the credentials of the builder. So should be the case with art. In the past, we have talked about ascertaining the provenance and authenticity of an artwork, but now it is equally imperative to check out the credentials of the dealer or gallery. Reputed galleries are likely to have done the groundwork including the investment potential of the artist. The dealings are also likely to be more transparent. But, do proceed with caution; after all, it is your money invest wisely.

(Published in Financial Times)

Refrain from impulsive buying

It is the festival season and the New Year is also round the corner. This is the time when people spend a lot of money on shopping for clothes and jewellery, and in doing up their homes. Conventionally, art has been more of a home décor product rather than an investment instrument. Even today a lot of people buy art to transform their interiors.

There is nothing wrong in buying art as a decorative purchase, but one can try to integrate the two concepts – décor and investment. If you are spending more than Rs 50,000 on a work of art it makes sense to ensure that it is a sound investment. Anything less than Rs 50,000 can be bought for the sole purpose of dressing the walls.

Once you have decided to buy an artwork, curb your impulses and do not indulge in spontaneous buying. Generally at any given point of time, there are a number of art shows going on in the city. Take your time to know more about them and the artists that are being displayed there. When you are buying art purely for its visual appeal look for aesthetics, decorative aspects, colours, theme and style of painting. In such cases, the name of the artist or his credentials do not matter so much. But, always check out the quality of the materials used, since the longevity of the artwork depends on the choice of canvas, paper, frame and other hardware. Don’t let the art galleries push you into buying something you are not sure about. Take your time to make a decision.

Sometimes artworks that have been languishing in galleries for long can get damaged - scratches, minor tears and patchy colours may occur over time and these may not be visible at a casual glance. Watch out for those before buying.

If your budget is more than Rs 50,000 it is important to do all the necessary groundwork – artist’s credentials, price trends and provenance. Make sure you cover all aspects that will have a bearing on an artwork’s investment potential.

(Published in Financial Times)

Who is investing in art?

There appears to be a popular misconception that art is bought only by the rich and the famous. Or, by those who are serious art collectors. The truth is art has suddenly become a viable asset class for young professionals. Thanks to the IT boom there has been a spurt in salaries, and as a result there is a growing number of people with deep pockets. In Bangalore itself, there is a huge interest in art from individuals working in the IT sector. In the past, once people had invested in real estate and mutual funds, they looked at art as another investment avenue. However, now art has become a status symbol. It has become a prized possession that needs to be acquired and then flaunted.

Gallery sources reveal that there has been a significant increase in the number of buyers in the age group of 20 – 30 years. These are buyers who have Rs 50,000 to Rs 2 lakhs, which they would rather spend on art than splurge it on mindless shopping. It also indicates the awareness levels in this young age group about the potential of art as an investment instrument and its snob value.

What stands out is that there are many first time buyers who visit art galleries with the sole intention of buying art as an investment. Unfortunately, most of them have no clue about art and rely completely on the gallery in selecting the artwork. A majority of them, in fact, are drawn towards artwork that is aesthetic and has a far greater decorative value than an investment value. However, thanks to the hype in art investment, they end up buying works that do not appeal to them. Also, another popular trend that seems to be catching on is that festival shopping for jewelry and clothes now also encompasses shopping for artworks. These generally are in the more affordable range and with a greater emphasis on aesthetics to fit in with home decor.

(Published in Financial Times)

Investing in decor

Investing in art is always a long-term proposition. This asset class - it is perceived as one these days - is quite different from money market instruments or commodities for that matter. It involves aesthetics, preservation and a keen eye for potential. It is therefore essential to keep in mind a few facts about art before buying an artwork, if you have its investment aspect in mind.
To begin with, an artwork does not lie in a demat account. It will be displayed in your home or office for a few years. It is therefore absolutely essential that you like the piece you are buying, apart from its projected market value. This apart, it is also advisable to buy a ‘marketable artwork’, going by the current trend.

Another aspect that you need to keep in mind while buying an artwork is the artist himself. An upcoming but promising artist’s works will not be as expensive as an established and senior artist. Some knowledge about art will help as you can identify potential and buy works that will appreciate over time, at a good price. It is therefore necessary to study artists and read-up on reviews before buying an artwork.

Yet another factor you need to dwell on is the sort of work you are buying. Oil and acrylics on canvas cost a little more but are also likely to fetch higher returns when you resell them. A good frame will ensure the durability of the artwork as well. In addition, you need to take steps to protect your artwork adequately while on display at your place.

Many people buy an artwork, display it for a couple of years and sell it to buy another one. This way, they have a variety in their decor - workspace or home - and get a return on their investment too. While this is a good strategy, knowing some basics about art investments will ensure you make the right choice.

(Published in Financial Times)