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Investing In Indian Art – Strategies for Turning A Profit (Nov 2, 2006)
As recent Indian contemporary art auctions have confirmed, prices continue to climb upward. Financial investment analysts who track this trend, verify that Indian art has outperformed the US stock market since 2001 (click on Contemporary Indian Art Outperforming Traditional Investments article). Not only is the market robust, but collectors have an added incentive—a framed artwork is a tangible, liquid asset that is aesthetically pleasing when hung in the home or office, much more so than other types of investments.
For first-time collectors, knowing what to buy, how much to pay, and other investment questions can be daunting. As one would not play the stock market without at least a rudimentary knowledge of the ins and outs, similarly a few general guidelines will help prepare the novice investor for the exciting world of Indian art, and ideally, a profitable return on investment.
Foremost is research, research, research. One needs to gather as much information as possible on artists from books, catalogs, web sites, and other reliable sources. Visit Indian art galleries and museum exhibitions to learn about specific artists and their styles. Determine where their work has appeared in the past exhibition or auction and follow the market trend in the last five years.
As a rule of thumb one should always look out for provenance. Provenance will hike the value and adds to the resale allure of the piece, as well as attesting that it is authentic. A few more general rules for investing in art include buying the best you can afford. Buy signed paintings only —this is necessary for resale value and for weeding out fakes—and request a certificate of authentication from the seller.Buy paintings in perfect condition and keep them in perfect condition (go to TamarindArt’s Care and Conservation page at http://www.tamarindart.com/care_conservation.asp to get tips on how to best maintain artworks created in various mediums).
Enthusiastically applying these strategies may not be enough, however, when it comes to investing in Indian art for, like other commodity trading venues, dishonest traders and scams abound. In this market be especially aware of insiders who run up the auction record in order to inflate prices, dealers who do not have clear titles to what they are selling, posters sold as original prints, prices temporarily inflated by hype, and conventional frauds such as forgeries and faked signatures (click on Fakes Proliferate in Contemporary Indian Art Market article). The art world is far less regulated than are investments in securities and real estate, so there are few resources to turn to in the event of misrepresentation. Interact and forge bonds with reputable dealers and gallery owners only
In short, to invest wisely in art, one should have both good taste and a sense of business. Buying and selling in this arena is similar in many ways to dealing in other commodities—it is subject to the market pressures of supply and demand. But art prices vary with other contributing factors including aesthetics, authenticity, condition, provenance, and rarity. Collecting art can be one of the most pleasurable ways to spend money; an engaging work can provide its owner with a lifetime of visual pleasure—and a nice profit when given up for sale.
