The Art Market Can Only look Northwards-
Manoj Nair
Despite the economic uncertainty and the significant drop in the value of the rupee, there is still a brimming hope and confidence in the Indian art market. Manoj Nair analyses the facts and figures and shows how art has emerged as a new asset class.
On November 15, 2012, when US stocks lost more than $240 billion in value, Christie’s held its largest-ever postwar and contemporary sale, setting records for eight artists including Franz Kline, Jeff Koons, Donald Judd and Jean-Michel Basquiat. Something similar happened back in India. The Sensex and Nifty, the country’s top stock market indices, also plunged to record level and continued going south during that period. And, as if mocking at the two indices, a couple of auctions held during that period created records. Together, they sold artworks worth Rs. 32 crore. Though speckle in comparison to the figures raked up by the Christie’s auction in New York, it ably demonstrated the fact that even as investors were losing confidence in the stock market, they were not hesitant to raise paddles and buy the art they wanted. An article published in the International Herald Tribune in early 2013 said that investors have robustly propped up the art market. Rising client demand has been a key factor in driving the inclusion of art in a wealth management context. Globally, clients are sitting on an estimated US $4 trillion of treasure assets, which includes fine art, stamps and coins, wine, classic cars, precious metals and jewelry. The Art and Finance Report 2013 published by Deloitte and ArtTactic makes a very important observation that conclusively proves that there have been significant shifts in perceptions of the role of art in finance, as well as the role of finance in art.
Both the IHT report and the Art and Finance Report 2013 are looking at art as an asset class and pure investment. “What’s driving the art market globally is that certain people have a lot of liquidity and are looking for places to put it,” said Suzanne Gyorgy, head of Citi Art Advisory, a service of Citigroup’s private bank, told the New York Times. “For many people, art is an interesting alternative investment. It’s seen as a hedge against inflation and a safe haven in the high end of the market.” The Deloitte/ArtTactic report gives a reason for this. “Economic uncertainty is increasing client demand for alternative investments.” Of the total number of wealth managers they surveyed for the report, 53% of them stated that the challenging economic environment is the main motivation for their clients to include art in their overall wealth portfolio. They found that a large majority of the wealth managers believe that there will be a stronger demand for art in the future because of the general uncertainty in several European countries.
