Every day, one hears of handsome profits being made from art transactions at various auctions, which goes to show that investing in art is lucrative. The global art market is currently valued at $60 billion. If this figure makes you want to invest in art, stay warned, the going is not so simple.
For instance, the works of just 20 artists account for 90 per cent of those transactions. “If you happen to be a lucky owner of one of these blue chip artists’ works, your fortune is made. Otherwise the going is tough, as investment involves speculation and risk. It is therefore wise to buy art you like. That way, even if the works don’t sell for a great price, you will at least have something you like,” says Anders Petterson, founder director of ArtTactic Ltd, a London-based art market research and advisory firm. He is also a board member of Professional Advisors to the International Art Market (PAIAM), and a founding member of the Art Investment Council (AIC).
Earlier this week, Petterson visited the city to share his views on investing in art in a complex global market, to mark the launch of Art Chennai’s ‘Chennai Art Club’. Says Art Chennai’s convenor, Sanjay Tulsyan: “In Chennai, the focus is usually on traditional art. The idea behind the Chennai Art Club is to create awareness about modern and contemporary Indian art.” This club will be a meeting point for artists and patrons, and its membership is open to students, collectors, enthusiasts, as well as novices.
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The art market is a collector’s market, not a financial one, apparently. “For me, it is a long-term strategy, about collecting a legacy that you will preserve and pass on. If you look for short-term profit, you are on very thin ice,” says Petterson.
Art as an investment can succeed only in a balanced ecosystem that includes not just artists and buyers, but also curators and critics, art festivals and awards, and of course, widespread art education. “If everyone out there is speculating, you have a fragile and skewed ecosystem that is likely to crash,” says Petterson. He believes that the primary market, where artists are nurtured and their careers get launched, is in a crisis today.
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Collecting art takes time, education and familiarity. Petterson also contends that price is not always a correct indicator. “The best collections are those that have been put together with a personal theme attached to it. And don’t be afraid of backing unknowns. You might even establish a collection by supporting promising artists, and procure from an artist perhaps a painting a month and everyone stands to gain,” he suggests. And of course, while buying any art work, get documentation to safeguard yourself from fakes. Petterson also sees more art banks popping up, where art works are preserved in controlled environments. Singapore has one such bank, as does Mumbai; London has five such art banks.
People wishing to invest in art must also understand the dynamics of the market, and the play within the sub-markets around the world. For instance, in 2012, the Chinese market slowed down after three years of spectacular growth; meanwhile, the Indian art market reached a low in June 2012, but is set to rebound modestly in 2013.
Amazing heritage
Petterson says, “The Chinese promote their own arts and crafts; I hope, India, with its amazing heritage of art and crafts will do the same.”
Technology might greatly impact market dynamics in the next five years — from a growing online market enabling artists to reach out to a larger ecosystem to the genre of digital art, where art exists only in the digital format or in the form of low-cost but authentic digital prints. Petterson sums it up, “It is an evolving scenario”.