Friday, July 30, 2010

Hype and Reality !

Dear Friends,

My latest article in "The Telegraph" Newspaper reaching over a million readers for your reading pleasure, comments are welcome !

If you have picked up any newspaper in the past month, no doubt you’ve read stories announcing new record values for works of some Indian masters. But as they say, the devil lies in the detail and that is where a sensational headline can give people the wrong idea about the art market being on a new roll.

Let me make this easy for you so that you get a clear understanding of what’s going on in the art market. Take a look at the summer auctions at the major auction houses.

Starting with the modern art market, yes prices and volumes for some of the works by key artists — Hussain, Raza, Gaitonde, Souza and Tyeb Mehta — are back up at the peak levels witnessed in June 2008. This marks a significant recovery if you recollect that volumes in the modern art market had tumbled 63 per cent and prices fell 46 per cent between September 2008 and March 2009.

The key highlight in the summer sales was the auction of 152 works from the Souza estate through Christie’s which went at double their high price estimate. There were some very good works and it was an opportunity for people who had missed acquiring Souza works to buy them.

But is the excitement triggered by news reports of the record price of Rs 16 crore fetched by Raza’s Saurashtra justified? Well yes and no. Yes, because it was an exceptional work and no because what has sold in the auctions at higher prices are works which have been exceptional in terms of high quality, rarity and provenance, so it deserved the price but not the hype.

Artist S.H. Raza
Works which do not meet these criteria are still not selling or selling at much discounted valuations.

So be careful in this new market. I have started getting a lot of calls from my friends who say they would now like to acquire a work by one of the modern masters as the prices are expected to go even higher and their budget range of Rs 20 lakh to Rs 30 lakh will get them nothing that is even close to outstanding.

Jumping into the market now — unless you are very certain about the quality of what you are buying will only make the make a gallery richer and the collector or buyer poorer — saddled with a work that is tough to sell. I already know of someone who has bought a very ordinary Raza work at a valuation which should have been 50 per cent below what he has paid. Remember the “golden rule of significance” whenever you collect art — namely buy significant and defining works.

Now to the Contemporary Art market or younger artists as we know them. They had a 93 per cent correction in volume, as per Art Tactic, an independent art research firm, which means auction houses had very few people consigning Contemporary Art and the prices slid a massive 85 per cent between September 2008 and March 2009. Well, they are still down by 35 per cent from their peak. Volumes are better but not even close to what you saw in the boom times.

But you may have noticed that Bharti Kher set a new record of close to Rs 7 crore for her work "The Skin speaks a Language not its own" at Sotheby’s evening sale. The work was sold in 2007 at Art Basel and is her most defining work till date. The work according to international sources was sold again in 2008 at the peak of the art market at close to this current valuation. This means that the person who consigned this work having bought it when prices were at their peak in 2008 really has not gained much. Lesson: it never does pay to buy into the hype.

Bharti Kher’s work titled The Skin speaks a Language not its own

Interestingly Subodh Gupta has slowly been creeping up the charts again. I always get surprised when his paintings sell well because, according to me, Subodh is one of the most brilliant installation artists of our times, but when his paintings sell at higher prices it’s always a sign that people are again not buying significant works from his stable.

An untitled work by Subodh Gupta

His famous installation The Hungry God is a case in point and when it comes on the auction market it will set a new record for contemporary art in India. Again, though as some collectors get smarter, Bharti’s significant work sold at Sotheby’s and Subodh’s work — which was estimated to fetch Rs 2.5 crore to Rs 3.5 crore — did not sell.

The lessons from the summer auction are very clear, whether it is in the modern space or the Contemporary space, buy exceptional works, buy works that are significant of their times and have a good provenance. Do not be carried away and end up collecting or investing in high value art without research.

Also remember to analyse price patterns if you’re investing rather than collecting. One of the reasons for new records being established is also the fact that private museums being set up in India are buying. This is further adding fuel to the fire and prices for exceptional works from the modern masters are touching lifetime highs. Also I fear that market speculative forces are again back at work and it pays to be cautious. There is definitely some level of insider trading again visible in the auctions.

And of course, the final message to collectors, the most important golden rule —buy only what you love!

Kapil Chopra is Senior Vice President of Oberoi Hotels & Resorts.He writes a blog on collecting and investing in Indian Contemporary Art at also writes for The Telegraph Newspaper in the Sunday magazine " Graphiti" every fortnight. In Delhi, he writes for "The Mail Today " Newspaper and the "First City" Magazine.


anangsen said...

Kapil, you have outdone yourself! I thoroughly enjoyed and endorsed your absolutely brilliant article, and I congratulate you for not mincing your words. You have seen through all the muddle with exceptional clarity, and reduced it to its functional basics so effortlessly.



Kapil Chopra said...

Thank you Anang, trust me these words mean a lot to me as you are one person who goes through all the posts very diligently !

Thank you, just tried to be objective with so many headlines on the art market being on a roll !



bookworm said...

I read your lucid article 'Hype and Reality'and would like you to explain this sentence."There is definitely some level of insider trading again visible in the auctions."
I dint understand the insider trading concept and would appreciate it if you could explain that to me.
An insightful article couldn't have said it any simpler, hope more collectors read this and get gyan!:-)