Greed Factor !

Dear Friends,

Well, my day job of running hotels is keeping me busy from posting more often on the blog, but here is my latest article in The Telegraph newspaper reaching over a million readers. It is critical to be careful lest you make a wrong decision in buying contemporary art at ridiculous valuations.

Also, it is quite disappointing to see this attitude from leading artists where works are being churned out like a factory, reminds me of real estate companies launching a new apartment complex every month. Such short term approaches are not healthy for the overall state of an already fragile market. So enjoy your art but be careful !

As autumn comes and brings cooler temperatures with it the activity in the art world picks up and it’s now time to take stock. We’ve just had the September autumn auctions by all three major auction houses — Christie’s, Sotheby’s and Saffronart.

With all asset classes, including real estate and stock markets, being close to all time highs, a lot was expected in the art market considering the excess liquidity sloshing around and the renewed interest in the modern masters like Raza, Souza and Husain seen in the past six months. However, the results were tepid for both the Modern and the Contemporary Art market categories.

For me, that was not surprising at all. In fact I was amazed that the party in the Modern Art market lasted as long as it did. If one was to combine all the Souza works in the three auctions, over 23 per cent did not sell and 28 per cent just managed to sell at the lower end of the estimates. So 51 per cent of all Souza works were not really attracting attention, signalling that the large supply in the last few months had finally taken a toll.

Last Howl from the Cross by F.N. Souza (1963)

The speculators in the Modern Art market are exiting and the private art museums bought what they had to buy so the market slowed due to buyer fatigue. You will still get an auction record when an exceptional work by a modern master hits the market but for more mediocre works, it will be a tough climb from here.

The common thread visible in all the auctions was the fact that most of the works were selling at the lower end of the price band given by the auction houses, so either the estimates were too aggressive or the buyers were just not keen on picking up mediocre works.

The contemporary art market was up 32 per cent in volume as compared to June 2010 but that was helped by the fact that six Subodh Gupta lots were up for auction and they contributed 50 per cent of the entire value of all auction lots. In terms of total value, the sale value was still lower by a whopping 73 per cent compared to the record values of autumn 2008.

an untitled work by Subodh Gupta (2005)

Frankly, I don’t see any recovery in the auction market for the top ten Indian Contemporary artists looking ahead. The reasons are simple. Most of the top Indian Contemporary artists that feature in the auctions with exception of one or two artists have no clue about art valuations and are pricing on the higher side driven by that old enemy of value — greed.

Also the contemporary art market for the so-called top artists is functioning like the real estate market that I see in the Delhi suburbs of Gurgaon and Noida. There is a new launch every week by the same developer who wants to milk the cow before it gets too late and the tide turns.

Why I make this comparison is simple. If you are a passionate artist, driven by quality, how can you possibly churn out three solo shows in three months in different countries, flood the market with supply, keep your prices high and still expect to sell? What you’re creating is just a factory which with the help of studio assistants is churning out art without any soul and trying to rake in the bucks. Most of our top artists are now doing exactly this, so there is a solo show every month and a couple of group shows in the middle.

The artist may benefit by selling more in the short term and so does the gallery owner who is happy with his commission on selling the work. Both of them have forgotten the collector who has everything to lose even if he buys one work from the exhibition as the prices coupled with so much supply will ensure that he loses money on every purchase.

Only T.V. Santhosh and N.S. Harsha in my top ten artists list have current values that are still below auction prices which means that if you buy a T.V. Santhosh work at Rs 40 lakh for a 6ft by 4ft canvas you are assured of a better price in the auction. In the other cases, except for these two artists, you would most likely end up a financial loser if you ever have to sell the work and that too by a good 30 per cent to 40 per cent.

T.V. Santhosh’s Scars of an Ancient Error-I (2006)

Someone needs to correct this and knock some sense into artists’ pricing. Otherwise my advice is to just save your money for some cutting-edge art by some very talented young artists instead of buying factory-made art with just a name and a fancy signature.

So in the coming months, go around some galleries or browse the net for some great quality art. You want art that is reasonably priced and will give you aesthetic pleasure besides appreciating over time.

Kapil Chopra is Senior Vice President of Oberoi Hotels & Resorts.He writes a blog on collecting and investing in Indian Contemporary Art at www.indianartinvest.blogspot.com.He 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.

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 www.indianartinvest.blogspot.com.He 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.

Young, Emerging and Established Artists - A Perspective

Well, here is the post that I promised, been to Berlin and then to lovely Moscow in the last few days, finishing the week with two art shows that I attended this week. Berlin is a lovely city with a lot of history and with Nature Morte, Bodhi ( now closed) and Volker Diehl ( they are a fantastic gallery both in Berlin and Moscow) there is enough on Indian art happening there. In Moscow, Russian art has been going through the roof, I stayed at the lovely Ritz Carlton hotel facing the Kremlin and guess what they have a gallery below the lobby level, open only by invitation. The gallery houses European masters and some of the works are over a 100 years old and valuations could be upto 10 million USD.It is managed by a private art fund called Aurora and I met one of the partners who was really passionate about what they did.

Now, why this post ? the main reason is that like all other asset classes even Indian art like Russian art has gone through the roof. So when everything in a market moves, insignificant works by contemporary artists also go through the roof as no one wants to miss out, studio assistants for some of the real big names start churning out more works, art dealers and galleries join in and start marking up the prices. More than the galleries, artists start thinking that they are really worth much more. Then there is a market crash and values sometimes become realistic but most of the people especially the one who have just arrived on the scene and also some of the older ones who never really made it refuse to accept market realities. So here are some of the key pointers to buying Indian contemporary art from artists who have never been in an international auction or do not have a price record history....

• Pricing record - Let us assume you walk into an art show at one of the galleries or a friend reaches out to you and tells you that you should really buy this art work, do you take an instinctive decision or you look at some of the data before you buy ? The problem is that there is no pricing logic in the works of younger artists, I went to a show recently and saw this nice work which was 8 feet by 8 feet and the artist expected 12 lacs for the work, no pricing history, huge work but who do you sell it to later ? That is the problem, according to me the artist should have priced it at 3-4 lacs but here his price was 300 % above that and all he has to his credit is one international art show with a gallery that does not matter.

• Artist Biography- Do go through in great detail on the artist biography, which college, which awards,which shows and which gallery is promoting the artist ? I went to India Habitat Centre for a Shiv Varma show, why did I go ? He has won the Kashi award and also the IHC-Art India award, so two major awards, his forte is sculpture but I loved a huge canvas which was 6 ft by 6ft and I was told that the price is 2.5 lacs which may look reasonable considering the size but his forte has always been sculpture. I liked the work but the value threshold was being crossed and so I offered a price of 2 lacs, the logic being if an artist has just come on the scene and even won some awards, the price for a new contemporary artist according to me should be in the range of 3,000 to 6,000 per square feet depending on the artist biography. Art purists may scoff at my financial transaction approach but it helps people not getting fleeced when buying art. I see artists with no background charging 15,000 to 25,000 sq ft for a painting and like many people I know, you would have a nice work of art but no investment value. Also, the younger lot is really getting carried away, they are not looking at who is collecting them and are just interested in the financial transaction at ridiculous values.

• Initiative - Every couple of months, I get an email from Thukral & Tagra and Seher Shah, as to what is their next show and where are they showing next whether in India or abroad, gallery, Art fairs or museums. This gives me comfort as an art collector and also assures me that maybe I have taken the right decision, I only buy when I like the work, this just re assures me more. It is also a lovely touch by the artists to keep in touch with people who are collecting their art, even in these tough times its quite tough to get a T&T canvas but they still continue with this information.The buying process does not get over with the sale closure but you become part of a collector circle. All artists like these will weather this downturn better than our other friends who have not bothered to update their existing collectors of what is happening next.

• Number of Artworks - This is another critical point, younger artists and even the top contemporary league are quite prolific, the logic last year was to make hay while the sun shines, today, values have fallen to 20 % of what the values were a year back and this is the real top league, talented but over producing. Atul Dodiya, an excellent artist by any standard showed 40 watercolours at the Bodhi show in Mumbai last year and had scores of prints in edition of 20 from STPI in Singapore also. The market just does not have enough collectors to absorb such numbers and his market crashed. Everyone who had a Subodh Gupta canvas just started putting all the works in auctions and the price crashed from 5 crores to 80 lacs and there is still enough works in the market which has more to do with art dealers ( on a personal level, Subodh is the most talented and the most humble numero uno artist you will ever meet ). Thukral & Tagra and TV Santosh have been better in this regard as they did not produce that much and are slow in getting works out of the studio, so they are safe but if you got carried away in the boom and bought a TV Santosh at 80 lacs and T&T at 60-65 lacs then you have still lost 50 % but again buying at the right price is the key. Give me a good TV Santosh canvas on terror at 20-25 lacs and I am a buyer !

Well, these are some of the points you should look at, both exhibitions that I attended last week were overpriced and I don't think would have sold more than 2-3 out of the 20 odd works.That will be art you love but please don't spend your money on something that gives you joy but no appreciation because of illogical pricing !

Cheers and till my next post !

Kapil Chopra

My views on the current Indian art market !

Well, its been a long time since I updated my blog, all financial markets have gone down further and so the over heated art market finally is coming down. Sales have stopped as everyone now takes a view as to who all would survive this recession. My view on this subject is quite simple, artists who have the humility to accept the new market realities would survive, also some of them just kept painting or doing the same concept to death, they would fall on the side.

To give you an example of the new market realities, just look at the TV Santosh work in the saffronart auction, it was an above average work ( not excellent though) and it went for 27 lacs for a 54 by 70 inch work,just 6 months back you would have been lucky to get it for even 80 lacs, so that is the kind of drop in prices we are talking about, Subodh Gupta, undoubtedly India's top contemporary artist has seen prices come down from 4-5 Crores to 1 crore and in private deals even at 80 lacs. This is the reality of the art market, a lot of blogs and gallery owners, art fund managers, so called curators would go on about how we should buy what we like and art is not about the value per square feet and all that.

I was surprised to see Hema Upadhayay works sold at Bodhi Singapore and in auctions immediately, most of them could not even manage a premium over what they were sold at. She is currently doing a show at Nature Morte, but over production never helped anyone.She is hardly moving and who is going to buy her work at 16 lacs when at Christie's she could only manage 13 !

I also feel its a great time to start collecting and your budget could be anything, I will detail out my favourite picks in my next blog but not before I dissect some shows and auction results for you !

Till then keep on reading !