Friday, November 4, 2011
Is art an investment? (A series in 6 parts)
Raw speculation in art is blind man's buff. There is no hard valuation, neither a market exchange nor regulator, as in shares or bulk commodities
An artist invariably begins his career selling on a cost-plus basis until informed collectors and critics assign significance to this artist's contribution to a style, school or genre and the work begins to command a premium. Demand-supply factors nominally correct this price.
To cite an example, Bonham's in England once raised big money at an auction of FN Souza's drawings. But that auction was exclusively of drawings during his London tenure, long ago, which are in special demand. That would not mean that any FN Souza drawing would fetch you the same premium overnight. Likewise, if a chunk of our grand old masters' lifetime work fetched the much-hyped crore- the painting in question was most probably composed three decades ago, part of a very limited series and sold at four-digit rupees then. While some collector in the chain possibly paid a fortune and recovered it from the auction house, the painter continues a respectable upper-middle-class existence.
Sure, there would be a rub-off on other works in that series by this artist, also on his other works, but the extent is certainly not predictable. So, if there is a 3 or 4 digit long-term profit in art as investment, there is this risk too!!
Ideally, if one is looking for a long term appreciation of a work of art – he must first have a basic knowledge of the field that he would like to dabble in. He should clearly understand that scores of works along a theme or along several visualisations evolve a unique style and discipline. With time and more experience that style points to a way of thinking about the visualised subjects, often a philosophy conforming to a body of artists in an institution, or even across countries. With more maturity, that artist contributes to that style or school and thus gains from his work being correlated to more established artists and their valuations, sometimes across the planet from us. In rare cases of brilliance, critics and historians perceive one artist's work as schools by themselves. This perhaps explains why the expert art valuator working for a foreign institutional buyer like Christie's or Sotheby's offers large sums of money for a painting by our veterans. It takes a very well informed, mature and experienced critic and valuator to correlate a given work in conformity to an established genre of masters, and risk buying it at such a large sum. Here, it pays to take good counsel from a qualified art historian and critic.
We cannot deny that some canvases command serious money and this makes them as valuable as stock market blue chips
But the bottom line is that an organised study is vital to determine the investment value of a work of art. One cannot speak of art investment just because one has a few lakhs stashed away and wants to institute them in a profitable portfolio.