Emergence of Art Marketing

Investment in India ( AMI)

 Presenters

• Christeena - 6
• Anish -8
• Dipanwita - 13
• Prathamesh - 38
• Samiksha - 51
 Investment Options
(Traditional)

• Fixed Deposits
• Equity
• Gov. Bonds / Securities
• Real Estate
• Mutual Funds / Insurance
• Stock Market
• Commodity Market
 Investment Options
(Alternate)

• Antique – at least 100 yrs old

Furniture, Military memo, Clocks, Glass, Books, Musical
Instru

• Collectibles – Stamps, Toys, Sports Memo, Wine,

Stone, Cars, Coins

• Art Market – Paintings, Sculptures, Photographs,

Drawings
 Characteristics of a Good
Alternative Market

• Availability of Information
• Liquidity
• Transaction Costs
• Informational Efficiency
Art Market – an alternative investment.
Features

• Efficient ROI
• Wide Price fluctuation than stocks
• Reduced Risk on returns
• Higher Volatility than stocks
• Chart goes up even though Traditional
investment options performs poorly
 Art Market - Factors to consider
while Investing
• Authenticity
• Condition
• Rarity
• Provenance
• Familiarity
• History of Artwork
• Workmanship
 Advantages v/s Disadvantages of
investing in Art
• No correlation with stocks
• Appreciation rather than
periodic dividends
• Low Downside risk in Crisis
/ War situation
• Value with in time,
unless the art is physically
damaged
• High Maintenance &
Transaction Fee
• Income is not form of Dividend
• Value is subjective criteria.
Qualified experts are req. for
Valuation
• Difficult to authenticate the Art
• Protection against Theft
• Distribution of Information is
highly uneven
Comparison of various Assets in
India
 Investor’s Portfolio
• Investors are classified on the scale from P1 to
P6. P1 = Low Risk Taker / P6 = Extreme Risk Taker
Snapshot of Portfolio at 3 stages
in terms of Risk & Reduction
Indian Art Market
 Current Trends & Drivers of
Indian Art Market
• Growing with GDP growth
• Increasing purchasing power of HNIs & NRIs
• Buying art is Status Symbol
• Financial Institutions started investing – Diversified
Portfolio
• Increase in Awareness & Artistic
• Improvement in Artwork Supply
• Patriotism
• Bollywood Stars as Investors
 Indian Artists
Price (USD mn)

Artist Artist / Location / Date Title

Tyeb Mehta Christie’s, New York / 21.09.05 Mahisasura 1.58

Amrita Sher-Gil Osian’s, New Delhi/ 1.3.06 Village Scene 1.53

S H Raza Sotheby’s, New York/ 29.03.06 Tapovan 1.47

V S Gaitonde Christie’s, New York/ 30.03.06 Untitled 1.47

F N Souza Sotheby’s, New York/ 19.09.06 Man with Monstrance 1.4

F N Souza Christie’s, New York/ 20.09.06 Man and Woman 1.4

S H Raza Saffronart, Online/ 07.12.06 Climat 1.35

Indian Artists (Cont…)
Indian Artists (Cont…)
 Art Funds in India
Date Art Funds Corpus (INR in crores)

Sep-05 Yatra I Fund 10.95

Mar-06 Copal Art Fund Series I 10.00

Jul-06 Osian's Art Fund 102.40

Nov-06 Crayon Capital Art Fund 60.00

Feb-07 Yatra II Fund 21.92

 Opportunity v/s Risks in
Indian Art Market
Market Opportunities Market Risks

Masters are still undervalued Good works by the Masters are still available and are Quality vs. Price Artists are too aware of the market and may make work that are
undervalued. Valuation at the top Aesthetic level is low compared to prices achieved in overpriced and lacks content. Prices of younger artists have gone up too much too fast.
the Western contemporary market. Market saturation of certain artists’ work.

HNWIs – an untapped segment Huge untapped segment of High Net worth Individuals Growing the market for collectors Collector base is beginning to plateau off and little
looking to start buying art. effort being made to grow it.

International exposure Increasing interest and knowledge for contemporary Indian art Lack of Buyer Knowledge Buyers are not adequately differentiating between good and
in the international art market poor quality works
 Opportunity v/s Risks in
Indian Art Market (Cont…)
• Lack of knowledge among new buyers.

From painting to new media Collectors are becoming more experimental and are moving beyond painting towards Speculation Speculation, too much emphasis on short term returns, further exasperated by the proliferation of art
other media funds.

Increased awareness, but knowledge is still lacking There is an increase in international awareness of Indian Lack of transparency Manipulation and distrust in the auction market. Transparency needs to be introduced at the
contemporary art, but knowledge is still limited. very earliest if the Indian art market is to grow and mature.

NRIs stimulating the Indian art scene Non-resident Indian artists, curators and gallerists are re-invigorating the Indian Art funds and art as an asset class Art funds are pumping money into art as an ‘asset class’ that has a real danger of
contemporary scene. quickly and artificially inflating prices

Lack of governmental support for the visual art market Museums being built by private collectors
 Legal Aspect

• Funds are organised as Private trust, under

Indian Trust Act, 1882.
• No limit for Investments
• Profit sharing to Income Tax Depart.
30% - Short Term (<3 years)
20% - Long Term
 Determinants of Art Buying

• Risk Appetite
• Monetary Allocation
• Investment Horizon
 Steps – Art Purchasing

a. Research the Art

b. Research the Artist
c. Provenance
d. Consult the Expert
 Mechanism – Art Funds

• Create a Fund by rising money

• Invest in Portfolio of Artworks
• Close Ended Funds & Open Ended Funds
 Conclusion
• Low Risk High Returns
• Booming Market
• Unstopped Potential
• Can indirectly invest in Art through Art Funds
• Best Alternate Asset in Portfolio
• Future main stream Asset