Osian's Auction Catalogue Masterpieces and Museum-Quality III | March 2004

18 MASTERPIECES & MUSEUM-QUALITY III In recent months many financial institutions have approached Osian’s with regard to making certain investments in the Indian arts. Their knowledge-base is relatively low and the degree of homework undertaken minimal. Yet the desire is there, and hence the onus falls upon Osian’s to provide the comfort regarding the nature and modus operandi for the investment. As the leading market-maker and knowledge-base builder our first task is to highlight the pitfalls and shortcomings inherent in the market for serious financial institutional investments, which range from legal framework issues to media hype, illiquidity and insurance concerns. Once these problems & risks are clarified the up side needs to be clearly understood, as does the context in which investments can be made. Let me clarify some of the prevailing trends within the Indian domestic & global art markets, so that a potential investor has a better idea of where things stand today: ❚ A rapidly increasing reality & perception regarding the fixed supply situation for great works of art, hence commanding high premium in pricing The level of discrimination has now reached a threshold where the collectors are willing to pay a higher premium to acquire the best works of art with economic factors not being the chief constraint. Crossing this aesthetic / knowledge barrier has been one of the key drivers for exponential pricing globally. The Indian market is still at the infant stage of such appreciation, and at least the markets for 75-85 significant contemporary Indian artists remain way below a sustainable equilibrium level. ❚ An immense increase in the purchasing power of the upwardly mobile Indians & NRI’s Current NRI participation in the purchase of Indian contemporary art is still at a very introductory level, estimated at about 100–125 NRI’s buying from India, which is expected to grow to more than 2,000 clients worldwide before 2006. With legislation prohibiting the export of many items, contemporary art has a clear advantage in becoming the cultural focus of the global elite Indian. ❚ Paradigm shift in the liquidity status of the new owners Significant changes are occurring in the profiles of the buyer and seller. Many art works are now being retained into permanent collections, which are not meant for resale in the near future. These buyers will not become easy sellers like the old liquidity-strapped families in India. However, at the same time many private dealers have arisen providing potential for greater turnover of stock, as with the new attitude of buying art for investment purposes. ❚ History as a base of credible pricing A greater awareness and knowledge-base has arisen regarding the links between artistic historical significance and the pricing of art, hence the formation of credible benchmarks, leading to greater publicly accountable growth rather than only a fashionable & bandwagon effect, which was apparent in the early-mid 1990s. ❚ Greater collector discrimination regarding the Signature An increasing awareness regarding the individual artists, their significant periods, media of expertise, style, literary references, exhibition histories, and the like have provided higher comfort levels to collectors when purchasing important works of art . However, this in turn leads to greater volatility & illiquidity with regard to the relatively mediocre art works. ❚ Increasing respect for Archival & Documentation work High quality publications of historical and archived art works have given significant credibility to the art world and individual artists, which in turn have aided in taking forward sustainable financial thresholds for prices. This trend is gaining momentum, and once information is more freely available the consequences will be very significant. The opening of Osian’s ADRC online will prove to be a major turning point. ❚ Transformation of black into a white economy leading to confidence, glamour and collectibility The transformation from a chiefly cash/black economy status into a predominantly white economy has led to higher transparency, facilitating confidence in displaying and exhibiting works of art openly. This in turn brings greater social acceptance to this most exclusive of collectibles. ❚ Increasingly to be viewed as a regular component of portfolio analysis and investment With a growing economy, in which the process of establishing credible collateral value moves forward, the chances of art gaining a permanent and credible space in institutional investment portfolio decisions are becoming greater. ❚ Growth of services & expertise With Osian’s having developed a comprehensive infrastructure for services and expertise required to sustain the growth of the art market, others players in the market are expected to follow suit. Thus from specific sourcing to research & archiving to cataloguing to curatorial inputs to selection of collaborative partners for cultural events, all such will become readily available to the institutions. ❚ Best value as investment in times of economic depression & war Given the best of art reflects the best that history and civilisation of the times wishes to express, it is obvious that as history changes or becomes suspectible to destructive forces, the nostalgia and respect for history increases, hence the art gains value and worth, and its preservation becomes all the more critical. The above factors all clearly denote that the Indian contemporary art market is on the upswing, and it is a long-term upswing, especially if the infrastructure-building is sustained at the required levels. We at Osian’s, having pioneered many of the changes, are taking greater responsibility as things move forward. Many more will join us and hopefully a few will better our efforts, for we are still at least seven to eight years shy of the arts playing the pivotal role in the developmental policies of India. If all progresses as planned, I soon foresee the creative communities and intelligentsia uniting, upon a financially independent & self-generating platform, and taking a much deeper role & responsibility in the way the socio-political system of India is governed and taken forward. A sustainable investment growth in the arts is but one small step towards achieving this sectoral financial strength & independence. ART AS INVESTMENT A Few Issues