Growth in Indian art paves the way for wealth management
Indian art market is on an upswing and a recent report by Fortune claims that the Indian art market has risen over 485% in the last 10 years.
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India’s share in global art market is $250 million, i.e., less than 1% of the total global art market that is currently worth $60.8 billion. However, the Indian art market is on an upswing and a recent report by Fortune claims that the Indian art market has risen over 485% in the last 10 years, making it the fourthmost-positive art market in the world. In the past, the Indian art market was largely dominated by collectors and connoisseurs, royal and wealthy Indian families, who acquired art more out of aesthetic appeal than as investment in an alternative asset class.
Recent trends indicate the emergence of a new class of buyers: upper-middle-class families, upwardly-mobile professionals and entrepreneurs from diverse fields, who constitute the growing number of high net-worth individuals (HNIs). Driven by high disposable wealth, this growing HNI population has triggered a change in the investment behaviour. With an increase in global liquidity and wealth creation driving up prices across all asset classes, HNIs are seeking new investment products and avenues with low correlation to financial assets.
Besides buying art for multiple reasons ranging from passion and inspiration, HNIs have combined their aesthetic sense with financial intuition to broadbase the market and deepen it to provide an alternative investment opportunity that diversifies their financial portfolio. As an alternative asset allocation strategy, investment in art is growing to become a sunrise investment option in the financial strategy of HNIs, given that they are also considered to be an effective hedge against inflation with defensive characteristics during weak economic periods. In addition to individuals, buying of artworks has seen heightened interest from the corporate sector as well and institutions, others who have developed significant corporate collections. Increasingly, architects are commissioning site-specific (large) works in their corporate projects.
In India, corporate art collection is still a recent endeavour, and one where promoter interest and personal collections often cross over to form the genesis for corporate collections. While there are a number of examples of corporate houses investing in art, directly or indirectly through their promoters, yet few view them as bankable assets, though the value of such collections has probably grown manifold over the years. Among those that have occasionally tested the market, their international auction forays over the years have seen them fetch record prices.
Lately, the art investment market has made its presence felt on Indian shores and a wide range of ancient and modern abstracts and contemporary artworks are now available in art galleries and leading auction houses. The increasing awareness of Indian contemporary artwork and masters in recent times has led to an exponential growth in prices of art; with contemporary works selling for record-breaking prices by prestigious auction houses.
Leading auction houses are focusing on prolific members of Progressive Artists’ Group such as M F Husain, F N Souza and S H Raza, among others, at the top end of the price ranges, and on other modern figurative and abstract artists.
Recent trends indicate the emergence of a new class of buyers: upper-middle-class families, upwardly-mobile professionals and entrepreneurs from diverse fields, who constitute the growing number of high net-worth individuals (HNIs). Driven by high disposable wealth, this growing HNI population has triggered a change in the investment behaviour. With an increase in global liquidity and wealth creation driving up prices across all asset classes, HNIs are seeking new investment products and avenues with low correlation to financial assets.
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Besides buying art for multiple reasons ranging from passion and inspiration, HNIs have combined their aesthetic sense with financial intuition to broadbase the market and deepen it to provide an alternative investment opportunity that diversifies their financial portfolio. As an alternative asset allocation strategy, investment in art is growing to become a sunrise investment option in the financial strategy of HNIs, given that they are also considered to be an effective hedge against inflation with defensive characteristics during weak economic periods. In addition to individuals, buying of artworks has seen heightened interest from the corporate sector as well and institutions, others who have developed significant corporate collections. Increasingly, architects are commissioning site-specific (large) works in their corporate projects.
In India, corporate art collection is still a recent endeavour, and one where promoter interest and personal collections often cross over to form the genesis for corporate collections. While there are a number of examples of corporate houses investing in art, directly or indirectly through their promoters, yet few view them as bankable assets, though the value of such collections has probably grown manifold over the years. Among those that have occasionally tested the market, their international auction forays over the years have seen them fetch record prices.
Lately, the art investment market has made its presence felt on Indian shores and a wide range of ancient and modern abstracts and contemporary artworks are now available in art galleries and leading auction houses. The increasing awareness of Indian contemporary artwork and masters in recent times has led to an exponential growth in prices of art; with contemporary works selling for record-breaking prices by prestigious auction houses.
Leading auction houses are focusing on prolific members of Progressive Artists’ Group such as M F Husain, F N Souza and S H Raza, among others, at the top end of the price ranges, and on other modern figurative and abstract artists.
This makes investors heavily dependent on art dealers and gallery owners for investment advice. It is extremely important for an investor to obtain independent and objective advice while making investment in any asset class, and the same holds true for investing in high-value works of art (See accompanying graphic). The art market has grown considerably in recent years, driven by important factors such as a more organised infrastructure to transparency in transactions and a new class of buyers with high disposable income.
These developments present interesting opportunities for providers of art-related services, as well as for wealth management services that would integrate art in the overall wealth management strategies for Indian clients. The growth of the Indian art industry makes this an opportune time to create a knowledge-based approach in which financial institutions, in association with the government and the art industry, create suitable infrastructure to facilitate the concept of investing in art as a longterm viable investment.
Creating and effectively disseminating knowledge on art as an asset class and generating awareness on art by hosting events that include exhibitions and artappreciation workshops will help create a transparent and more sophisticated market for Indian art. It will also provide an outstanding opportunity at growing international investor interest in Indian art, while boosting India’s soft cultural power and tourism in the process. The Chinese have also done this successfully; India can also leapfrog with the Indian Art Medium.
(The author is founder, managing director and CEO of Yes Bank)
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