The Indian art market's double dip

ArtTactic, a research and analysis firm, states in its latest report on India: "The Indian Modern and Contemporary art market continues the negative trend as other global art markets are on the rise. For the Summer sales, the auction houses attempted to respond to the disappointing results in March 2011 and had lowered the estimates to try to re-ignite buyer interst (sic)."

Saffronart's auction earlier this month was lacklustre. Over half the lots did sell above their higher estimate, but that was because, as the ArtTactic quote above suggests, those estimates were very modest. The June 15-16 sale achieved only one truly spectacular result: a Tyeb Mehta Kali that was acquired for a little over 1.3 million dollars, over three times its higher estimate, accounting for more than 30% of the 65-lot auction's entire value.

There's been a substantial rejig in the standings of the auction houses since the meltdown. Osian's has been worst hit, and has almost disappeared from the auction radar. Sotheby's has lost ground to Christie's, which is perceived as more dynamic and driven. Sotheby's was dealt a further blow when its long-time consultant, Dadiba Pundole, left and launched his own auction house, conducting a brilliantly successful sale of twenty paintings from Jamshed Bhabha's collection bequeathed to the National Centre for Performing Arts. Dadiba says the break from Sotheby's was unrelated to the setting up of Pundole's. The NCPA sale was offered to him after he ended the Sotheby's association, and an auction was the easiest way of liquidating the stock. I believe him, just as I believe Brad Pitt only began his affair with Angelina Jolie after splitting with Jennifer Aniston.

The slump in the Indian market is receiving international attention. Last week, the Independent's John Elliot published a good piece about the situation. The question is: why should Indian art sales be doing so badly when our economy is so much stronger than most others around the world? Surely one would expect exactly the opposite to be happening, namely that the downtrend would continue in places like Europe and the US facing anaemic recoveries or a return to recession.

The answer lies in a column I published in Time Out in late 2006. I've quoted it before on this blog when the first prediction it made came true, and I'm quoting it again now that the second one has as well.

"... as the autumn auction season kicks off and the records start tumbling, I will hazard this prediction: if the market keeps its present course, it’s heading for a crash sometime in the next two years. It’s going too fast to negotiate twists in the road which are bound to appear up ahead.
People like my friend with the Badri Narayan are pricing genuine collectors out of the market. The turnover of paintings is frighteningly high: it’s not unheard of for a single canvas to be sold half a dozen times within a year. Auction houses have turned advocates rather than neutral sellers. Even Christie’s and Sotheby’s are featuring raw artists and accepting fresh-minted works consigned by galleries, in contravention of normal international practice. The boom that began with established masters has spread to artists with no proven track record or historical merit. Gallery owners, who should be turning off the tap of speculation by carefully vetting clients, have little power to set conditions. They have to suck up to popular artists in order to get a few works out of them. The artists, meanwhile, many of whom have known privation in the not-too-distant past, are keen to make their pile as quickly as possible by selling to the highest bidder.
Despite these unhealthy symptoms, the experts have convinced themselves the party will go on forever. They, like everybody else, are having too much fun to think hard about tomorrow.
The rise in art prices has been congruent with a global boom, and the crash is also likely to be triggered by global factors, as yet unknowable. Once the tipping point arrives, developments intrinsic to India will take over and probably make the correction deep and painful. Since few buyers are purchasing for love, people holding stock will want to cut their losses immediately, feeding supply even as demand fades. There is the additional dimension of mushrooming art funds to consider. These funds usually operate for stipulated periods, and will have to unload their wares even in a declining market, exacerbating the slide."

The two predictions I made were, first, there would be a crash triggered by global factors. Second, and more important, the Indian art market would be worse affected by the crash than global markets because of the dominance of art funds and speculators. In nominal terms, the Indian economy is about 15% larger than it was 12 months ago. Art sales, on the other hand, have actually fallen in value in that period.

I concluded the column thus: "I’m actually looking forward to that time, so I can visit galleries and look at art without the surrounding noise, maybe even buy a painting I like now and again. They may stop serving Black Label at openings, but I don’t like whisky much anyway."

This, too has, happened. I enjoy openings and exhibitions much more now that they're less lavish, less connected to society pages and sticker prices.

The Kiran Nadar Museum

The Kiran Nadar Museum of Art opened its new premises at DLF Place, Saket, with a huge party during the India Art Summit. The move from NOIDA, where it had occupied a hall in the HCL campus, has been accompanied by an expansion of the art on display and, more importantly a shift in focus from modern to contemporary art.
The first work I encountered on entering was Bharti Kher's bindi-decorated elephant, titled The Skin Speaks a Language Not Its Own, which sold at Sotheby's in London in June last year for 7 crore rupees (1.5 million dollars).

There was a ring of guards around it, protecting it from the wine-sipping, canape-nibbling horde. I had a vision of Kiran Nadar holding a rifle and placing her foot on the fallen beast, for it was a trophy of a kind. I soon realised the entire museum was made of trophy artworks, bought for top dollar at auction for the most part. Nadar apparently attends auctions and bids herself, which must be an auctioneer's dream. Even on the rare occasion she doesn't get what she wants, I'm sure her underbid is high enough to ensure a high winning price. Walking through the galleries I ticked off a few auction records, and I don't follow results all that closely, so I probably missed more than I caught.
Obviously a collection built in this fashion can't reveal any personal vision. The Kiran Nadar Museum display is eclectic, disparate, and ultimately less than the sum of its parts, though the parts are so exceptional that even the 'less' is substantial. Nadar appears to resemble some late 19th century and early 20th century American multimillionaire collectors who didn't have strong personal tastes, but knew they wanted the best and were willing to pay whatever it took to get it. Nothing wrong with that.

Museums, Mansions and Money

My latest Yahoo! India column, uploaded a few hours ago, can be read here.

The Rise and Fall of Bodhi Art

Four down, two to go. Bodhi Art has closed its galleries in Delhi, Singapore, New York and Berlin. Its Kala Ghoda flagship appears on the verge of going under. The lease will not be renewed after it runs out in September, say people in the art world. That will leave only Bodhi Space in downmarket Wadibunder, which is likely to function as a warehouse for the considerable collection the gallery has amassed over its five-year existence.
Bodhi, the most prominent emblem of the art market’s dizzying climb, is the highest-profile victim of the market crash.

That's the opening of my article published in the current issue of Time Out. The entire article is here.

The Art Market's Blue Period

On August 27 last year, Delhi's posh art set crowded a spacious room at the Oberoi hotel to hear Sotheby's representative Oliver Barker speak about Damien Hirst, and to view a selection of paintings and sculptures from the auction house's sale titled Beautiful Inside My Head Forever. It was part of an effort to stimulate international buyer interest in the event, which offered 223 new works by Hirst directly to bidders without any dealer intercession.
At one point, Barker quoted Hirst as saying, "After the success of the Pharmacy auction, I always felt I would like to do another auction. It’s a very democratic way to sell art and it feels like a natural evolution for contemporary art." A few audience members snorted at the use of the word 'democratic' to describe the vending of works estimated at a million rupees each for small sketches and many millions of pounds for large sculptures. But I could only chuckle. It was just Hirst being his usual self. I'm sure he knew exactly how outrageous the statement sounded.
The Hirst auction's first session was held in London on September 15, even as Lehman Brothers' bankruptcy filing triggered a global sell-off in equity markets. By the close of the second session the next day, over 111 million pounds had been bid, well above the auction's high estimate.
Beautiful Inside My Head Forever turns out to have been an apt title for an unforeseen reason: the phrase encapsulates how the early 21st century will be viewed by dealers, artists and curators who benefited from the unprecedented market expansion of that period, which is now decisively behind us.
Sotheby's obviously realised long before September 2008 that the world's largest economies were in trouble, and that sustaining prices in the future would involve getting Russians, Chinese, Indians and Arabs interested in buying outside their immediate cultural sphere. The Hirst display in Delhi was a step in that direction. Unfortunately, the rot in the global financial industry were so serious that it set off a domino effect. Consumers in Europe and the US cut back on spending, driving down demand for manufactured imports as well as commodities like oil and steel, hurting China, Russia and the Middle East. No country, cartel or corporation was left with the financial strength to boost support for art.
In late 2006, I had predicted the art market would see a downturn. I wrote in my Time Out column, "if the market keeps its present course, it’s heading for a crash sometime in the next two years", and outlined the reasoning behind the prediction. "[Speculators] are pricing genuine collectors out of the market. The turnover of paintings is frighteningly high: it’s not unheard of for a single canvas to be sold half a dozen times within a year. Auction houses have turned advocates rather than neutral sellers. Even Christie’s and Sotheby’s are featuring raw artists and accepting fresh-minted works consigned by galleries, in contravention of normal international practice. The boom that began with established masters has spread to artists with no proven track record or historical merit. Gallery owners, who should be turning off the tap of speculation by carefully vetting clients, have little power to set conditions. They have to suck up to popular artists in order to get a few works out of them. The artists, meanwhile, many of whom have known privation in the not-too-distant past, are keen to make their pile as quickly as possible by selling to the highest bidder.
Despite these unhealthy symptoms, the experts have convinced themselves the party will go on forever. They, like everybody else, are having too much fun to think hard about tomorrow."
I then suggested what would cause the slump: "The rise in art prices has been congruent with a global boom, and the crash is also likely to be triggered by global factors, as yet unknowable."

The point of quoting these lines is not to say I told you so (OK, maybe there's a teeny-weeny bit of that involved). Pretty much everybody in the industry knew prices were absurdly high and would fall sometime. The more polemical point in my article was about how Indian art would react compared to art worldwide: "Once the tipping point arrives, developments intrinsic to India will take over and probably make the correction deep and painful. Since few buyers are purchasing for love, people holding stock will want to cut their losses immediately, feeding supply even as demand fades. There is the additional dimension of mushrooming art funds to consider. These funds usually operate for stipulated periods, and will have to unload their wares even in a declining market, exacerbating the slide."
Four months into a severe downturn, it is unclear if Indian art is doing better or worse than its emerging market peers. Everything has gone down so quickly that comparison at this point is useless. The question is how matters will play out over the next two or three years. The Indian economy is doing relatively well, so one might expect Indian art to outperform. But the art fund issue remains crucial. Nobody knows how many works these vehicles hold because their functioning is so opaque. It's certain that 2009 will see substantial liquidation of stock with very little counterbalance in the form of investments in new funds.
One important factor has emerged since I wrote the column: about half a dozen contemporary artists are now established globally, represented by well-known international galleries. A dozen more are on the verge of such recognition. The work of these artists might end up delinked from India-specific ups and downs, and move in tune with global prices.