The fine art of investing in art

Not convinced? Check the following art(e)facts: An M F Husain painting cost just Rs 10,000 in the late 60s. Now it is valued at Rs 30 lakh. Don't the figures tell a story akin to an Infosys share bought at a face value of Rs 10 some years back?

"Art defies logic. But investing in art has its own logic. There is nothing abstract about it," says Ashish Balram Nagpal, a reputed art dealer in Mumbai.

"Consider this. A square feet in the Nariman Point area of Mumbai costs Rs 40,000. But a patch of the same size on Husain's canvas is worth Rs 4 lakh. This is true with most of the artists. Now you may decide where to put your money in," he says.

Concurs Dinesh Vazirani of Saffronart, which organises frequent exhibitions in India and abroad: "The art market is looking up. It is stable and mature and not speculative. Investments are sure to fetch handsome returns over a period of three years."

The Rs 700 crore art industry in India is fast expanding with upcoming painters and artists getting more exposure in the domestic and international markets.

Experts say investing in art is safer and gives more returns than money put in gold, the stock markets or any other deposit scheme.

"You buy a painting today and it will give you an annual return of at least 50 per cent. This is a very conservative estimate. Some paintings will fetch you phenomenal returns. No mutual fund or any other market-related instrument will multiply the investor's money to this extent," Nagpal says.

He has a word of advice for prospective investors: Don't sell the painting for at least five years. Hold it for some time and go for a killing when prices shoot up after some years.

"It (investing in art) is more seen as a heirloom. It is an asset one is amassing for the next generation. Old paintings of well-known artists are sold at auctions for mind-boggling amounts," he says.

Art is a thing of joy and a pleasure for the pocket, for both the investor and the artist, feels famous water painting artist Samir Mondal.

"People in the industry know that, for the past 15 years, the value of the works of reputed artists has doubled every three years. Some paintings have even appreciated more than five times in a single year."

"Of course, there is no guarantee that the value of the work of art will appreciate. But an investor is always open to the market risk. Does the stock market or the mutual funds give you any assured high returns? Intelligent investing is the key to investing in art as well," Mondal says.

If that is the case, how to identify the right artist and the right painting?

"How do you proceed when you want to invest in the stock market? You go to a broker and he explains to you the nitty-gritty of the market and advises you. You rely on his advice and make a decision. In this industry also the route is the same. There are many dealers. Go to a reputed one. Tell him your requirements and budget. An honest dealer can get you the best bargain," says Vazirani.

"The investor can also visit exhibitions and auctions and decide independently. Still, an informed decision would be better," he adds.

"Evaluating art is very difficult. The buyer has to make sure that the painter is accepted by art lovers over a period of time. The most well-known artists in the country are in the line for decades and their works are widely accepted. That is one of the yardsticks," says Mondal.

Some common points the evaluators look for are the consistency of the painter, quality of the painting "" both artistic and physical, publicity that the artist receives and the appreciation history of the painter.

"Investors are more choosy now. Intelligent buying has replaced emotional buying in the last five years. This augurs well for the industry," Mondal says.

"A good dealer can find the right work for you. The investor can even commission the art to suit his requirements of space, visual appeal and colour preference. The largest number of paintings sold in Mumbai are of 3 feet by 4 feet. This size suits the popular 2-3BHK flats in the city," says Nagpal.

And how liquid is the market? "Very much. Buy the stuff only from a dealer who is ready to buy it back at a higher price after some years. A good dealer can always buy back and resell the painting at any time," said Nagpal.

"The market was not liquid earlier. Things have changed now. There are 50 art galleries in Mumbai alone. There are 50 dealers who don't run galleries but are active in the market. Moreover, there are hundreds of interior decorators who source paintings and antiques in thousands every year. The buyer can exchange the painting for cash at any time," says Mondal. It does, to their bank accounts too, say experts.

"Art market is as liquid as any other market. Go to any dealer or art gallery with a painting and you are sure to get a good and justifiable price for it," says Vazirani.

Gone are the days when a Ravi Varma or a Husain adored the walls of the palatial houses of the rich, say experts.

The canvas is broadening. Executives and the middle-class are also finding that paintings and antiques add charm to their household.