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The mysterious working of the art market

Was the Tyeb Mehta that sold for a record price at Christie's auction worth the price?

‘The Falling Figure’. Photo: Courtesy Saffronart
‘The Falling Figure’. Photo: Courtesy Saffronart

Is art a sound investment? A canvas by Jean-Michel Basquiat purchased in 1984 for $19,000 was auctioned in May for $110.4 million. A compounded annual growth rate of 30% for 33 years running.

Yes, a stellar investment but only for a thin slice of work created by a limited set of artists, at a price that usually is excessively rich, which therefore can engage the actionable interest of a limited few.

In light of activity in this segment, a new world auction record for Tyeb Mehta was achieved on 25 May with a canvas from his Rickshaw Puller series selling at Christie’s London for Rs22.9 crore / $3.55 million.

The fact that another work by Mehta, The Falling Figure, is the highlight of the Saffronart summer online auction on 6-7 June, the question to be considered is whether Rickshaw Puller was worth the price. A detailed response would demand a dedicated article, but briefly, this wasn’t near the strongest work from the series. A previously unexposed work being seen outside its home in Delhi for the first time, and its vividly coloured palette (not necessarily a plus), did lend it an edge. According to the Artery Indian Art Auction Report 2017, 11 works by Mehta were auctioned globally in 2016, of which three were canvases, and one certainly more historically significant than this record work.

So why didn’t the historically important work fare better? Two reasons: The first is that an auction can be a fickle playground where works can sell for well within or outside their acceptable value range, with prices in some cases sent skywards on the back of two rigid egos colliding; and the second reason: the maturity of the market. The Indian market’s current state of maturity allows for works, ranging from the average to the exceptional, to be acquired for prices that are significantly below, or higher, than their fair market valuation.

Tyeb Mehta’s ‘Untitled (Woman On Rickshaw)’. Photo: Christie’s Images Ltd 2017

The investable slab of the Indian art market is currently in its youth, that is about four market cycles away from witnessing sharp ascents in the price escalation of its top rung artists. The bright side in the current context is that decisions made with due diligence can be to the benefit of the present-day buyer, winning strong works with a relative walkover, and to the absolute advantage of the buyer’s children and estate that will inherit these assets over the following 2 to 4 decades.

The other recurring question was regarding Christie’s “return to form". When did they ever lose form? Apparently, their December sale recorded poor results (so much as to result in their calling it off completely!) and that their latest auction had, in part, restored their former glory and position.

While their December sale had indeed been a tad lacklustre, it in fact performed better than their May auction, recording sales worth 68.03 crore from 53 sold works, as against last month’s 48.9 crore from 62 sold works.

The December auction would have recorded an even stronger sale value, but for one glaring reason. Time to address the rising din of the trumpeting elephant in the room: Demonetisation.

Did the dreaded D soften the strength of the market? Absolutely. But did it impact the sale of the top tier asset slab? Not more than by a flick on the wrist. Collectors who had already been acquiring top tier works were unperturbed, with no real change in their acquisition policy.

In fact, 57 artworks have sold in the above 1 crore slab since the demonetisation announcement, collectively recording a total of 212.3 crore. Demonetisation did, however, impact two sections: mid-market buyers with a lower spend appetite. For consideration, from the 19 works that went unsold in the Christie’s December sale, 13 were from the low to mid-price range. The other section was that of the sellers: a large section of owners of important assets have held off the sales of their prizes, waiting to gauge demonetisation’s impact on buyer behaviour and prices.

Also Read: The dependable Tyeb Mehta

Returning to the unanswered question, why did Christie’s call off their celebrated December sale in Mumbai? It is important to consider that Christie’s hasn’t abandoned the category, but merely realigned their expenses in what they feel is ideally suited to the current context.

After investing heavily in human resources, elaborately produced collaterals and lavishly mounted previews and events over nearly half a decade, if the earnings were not appropriately aligned with expected projections, it could rather simplistically have been a rational business decision.

I’d like for the reader to consider that the same auction house earned 2,891 crore ($448.06 million) from 70 works sold during the Post-War and Contemporary Art Evening sale on 17 May. In comparative scale, ours is a market being nurtured for growth (still in its youth, as I’d mentioned), and while we are moving along the path in this direction—as per the Artery Indian Art Auction Report 2017, the turnover in 2016 was 609.03 crore, of which 16 works sold for above 5 crore each, recording a total of 196.18 crore—we are a few raised paddles removed from the international Evening sales results.

Arvind Vijaymohan is the CEO of Artery India, an art intelligence firm he founded in 2002.

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