Manjit Bawa's Painting
If you are unaffected by the liquidity crunch, then the answer is yes. Currently, the Art market is going through a rough phase like most other markets and it will take time to stabilise.
According to an art consultant, there are a few good reasons for buying Art:
- The prices are coming close to being reasonable for the first time in several years.
- Numerous dealers & galleries are now willing to negotiate prices.
- Some investors are selling of quality works at lowered prices because of the cash crunch (also known as distress sales).
- Good artworks are likely to come up at auctions again due to distress sales.
- Both dealers & galleries are likely to focus on better quality works in order to woo the price-sensitive buyer.
“A year ago people couldn’t get enough work. They would buy two copies of everything because it seemed like money in the bank,” says Farah Siddiqui of FSCA gallery in Mumbai. “Now people are desperately trying to sell works at cost price or even lower.”
Bodhi Art, one of India’s biggest galleries, is rumored to have offered 40% reductions to clients and many of the other galleries on the international fair circuit are reported to have made reductions of at least 20%. “We are making deals like everyone else,” says Peter Nagy of New Delhi and Berlin gallery Nature Morte. “The collectors are still there but there are a lot more negotiations over prices.”
“The trend appears to be shifting somewhat from the investment aspect of art to its aesthetic or intrinsic value. It therefore appears that decorative and affordable art will do well in the interim period, but serious collectors are on the lookout for excellent works. As a buyer, for you, an ideal work of art is one that can combine the aesthetic and financial investment components”, says art consultant, Nalini Malaviya. She suggests that the best way to buy art is to zero in on the artist or the artwork through systematic research. Visiting an on going art shows and buying one that you like and one that suits your wallet is another option. Although, the one bought through systematic research would be a safer bet in the long run.
This is clearly indicative of a bear market. A sudden crash in asset (art) prices and a sudden interest in value investing. Just like in the stock market, where people have now started paying heed to PE ratios, Debt/Equity splits and quality of management, people in the art market have begun to investigate the intrinsic value and quality of what they buy.
The good news is that artists are no longer mass-producing their works. They current scenario is forcing them to once again strive for quality in their creations.
Whatever the experts may advise, this is a time in which most people are suffering from a liquidity crunch. Many opportunities to invest may come your way, however, I feel the safest place for your money is in the Bank (one that is unlikely to fail)!
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