Wednesday, February 3, 2010

Osian's - going, going, not gone yet?

Last week I met Aqdas Tatli, who is doing an MA in Art Business from the Sotheby’s Institute of Art in London, and over dosas had a robust debate on whether art is art or is it just another commodity. (If he doing his master’s in art business you can imagine which side of the debate he clearly stood.)

Soon after, I read this great article in Forbes magazine about the woes of Osian’s, the world’s second largest art fund started by Neville Tuli in my humble Mumbai. It is threatening to go belly-up thanks to Tuli’s wild gambles leaving several high-profile investors left moaning. Tatli is making a presentation on Osian’s in his class (and I am hoping to sneak in).

But my point is, yes, art is a commodity. But isn’t it a consumer-durable kind of commodity? You must buy it because you like it, appreciate it, enjoy it and get some pride out of it. You don’t buy it because it will someday make lots of money for you. That said, it does carry a chance with it that someday it might turn vintage, and make a pile for you in the process.

Can we equate art to an investment commodity? The success of both art and financial instruments as an investment depends on some solid predictable indicators interacting with some unpredictable ones. In case of financial instruments such as shares and bonds, the predictable economic and physical indicators such a healthy capital investment, a balance sheet that makes sense, business plans that are clearly based on the prevailing business, political and economic environment are in tension against unpredictable elements such as wild human behaviour, natural disasters, accidents etc. In case of art, the predictable factor such as the marketing machinery behind an artist interplays with unpredictable elements such as current fashions, tastes and the artist’s creativity and ability. But I do think, that in case of the latter, the balance is deeply tilted on the side of the unpredictable indicators.

Which is why, if I ever have any money to buy art I will follow the advice by a wise bald gentleman called Girish Shahane. Yes, invest in art but always buy something that you like. So that if its price doesn’t rise as predicted, at least you are left with something on your walls that you enjoy and appreciate.

South Asian art is making its presence felt in London at two venues. First, Saatchi Gallery has a huge exhibition on Indian and Pakistani art (paintings, installations, sculptures, you name it) entitled The Empire Strikes Back: Indian Art Today. Second, the Whitechapel Gallery in East London has an extensive exhibition on 150 years of photography in South Asia. There’s your art for a bargain, oh Londoners!


Girish Shahane said...

Thank you, thank you, but I have to say that bit of advice is hardly original, or even unusual.
I like this quote from Arne Glimcher of PaceWildenstein at the height of the boom: Art is not an investment. Art is something you buy because you are financially solvent enough to give yourself the pleasure of living with great works rather than having to just see them in museums. People who are buying art at the top of the market as an investment are foolish .

globalbabble said...

Arne Glimcher is another wise man. Must check if he is bald too ;-)

Lex said...

But what about art that has been made because it says something? Value can be counted in the comment that it makes on society. "Great" art - by which I mean the art that is remembered and becomes known to many people - is always art that has somehow spoken to people in some particular way. i think art's value is about more than its current value in the business world.

globalbabble said...

Hi Lex,

When I say "enjoy and appreciate" art, of course part of it would be because you think it says something important and interesting about life. The point is how do we monetize it? And is that enough to turn it into an investment instrument?

Besides, who decides that it says something interesting about the world around? The buyer or the world. The world may agree with the buyer today and change its mind tomorrow or vice versa. And that's the risk associated with buying art only as a financial investment.

jaimit said...

Art is art and investment is investment. If you buy art then you must see it as that. I would. If I see art in my house and assume a growing value to it then the next best thing I should do is put up a digital frame and feed my stock value on it. But an art fund is where people put money in the hope of profiting from other people’s opinions / grred?. Capitalism sees nothing wrong in it. The decision is an investment one and there are risks of the investment type with it. So per se I have nothing with investors in an art fund or those buying and storing for future sale. The poor guys are the ones who buy art to hang on the walls and the only colour they see in the frame is green. That’s a sad story.
I would definitely take that bald man’s advice for buying art as at least I might have a true story to tell someone about the art I have on my wall. The strong strokes, the artist’s pain, the progression. He makes me, the cynical basterd that I am, actually think there is story in there somewhere.
GS - reform me...

Aqdas said...

As I understand the art is bought for the aesthetic pleasure and for the pride in owning it. It does appreciate in value and has the characteristic like any other commodity. During the time of the boom, I have witnessed serious collectors avoided buying art or they bought only if they were very keen on owning the particular picture. On the other hand the smart speculators (who do not have clue on art) wanted to diversify their portfolio of investment and found investment in art to be lucrative. The trends have shown the effect of recession affecting the art market much later then the other market in economy. The speculators were too dumb to be cheated by greedy art dealers and bought works when it was at its highest price. Not to forget, lots of fakes circulating in the market. If the dealers who had rather acted a good art consultantand avoided being too greedy then they would had this same speculators as a potential investors with them. As far as the story of Osian’s Auction House is concerned, it shows the complete clarity and it is easy to understand.

globalbabble said...
This comment has been removed by the author.
jaimit said...

:0) the comments posted here are of the blogger. they do not reflect the views of the company he/she works for or the job role he or she might have/ assumed to have had. the company or the individual is not responsible for what the blogger shoots his / her mouth off for. :D