Emergence of Art Marketing Investment in

India ( AMI)

Presenters

• Christeena - 6• Anish - 8• Dipanwita - 13• Prathamesh - 38• Samiksha- 51

Investment Options (Traditional)

• Fixed Deposits• Equity• Gov. Bonds / Securities• Real Estate• Mutual Funds / Insurance• Stock Market• Commodity Market

Investment Options (Alternate)

• Antique – at least 100 yrs old Furniture, Military memo, Clocks, Glass, Books, Musical Instru

• Collectibles – Stamps, Toys, Sports Memo, Wine, Stone, Cars, Coins

• Art Market – Paintings, Sculptures, Photographs, Drawings

Characteristics of a Good Alternative Market

• Availability of Information• Liquidity• Transaction Costs• Informational Efficiency

Art Market – an alternative investment.Features

• Efficient ROI • Wide Price fluctuation than stocks• Reduced Risk on returns • Higher Volatility than stocks• Chart goes up even though Traditional

investment options performs poorly

Art Market - Factors to consider while Investing

• Authenticity • Condition • Rarity • Provenance• Familiarity • History of Artwork• Workmanship

Advantages v/s Disadvantages ofinvesting in Art

• No correlation with stocks • Appreciation rather than

periodic dividends• Low Downside risk in Crisis

/ War situation • Value with in time,

unless the art is physically damaged

• High Maintenance & Transaction Fee

• Income is not form of Dividend • Value is subjective criteria.

Qualified experts are req. for Valuation

• Difficult to authenticate the Art

• Protection against Theft • Distribution of Information is

highly uneven

Comparison of various Assets in India

Investor’s Portfolio • Investors are classified on the scale from P1 to

P6. P1 = Low Risk Taker / P6 = Extreme Risk Taker

Snapshot of Portfolio at 3 stages in terms of Risk & Reduction

Indian Art Market

Current Trends & Drivers ofIndian Art Market

• Growing with GDP growth• Increasing purchasing power of HNIs & NRIs• Buying art is Status Symbol• Financial Institutions started investing – Diversified

Portfolio • Increase in Awareness & Artistic • Improvement in Artwork Supply • Patriotism • Bollywood Stars as Investors

Indian Artists Artist Artist / Location / Date Title

Price (USD mn)

Tyeb Mehta Christie’s, New York / 21.09.05 Mahisasura 1.58

Amrita Sher-Gil Osian’s, New Delhi/ 1.3.06 Village Scene 1.53

S H Raza Sotheby’s, New York/ 29.03.06 Tapovan 1.47

V S Gaitonde Christie’s, New York/ 30.03.06 Untitled 1.47

F N Souza Sotheby’s, New York/ 19.09.06 Man with Monstrance 1.4

F N Souza Christie’s, New York/ 20.09.06 Man and Woman 1.4

S H Raza Saffronart, Online/ 07.12.06 Climat 1.35

Indian Artists (Cont…)

Indian Artists (Cont…)

Art Funds in IndiaDate Art Funds Corpus (INR in crores)

Sep-05 Yatra I Fund 10.95

Mar-06 Copal Art Fund Series I 10.00

Jul-06 Osian's Art Fund 102.40

Nov-06 Crayon Capital Art Fund 60.00

Feb-07 Yatra II Fund 21.92

Opportunity v/s Risks in Indian Art Market

Market Opportunities Market Risks

Masters are still undervalued Good works by the Masters are still available and are undervalued. Valuation at the top Aesthetic level is low compared to prices achieved in the Western contemporary market.

Quality vs. Price Artists are too aware of the market and may make work that are overpriced and lacks content. Prices of younger artists have gone up too much too fast. Market saturation of certain artists’ work.

HNWIs – an untapped segment Huge untapped segment of High Net worth Individuals looking to start buying art.

Growing the market for collectors Collector base is beginning to plateau off and little effort being made to grow it.

International exposure Increasing interest and knowledge for contemporary Indian art in the international art market

Lack of Buyer Knowledge Buyers are not adequately differentiating between good and poor quality works

Opportunity v/s Risks in Indian Art Market (Cont…)

• Lack of knowledge among new buyers.

From painting to new media Collectors are becoming more experimental and are moving beyond painting towards other media

Speculation Speculation, too much emphasis on short term returns, further exasperated by the proliferation of art funds.

Increased awareness, but knowledge is still lacking There is an increase in international awareness of Indian contemporary art, but knowledge is still limited.

Lack of transparency Manipulation and distrust in the auction market. Transparency needs to be introduced at the very earliest if the Indian art market is to grow and mature.

NRIs stimulating the Indian art scene Non-resident Indian artists, curators and gallerists are re-invigorating the Indian contemporary scene.

Art funds and art as an asset class Art funds are pumping money into art as an ‘asset class’ that has a real danger of quickly and artificially inflating prices

Lack of governmental support for the visual art market Museums being built by private collectors

Legal Aspect

• Funds are organised as Private trust, under Indian Trust Act, 1882.

• No limit for Investments• Profit sharing to Income Tax Depart.

30% - Short Term (<3 years) 20% - Long Term

Determinants of Art Buying

• Risk Appetite• Monetary Allocation• Investment Horizon

Steps – Art Purchasing

a. Research the Artb. Research the Artist c. Provenance d. Consult the Expert

Mechanism – Art Funds

• Create a Fund by rising money • Invest in Portfolio of Artworks• Close Ended Funds & Open Ended Funds

Conclusion

• Low Risk High Returns • Booming Market• Unstopped Potential • Can indirectly invest in Art through Art Funds• Best Alternate Asset in Portfolio • Future main stream Asset