India's Art Appreciation

Modern works are zooming in value -- leading some to fear a shakeout

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What has been the best investment in India in recent years? No, it's not an outsourcer such as Wipro (WIT ), Tata, or Infosys (INFY ). To get supercharged returns, you'd have done far better with a painting by Ram Kumar. A 6-foot-by-4-foot oil that sold for $32,000 in 2003 might fetch $500,000 today -- a 1,462% runup.

There has long been a global market for Indian miniature paintings, sculptures, and other antiquities, but interest in the country's modern art has lagged. Now, a robust economy, a new moneyed class, and the energetic participation of young expat Indians are boosting sales of contemporary Indian art to new highs. In April a new gallery opened in Bombay every week, and sellout shows are the norm in big cities across India. Jerry Rao, chairman of software outsourcer MphasiS BFL Ltd., shows his collection in the company's offices worldwide. In the past two years, investors have started at least four "art funds" in which a curator buys and sells artworks instead of stocks. And since March, Bombay's Economic Times has even published an "art index" aggregating prices for works by 51 top artists.

The excitement the new market is generating was palpable at the Saffronart Gallery in Bombay's old textile district on May 4. On display were India's contemporary masters: Krishna Howalji Ara and his nudes, Jogen Chowdhury's figures, the prolific and flamboyant Maqbool Fida Husain, Sayed Haider Raza's colorful geometrics, Francis Newton Souza's intense landscapes, Tyeb Mehta's mobile figures. The reserve prices for their works started anywhere from $100,000 to $700,000. On hand to sip wine and check out pieces that would later be auctioned over the Internet were artists, dealers, and veteran collectors -- plus more than a few art world newcomers. "You can't avoid the art market these days if you're a sensible investor," said Mehul Patel, a 27-year-old Indian tech entrepreneur based in Singapore, as he swirled a glass of chardonnay.


Today, Indians both at home and abroad believe investing in art can be as prestigious as a good address and as profitable as the stock market -- or more so. And why not? Prices for art have tripled across the board. At a Christie's auction in London last September, the hammer came down on Tyeb Mehta's Mahisasura -- an acrylic on canvas depicting an Indian goddess defeating a buffalo demon -- for $1.6 million. Since then, at least a half-dozen works by contemporary Indian masters have sold for $1 million-plus. "Today, people aren't buying art out of conviction or pleasure, but because they see money in it," says Dadiba Pundole, a gallery owner whose father launched Husain and other top-tier artists in the 1960s and '70s.

Although most buyers are Indians -- usually successful expatriate entrepreneurs or professionals -- there's growing interest among non-Indians. The two largest collections are both outside India: Japanese food processing tycoon Masanori Fukuoka's 1,000-plus works are housed in a three-story museum near Kobe, while 1,200 works collected by the late Texas oilman Chester Herwitz reside in the Peabody Essex Museum in Salem, Mass. Christie's will hold five auctions of Indian contemporary art in 2006, up from three annually in recent years. New Delhi's Bodhi Art has a branch in Singapore and will open in New York in September -- adding to the city's six galleries already specializing in contemporary Indian work. And Indian expat buyers are becoming gallery owners: On Apr. 27, collector and tech entrepreneur Kent Charugundla opened TamarindArt in Manhattan with a sellout solo exhibit by abstract expressionist Bal Chhabda.

With prices soaring, art lovers are predicting a shakeout. After the sell-off Bombay's stock market has seen in the past week, some fear prices for art will follow. "It has to plateau, but when?" says Bombay gallery owner Ritu Prakash Desai. "Like the stock market, it's a guessing game." Already, some collectors are balking. "I'm still a buyer," says Fukuoka, "but at these prices, not like before." Even artists are astonished. Jehangir Sabavala, an elegant, cravat-wearing 84-year-old and one of India's premier abstract painters, recalls his long years of struggle and marvels that prices are "beyond recognition."

Another fear is that artists may be sacrificing quality for quantity. Given the growing demand, some artists have become painting factories, says Ranjit Hoskote, a Bombay art critic and author. "It's a trap, especially for young artists who are just churning out pictures," he says. And auctioneers are finding themselves embarrassed by fakes. In March, Sotheby's (BID ), Christie's, and Bombay-based Osian all withdrew several works of questionable origin from their offerings.

Despite such concerns, interest remains high. For the first time, Christie's this year plans to include Indians in auctions in Dubai and Hong Kong. "It's about time we showcase Indian artists to a wider audience," says Yamini Mehta, who heads modern and contemporary Indian art at Christie's. "There's great quality in these works."

Corrections and Clarifications "India's art appreciation" (Global Business, June 5) misidentifies the late Chester Herwitz as a Texas oilman. He was a designer and handbag manufacturer from Worcester, Mass.

By Manjeet Kripalani

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