The economic slowdown has entered the frame and prices of Indian art are in free fall. Art funds are in trouble.
Many funds, which had raised money from high net worth individuals to invest in art, are nearing the end of their terms. Yatra 1 matures towards the last quarter of 2009, as does Osian’s Art Fund, with an initial kitty of Rs 102.4 crore. “The decline in asset prices has impacted the valuation of funds,” says V. Sanjay Kumar of Yatra Art Fund. This has restricted disposal of artworks.
Prices of Indian art have crashed. Ten works of top artist Subodh Gupta went unsold in auctions since October. “Auction sales in 2008 were sub-$100 million compared to $143 million in 2006,” says Deepak Shahdadpuri chairman of Capco Advisors that runs CAPCO II Art Fund. “With funds managing over $60 million of art, large amounts of stock will need to be liquidated.”
“Selling in a falling market could put further pressure on prices,” say Andres Petterson, MD of market research firm ArtTactic.
Many art fund managers are turning a Van Gogh yellow. Yatra began “disposing” part of its portfolio two years ago and could extend by a year. Crayon Capital is thinking along similar lines.
A final decision will be made after Indian art auctions in March by Christie’s, Sotheby’s and Saffronart.
Neville Tuli of Osian’s rules out an extension, arguing that Osian’s Art Fund is providing a 10.2 per cent return. Given the downturn, this may sound good. But in the first year, the same fund returned 27 per cent.
That paints one fine picture of gloom.