Salvator Mundi sale: Art can be a stellar investment but not always
The requisites and guidelines to adhere to are so inflexible and severe that its potential benefits are appreciated by a privileged few.opinion Updated: Nov 16, 2017 21:35 IST
If I had a rupee for every time over the past nearing two decades I’ve been asked if art is a good investment, I’d probably have a capital base that would have facilitated my being the leading underbidder on Salvator Mundi.
The response has perennially been the same: yes, it is stellar as an investable asset but the requisites and guidelines to adhere to are so inflexible and severe, that its potential benefits are appreciated by a privileged few, typically ultra wealthy barons, or the kith and kin of genuine old-time connoisseurs.
To consider, without a doubt the finest instance of how capital can perform on an artwork, we shouldn’t look beyond Salvator Mundi. This work’s history is also smashingly fascinating. As an art world insider, one has encountered over the years incredible stories, replete with providence, deceit, acuity, faith, provenance and many similar embellishments. Despite the reams I’ve read, heard, and been narrated, this one stands apart.
Over the 400 years following its creation in around c. 1500, this small format oil on walnut wood passes through a series of well-manicured hands, all within royal circles and the nobility. The descendants of Sir F. Cook, in 1958 decide to consign it to auction, following which it appears in a Sotheby’s sale the same year. It is listed not as a work by Leonardo da Vinci, but by Boltraffio, one of the master’s apprentices. The work sell for GBP 45.
Forty-seven years later, this work appears in an estate sale in Louisiana from where it is acquired by an NY-based art dealer for $10,000.
What follows over the next eight years is a journey that involves the trials and tribulations of authenticating the work to be a genuine Leonardo - to be presented to a prospective buyer as a once in a lifetime opportunity: the final painting by the master in private ownership.
With the attribution in order, the dealer with a consortium of investors-dealers in 2013, initiate the sale proceedings of the work. Despite being initially offered to Russian billionaire Dmitry Rybolovlev, who very evidently wants it for his collection, this prized work slips through and is brokered by Sotheby’s to Yves Bouvier for $80 million.
Bouvier, known as the ‘Freeport king’ for managing the world’s largest Freeport art storage facilities, interestingly also happens to be Rybolovlev’s art dealer. As with dealers and the inclination of their trade, Bouvier goes on to sell Salvator Mundi to Rybolovlev within a matter of weeks. For $127.5 million.
Bouvier and Rybolovlev would soon find themselves in a bitter courtroom battle, with the collector claiming he had been heavily overcharged by his dealer on the 40 works he purchased from him over a decade for over $2 billion.
Back to our masterpiece. Rybolovlev consigned the work to Christie’s earlier this year, and the closing bid resulted in a premium included cost of $450.3 million. For his capital investment of $127 million, Rybolovlev recorded a CAGR of 37.2%
Seen through a historical lens, Leonardo’s little gem on walnut from GBP 45 in 1958 to $450.3 million. That’s a CAGR of 31.4% for 59 years running. Art sure can be an unparalleled investment. On occasion.
(Arvind Vijaymohan is the CEO of Artery India, the world’s largest financial data center focused on Indian art that tracks over 800 artists with a turnover of nearly $1.2 billion)