Visual appeal may not make good investment

(By Nalini S Malaviya)

An ‘investment artist’ is a popular phrase coined by art dealers and galleries to attract prospective clients to invest in art. What new buyers and investors need to understand is that not all art will turn out to be a financial investment. Decorative art rarely qualifies as a sound investment, at least monetarily. However, this class of art – paintings and sculptures attracts maximum buyers thanks to its visual appeal.

Another category of art that is becoming popular with both corporate houses and individuals is ‘customised art’. Paintings are coordinated extensively with interiors – furnishings, wall colours, accent pieces, patterns etc. In house artists are briefed on the kind of art that needs to be produced and these are affordably priced anywhere between Rs 5,000 to a lakh, or so. Generally, there are no artist signatures on the canvas as these are promoted under the seller’s brand. Obviously, art of this form is not a financial investment and most sellers, in fact make no pretensions about it. Buyers too are fully aware that they are paying for customised wall art that matches perfectly with their décor scheme.

However, when decorative art is projected as an investment option most people end up buying it in the hope that prices will appreciate over time. In general, prices of artworks do go up with time (not to forget inflation!) and most artists are bound to raise their sale tags periodically. But, the difference between a painting that one buys for investment and another for décor lies in the percentage of appreciation in the same amount of time. An artist, who is performing well internationally, will see a bigger hike in his price than one who sells locally through neighbouring galleries. The latter generally paints a similar kind of work due to popular demand, and exhibits a tremendously limited repertoire. Having said that, there is no harm in buying art that appeals to ones senses, as long as one is clear about its investment potential – financial or visual.

(Published in Financial Times)