Modern + Contemporary South Asian, New York, Sept., 2009

[private_subscribers]The sales of Indian Modern and Contemporary art held during New York’s Asia Week auction cycle last month demonstrated the health of the growing Indian art market. These sales came a month after the second successful Indian Art Summit held in New Delhi where visitor traffic and art sales exceeded expectations.[/private_subscribers]

Confidence in India’s economy and the growing awareness among middle class Indians that an art infrastructure of museums, galleries and auction sales, suggests that the Indian art market will continue to grow despite the current state of the world economy. But that confidence should not cause anyone to blithely ignore the risks inherent in buying Indian art. This is a new and, in many cases, untested field.

No wonder, then, that as the Indian art market retreats from its peak prices there is a renewed emphasis on modern masters like Tyeb Mehta, V.S. Gaitonde and M.F. Husain. The top ten lots in New York’s Indian Modern and Contemporary sales featured four Mehta canvases, including the two top lots.

Yes, Mehta’s recent death has created a heightened sense of urgency among collectors. But he is also one of the few well established Indian painters with a reputation and market record that can compare with F. N. Souza or Husain. At approximately the same moment as the New York sales were taking place, Saffronart–a leading Indian art auction house–conducted an online sale of Modern and Contemporary works. There 77% of the 95 works sold with 34 lots selling above the estimate range. Among the top lots were works by Husain, Akbar Padamsee, S.H. Raza, Manjit Bawa and Subodh Gupta.

The top lots are not always the best measure of an art market. A quick look at the total sales figures for this year’s New York sales versus last year’s edition of the same sales will give us a better sense of the overall market at this moment in time. The total volume for New York’s sales was slightly more than $10m this September, down from $20m the year before. Lots on offer were 25% fewer but the sell-through rate was slightly improved from the year before, mostly because Christie’s was able to improve its sell-through by 9%. That change may speak to the odd timing of last year’s sale right in the middle of the financial crisis where Christie’s was surely caught off guard with more work its sale than could be confidently sold in the new economic atmosphere.

Far more important as an indicator of the future health of the Indian art market is the Average Price level for the New York sales. The total volume fell 50% between 2008 and 2009 but the average price level only fell 36% for both houses combined sales. Christie’s maintained a substantial advantage when it came to average price with $99,000 to Sotheby’s $79,000. But both houses were down in almost the exact same one-third proportion. That statistic has to be very good news for Indian art collectors even with the recognition that the market now heavily emphasizes Modern over Contemporary works.

Comparing one year’s sale to the previous year only gives us so much information. A broader look at the New York sales of Indian Mondern and Contemporary art will give collectors a better sense of what’s taking place in the market. Below is a chart of the total sales volume for South Asian Modern and Contemporary art in New York since the first set of sales in 2006. Throughout the three-year period, Christie’s has held a much stronger market position accounting for the bulk of the sales. But Sotheby’s sales growth has added more to the overall market rise from Sept. 2007 to Sept. 2008.

We can also see that this September’s sale is serious reversal in the market when viewed by sales volume, though it is a substantial increase from March’s sales and suggests the market is gaining its footing. Since all of the sales in this sample took place within the extraordinary period of art market growth after 2004, the data provide no indication of where the so-called natural level of the Indian art market might be.

Switching to the average price for the same period, we can see the market peaking along with the broader art market with the September 2008 sale. That moment in time, which happened to also be the week of the now legendary Damien Hirst sale at Sotheby’s probably won’t be regained any time soon. However, the average price level is within the range established for this market another sign of stability.