Buying art for its own sake is a self-indulgence trip. But if you are one of those who look at art as an investment option, get your facts about artefacts right.

By Angana Bharali

As far as pulchritude quotient goes, this is one investment-option that outdoes all else. No, we aren't speaking about your new Mitsubishi Lancer. Sure, it looks good, but no one in the right circles is going to admit that something as mundane as a car looks that way. Not unless it is an antique, and that seems to be the preserve of the genteel rich. What we are speaking about is art. That's right; the stuff that you hang on your walls, or display on a rose-wood and marble tall-boy in your study.

The proposition that art can be a lucrative investment-option isn't as revolutionary today as it was a few years ago. Middle-aged software jocks in Bangalore, enriched by stock options, are investing in paintings; so are young dink (Double Income No Kids) couples in other parts of the country. Sanjay Kumar, the CEO of the Chennai-based Synergy Logic Systems, counts art as an integral part of his investment portfolio. ''Art,'' he explains, ''has a tremendous potential for appreciation.'' And happy-endings abound: Aman Nath, a Delhi-based art collector gleefully recounts the story of a student who, for a lark, bought a nondescript painting of a few roses in a vase for Rs 50 a few years back. Today, the painting, the creation of a Mumbai-based painter called Ara (now deceased), is valued at Rs 1,00,000. Aman Nath's glee isn't unfounded: if appreciation is what people are looking for, art could well become the setting for the next investment rush.

The art boom is waiting to happen

From the investment-perspective, art isn't a bad option at all: paintings, and, to a lesser extent, other art items are, contrary to popular opinion 'liquid' assets; they appreciate in value over time, the hallmark of a good investment; and they come with a dash of aesthetic and cultural values thrown in. The last is something no other investment-mechanism can match. As for appreciation, picture this: if you picked up an Anjolie Ela Menon for, say, Rs 1,500 in 1975, you could be sitting on a tidy fortune of around Rs 10,00,000 today-a compounded growth rate of close to 30 per cent a year. And things can only get better. Agrees Robin Dean, 35, a specialist in Indian art at auction-house Christie's: ''The Indian art market is still immature; the prices commanded by some senior artists is still low. But, I believe, Indian art is sitting on the edge of a boom''. Thus, if you are not up to scanning market-movements every day, even every hour, and want a safe, liquid, investment option, head for art. The lagniappe: you can hang it on the wall or stand it in a corner and admire it. Try doing that with your investments in fixed income securities.

How to go about identifying a good thing

The easiest way to invest in art is to opt for marquee names. Like M.F. Hussain, Anjolie Ela Menon, Ganesh Pyne, Manjit Bawa, and Francis Newton Souza. But even the work of comparatively young artists appreciates. For instance, an oil painting by Sanjay Battacharya could command upwards of Rs 2,50,000 today, up from Rs 20,000 in 1990. Cashing in on your investment doesn't pose a problem either. Says Sanjay Battacharya, 41: '' There has been a surge in demand for Indian art in the last few years. And not just in India.'' That isn't totally unexpected. The works of Indian artists are still undervalued, especially when compared to those of their Western counterparts like Damien Hirst (of the dead cows fame) and Cindy Sherman, whose works command close to Rs 1 crore. Agrees Nitin Bhayana, 26, Advisor, National Gallery of Modern Art: ''At current price levels, even Hussains and Arpita Singhs are undervalued.'' Caveat? The basics of economics hold true for art too: demand will drive up prices only as long as the supply is limited. Therefore, do not buy the works of those artists you consider prolific. The more they paint, the lesser the value of your investment. An extension of the same logic explains why the prices of an artist's works rise immediately following his or her death.

The mechanics of buying

If you have some money to invest in art, head, not for the nearest gallery, but the closest bookstore. Buy a few good books on art, read them, and familiarise yourself with the subject. Understanding art is a subjective affair: it cannot be reduced to the mathematical precision of spreadsheets and future cash flows. That doesn't mean you have to be an expert on art, but try to develop the ability to spot a good thing from a display of duds. The next step is to head for a reputed gallery and choose something that you like. Do not be surprised if you find two paintings of the same size, and by the same artist priced differently. The square foot logic does not apply to art. Most good galleries have their own assessors who estimate the price of a painting. With the help of the gallery, choose something that you like, but can also sell, a few years down the line, for a tidy profit.

Never mind if an (Indian) old master is beyond your reach. With their prices already up there, several of these offer little scope for appreciation. Look, instead, at the works of a few young artists. Investments in their works could appreciate exponentially.

How to end up painting a pretty picture

Just because you are investing in art doesn't mean you should forget the science you use to manage your other investments. For instance, if you have balanced either your stock, or your mutual-funds portfolio by buying into both low-risk, moderate return investments and high-risk, high-return ones, extend the same logic to your investment in art. If you have the money to splash, build a portfolio comprising the works of a few contemporary maestros and a few younger artists. A few of these could turn out to be duds; but some could appreciate to levels you never imagined.

Cashing in has, thanks to the advent of international auction houses like Christie's and Sotheby, become easier. If you wish to sell your painting through them, you have to send it to them 10 weeks in advance, and, if they manage to sell your painting, your money will reach you within a month. With five to six auctions of Indian art-mainly in London and New York-there's no reason why you should face difficulty selling your investment, if you have bought wisely in the first place. If that's too slow for you check out some of the Indian auction sites. Bazee.com, for instance, is in the process of auctioning a Hussain. The floor price: Rs 2,50,000. And most galleries can sell works from your collection for a commission of between 15 and 20 per cent.

Guestimates put the value of the art market in the country at Rs 40 crore. One reason for this lilliputian magnitude could be the fact that works of art are still not considered tangible assets. You can borrow money against shares or real estate; not against the Anjolie Menon in your collection, even if it is valued at Rs 12 lakh. The reason? There are no norms to value paintings; nor designated experts who do so. That explains why paintings can't be insured in India. Arun Vadhera, 52, the owner of the largest gallery in the capital, the eponymously named Vadhera Art Gallery believes that art could become a serious business if this changes: ''Then, it can be mortgaged; or shown as collateral against a loan. And your collection will be valued as part of your net worth.''

End-word: A painting from J. Swaminathan's Bud, Tree, and Mountain series was sold for Rs 4 lakh in 1996; today, Dean of Christie's estimates its value at Rs 11 lakh. QED.

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