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Why do modern art paintings sell for millions?

By Finserv MARKETS - Aug 12,2019
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Why do modern art paintings sell for millions

“Salvator Mundi,” a long-lost painting, supposedly by Leonardo da Vinci became the most expensive work of art ever sold in history after it was auctioned for a whopping

$450 million in 2017 by Christie’s(1). In May this year, Claude Monet’s 1890 painting “Meules” sold for $110.7 million, the most ever for any Impressionist work, according to Sotheby’s in New York, which handled the sale(2). It became the ninth most expensive painting ever sold at an international auction house. These are just a few examples of why the world’s wealthiest deem works of art as an investment as opposed to gold and money in the vault for ordinary people.

Indian contemporary painters such as Amrita Shergill, MF Hussain, SH Raza, Jamini Roy, V.S Gaitonde and Tyeb Mehta have also left their indelible mark on the global modern art scene. Two of Gaitonde’s untitled works sold for close to 29 crores and 24 crores at Christie’s in 2015 and 2013(3). Or take the case of SH Raza, whose two paintings, Saurashtra and La Terre, were sold for Rs. 15.9 crores and Rs. 18.8 crores in 2010 and 2014 respectively. However, these numbers can be mind-boggling for many. After all, what determines the price of artwork and makes it an expensive painting?

Aesthetic appeal: A piece of art should make you feel something and you will be surprised at the amount some of the worlds richest are willing to pay for it. Emotional satisfaction and pleasure is priceless when driven by the aesthetics of art.

Supply and demand: The scarcer the modern art, the pricier it is. Which is why paintings by artists like V. S. Gaitonde (1924-2001) or J. Swaminathan (1928-1994) are sold for steep prices. Living artists, who create very limited works of art also command a higher price.

Promotion: External validation art dealers, artists and auction houses brings value to a work of art and increases its perceived future value. This may include the artwork getting featured in the press, or a prominent art gallery thus putting it in the public eye. Art dealers also serve as tastemakers for general audiences, which further helps in marketing.

Artist reputation: If an artist rises into prominence with the sale of an expensive painting at a global auction house, his/her other works of art would automatically be perceived as valuable. He/ she becomes a brand in the art scene and can ask for what they want.

Investment value: We might think of fixed deposits or mutual funds investments but the wealthy buy art as an investment, not because they are passionate about it. They, in turn, make it more valuable because they think of it as an asset. For instance, Indians think of gold both as an investment and adornment, it serves a dual purpose.

Social status: Many people also see modern art as a status symbol and like to flaunt art pieces as a part of their home decor and hence collect them. They throng art fairs, auctions and events with after-parties in search of the right art piece that matches their taste. Modern art for such people is a means to make a statement about their spending power and become the talk of the town. Unlike commodities such as sports cars, art is exclusive. There can only be one original Raza, others would be a copy.

Branding: As we said above, once an artist is established, they create a market for themselves because they are a brand now. For instance, Tyeb Mehta is a huge brand. If an art connoisseur buys a Tyeb Mehta painting from a global auction house, it brings them in the limelight and makes a personal statement about their taste in art.

Modern art might be an investment for the super-rich, however, the common man falls back on traditional investments such as gold for safety and security.Underlining gold’s attraction as an asset for good times and bad, most investors would buy gold whether the domestic economy was growing or in recession. With the advent of digital gold such as the one offered on Finserv MARKETS, buying, selling and redeeming gold is a piece of cake and can be done in one click. What’s more, one can buy in small quantities and keep accumulating. So what if you can’t buy a piece of art? You too can become wealthy by investing in gold in small quantities.

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