Is art a good investment? Here are its advantages and hidden costs

Time of India

2 days ago

Blue-chip art for diversification
Academy
Empower your mind, elevate your skills
The art of business
Role of galleries & patrons
The flipside of canvas
Ownership & maintenance costs
The art world turned several heads in the first quarter of 2025, especially after a prominent auction at New York turned into a record-breaking affair. Nine artists broke their personal auction records, with the sale raking in an impressive $16.8 million. In the headlines was the $4.68 million sale of Indian artist Jagdish Swaminathan's triptych, Homage to Solzhenitsyn (1973). Not far behind were standout works like Jehangir Sabavala's The Journey of the Magi (1963), F.N. Souza's Oriental City (1958) and Madhvi Parekh's Flower Seller (1975), all of which drew significant interest from collectors across the globe.Art is valuable and an asset worth acquiring, but these all-time high sales hold a story beyond numbers. For India's sharply rising pool of ultra high net-worth individuals (UHNIs) and high net-worth individuals (HNIs), art is no longer just about passion or prestige—it's about potential. Once collected as status symbols, master artworks are now being seen as strategic financial assets, offering everything from portfolio diversification and appreciation to inflation protection.According to the 'State of the Indian Art Market Report FY23' by Grant Thornton Bharat and Indian Art Investor, the Indian art market topped $144 million in 2023, with the number of works sold and turnover in 2022-23 rising 6% and 9%, respectively, over 2021-22, cementing art as a sunrise asset class.This points to a fundamental shift in the way art is no longer perceived as an exclusive indulgence, but as a calculated asset that balances cultural value and capital appreciation. What sets art apart is that its pricing is driven not by economic volatility, but by the artist's merit, provenance, and rarity of the work, making it more stable and independent.Unlike equities, which have ups and downs, art is often seen as a tangible, finite asset. During periods of inflation, the demand for such collectibles typically increases, helping investors with a cushion of sorts, making art not just a luxury indulgence but a strategic financial anchor. Among the elite, few assets are as magnetic as blue-chip art. Especially, works from Indian and global masters.It's not just savvy collectors, but businesses too that are latching on to this trend, weaving art into investment strategies and workspaces alike. In India, corporate art collection is largely shaped by the personal passions of promoters and their existing private collections.Many leading business tycoons trace their corporate galleries back to the personal art pursuits of founders and their families. Over time, these have grown into institutionalised corporate assets with growing market value. Increasingly, architects are also commissioning site-specific works in their corporate projects. Big names like the RPG Group, Piramal, Bajaj and Kiran Nadar have recognised not only art's cultural resonance, but are fetching multi-crore prices and signalling confidence in art's investment potential.The Hurun Art List 2024 suggests that the Indian art market is witnessing a significant growth, with total sales by the top 50 Indian artists reaching an impressive $36.2 million in 2024, a 19% rise over the year before.Legacy institutions like Delhi's Dhoomimal Gallery continue to increase the presence of art. Galleries like Nature Morte and Vadehra Art Gallery add to the evolving art landscape representing some of the most accomplished artists of today, while also catering to emerging talent. In Mumbai, The Art House at the Nita Mukesh Ambani Cultural Centre, DAG at the Taj Mahal Palace, Chatterjee & Lal are some of the most visited galleries for buying art from emerging and established artists.Besides private art galleries, even government-funded ones—National Gallery of Modern Art and Lalit Kala Akademi in Delhi, and Nehru Centre Art Gallery in Mumbai— capture the iconic brushstrokes of old-school legends and host contemporary installations.In the coming years, patrons and collectors are set to expand with new projects, like Kiran Nadar in New Delhi. Featuring 'Collection Galleries', the new Kiran Nadar Museum of Art space will be dedicated to presenting the collection to the public, democratising art and art experience. Industrialist and collector Abhishek Poddar's Museum of Art and Photography in Bengaluru, too, is shaking up the museum scene by making art feel inclusive and within reach. From traditional collections with cutting-edge digital experiences, AI-driven guides and interactive exhibits art is becoming accessible and is slowly building a community around it.Selling art can be challenging, even if you own masters. Patience is key when you want to trade art, irrespective of the value of the piece. Selling masterpieces often sees a long waiting period, whether through a gallery, private sale, or an auction. Deals may take months, if not years, to close. If markets are slow, you may simply have to keep it up on your wall. Unlike stock portfolios, art also lacks a broad secondary market. Even fractional platforms offer limited exit options, making patience a vital part of the process.Moreover, art is taxed like any other asset class. In India, if an artwork is sold after two years, it's treated as a long-term capital asset and taxed at 12.5%. If sold before 24 months, it's considered a short-term capital asset and taxed at slab rate. Effective 22 April, a 1% tax collected at source applies on the sale of luxury goods, including paintings, sculptures and antiques, when the sale consideration exceeds `10 lakh. The seller is responsible for collecting this tax. Paintings, sculptures and antiques attract 12% GST under specified HSN codes. Imports carry a 10% customs duty, except for artworks created by Indian artists and sculptors, and imported into India. Export and VAT-related obligations add to the compliance landscape for collectors and investors.While the tribe of art lovers and owners is rising in tandem with India's growing rich and wealthy , the market is still shallow, compared to several other developed countries, including neighbours like China. It's important for buyers to be aware of a limited secondary market and resale options. In essence, while art offers aesthetic and long-term financial value, it demands deep pockets, expert advice and, above all, patience.Beyond the purchase price, maintaining a high-value piece comes with its own costs: specialised insurance, climate-controlled storage, condition reporting, even logistics, if the artwork is travelling for exhibitions. These costs often go unnoticed until after the purchase, turning what looked like a great deal into a long-term financial commitment.With innovation reshaping the art world and access widening like never before, investing in art is becoming a smart, strategic avenue for those looking to diversify beyond traditional asset classes. For India's rising base of HNIs and UHNIs, art is no longer just something you collect, it's something you calculate. When done right, it's an asset that delivers not just beauty, but legacy.The Author is MANAGING DIRECTOR, INDIA SOTHEBY'S INTERNATIONAL REALTY