February 15, 2018


By Anoop Kamath

The second edition of South Asian Art Market Report is primarily focused on the South Asian gallery sector, particularly looking at sales levels, average prices, analysis of different sales channels, including art fairs and online sales. The survey conducted among galleries also highlights some of the key challenges facing the sector and suggestions for how these challenges might be addressed. The report presents a unique insight into a sector, where very little pre-existing data exists, and offers an alternative view of the South Asian art market seen through the eyes of the galleries.

Anders Petterson, Founder of ArtTactic says about the report: “Whilst trends in the South Asian auction market are easy to capture and monitor, lack of market data and opacity in the gallery sector means that little is known about this segment of the market. This year’s gallery survey is the first attempt to address this issue. The objective was to give the gallery sector a voice, to understand how South Asian galleries operate, their motivations, and to discuss the opportunities and challenges facing the sector in the future. It is interesting to note that galleries define success quite differently from traditional businesses. Sales growth and profit are necessary ingredients to build a sustainable business but are not the most important criteria for success. Building long-term relationships with private and institutional collectors as well as their artists are the key criteria for the majority of galleries surveyed.”

Some of the key findings addressed in the report are: Art Market Sales Trends 2017; Art Market Outlook 2018; Gallery Sales Trends 2017; Gallery Sales Channels and New Gallery Models – Key Issues discussed in the report.

The key findings of the report pertaining to art sales trends of 2017 are:
South Asian art market up 13 per cent in 2017: South Asian art market sales were conservatively estimated at $223 million in 2017, up an estimated 13 per cent from 2016.

Gallery sales reach $104.5 million in 2017: Total estimated sales by South Asian galleries was estimated to be $104.5 million2 in 2017, which account for an estimated 47 per cent of the total South Asian art market sales (including auctions). Indian gallery sales accounted for an estimated $81.1 million, with the remaining $23.4 million coming from the rest of the region. Gallery sales were up 8 per cent on average in 2017.

Auction sales generate $118.2 million, up 17.1 per cent in 2017: The South Asian auction market saw total sales of $118.2 million3, with $48.2 million sold by Indian auction houses (up 1.3 per cent from 2016). Global auction sales of South Asian art were up 17.1 per cent from 2016.

Modern art market up 3.1 per cent in 2017, driven by higher domestic auction sales: Auction sales of South Asian Modern art, saw a 3.1 per cent increase in 2017. Whilst international sales of Modern Art at Christie’s, Sotheby’s and Bonhams were 22.5 per cent lower than in 2016, this was offset by stronger domestic sales by Saffronart, AstaGuru and Pundoles. Total sales from these auction houses led to a 15.8 per cent increase in domestic Modern Art sales in 2017.

Pre-Modern Indian art auction sales up 87 per cent in 2017: classical genres such as Pre-Modern art, also saw significant growth in 2017, with an 87 per cent increase in sales. Christie’s and Sotheby’s dominate the Pre-Modern art segment with 74 per cent market share. of the domestic auction houses, Pundole has the largest share of this market, with 7per cent overall.

Contemporary art continues to struggle to find a foothold at auction: Whilst auction sales of both South Asian Modern and classical art continued to grow in 2017, contemporary art struggled to gain traction. Overall sales of contemporary art were down by 45.9 per cent in 2017, and only accounted for $2.8 million in sales. Saffronart was a clear leader in this market in 2017, with a 58 per cent market share.

ArtTactic predicts a positive outlook for the South Asian art market in 2018 on the back of a stronger economy and diminishing impact of demonetisation. Compared to the findings from last year’s report, overall confidence in the South Asian Art Market has improved, and the majority of art market respondents surveyed by ArtTactic in December 2017 are positive-to-neutral about the coming 12 months.

Part of the renewed optimism seems to be driven by an increasing positive outlook for the South Asian economies, with 65 per cent of the respondents expressing a positive sentiment for 2018, compared to 46 per cent in 2017.

Although the impact of the demonetisation implemented in 2016 was perceived by 70 per cent of respondents as negative for the Indian art market in the last 12 months, only 30 per cent believe this negative impact will continue over the next 12 months, which could be another reason for the more optimistic outlook.

It is interesting to note that after the Indian government withdrew more than 86 per cent of its currency from the system, it also set off a migration to digital payment services.

Both the Modern and contemporary South Asian art market are expected to see a positive development in 2018, with 44per cent of respondents believing the Modern Art market will go up in the next 12 months (compared to 36 per cent in 2017).  An even stronger optimism can be found in the contemporary South Asian art market, with 56 per cent of respondents predicting that the market will go up in 2018 (up from 43 per cent in 2017). However, there is considerably more uncertainty around the classical Art market, as only 6 per cent believe this market will see a positive development this year, compared with 35 per cent last year. The majority, 75 per cent, believe the market will consolidate around current levels after several years of strong growth. Only 19 percent believe this market will fall in the coming 12 months.

In this year’s gallery survey, 46 per cent of galleries said that demonetisation had a negative impact on gallery sales in 2017, however, the impact is likely to diminish in the coming 12 months, with only 27 per cent of the galleries forecasting a negative impact of demonetisation in 2018.

If we look at the impact of demonetisation on different galleries, it seems to have had a larger impact on older, more established galleries (50 per cent reported that the impact had been negative versus 20 per cent of younger galleries). 53 per cent of smaller galleries (sales below $250,000 a year) also reported a negative impact versus 43 per cent of bigger galleries (sales above $250,000).

When it comes to the next 12 months, there is a broad consensus across different gallery demographics that impact will be neutral to positive.

The impact of GST set to benefit art market centres such as Mumbai and New Delhi, but punitive to states where art was previously exempted from tax.

The recently introduced Goods and Services Tax (GST) aims to create a uniform taxation structure across India. This is one of the biggest tax reforms since 1947, and means that tax payers in India will pay a consolidated tax instead of a plethora of indirect taxes that often varied between Indian states – with a goal to move towards the aim of ‘one country, one tax, one market’.

However, the radical tax reform has had mixed views in the media when it comes to the impact on the Indian art market. Before the implementation of GST in July 2017, art was exempted from VAT in a few Indian states, such as West Bengal. This means that art market centres such as Kolkota, will now be subject to 12 per cent tax on art. However, for many galleries, the change has been a positive one, replacing 13.5 per cent VAT rate on art, with a 12 per cent GST, and potentially making the administrative burden lighter in the longer term.

Based on the gallery survey among Indian galleries, only 27 per cent of the galleries reported a negative impact on sales between July and December as a result of GST, whilst 41 per cent of the galleries said it there had been a ‘neutral’ effect so far. Almost a third, 32 per cent, said the tax change had been positive for their business, and this particularly seems to be the case with galleries responding from Mumbai and New Delhi, which have benefitted from the tax change. Several of the gallery respondents said artists are most likely to become the losing party when it comes to GST. Whilst galleries and auction houses are in a stronger bargaining position to pass on the tax to their clients, artists selling directly in the market, could find the extra 12 per cent crippling for sales. They also need to contend with what appears to be a much greater degree of bureaucracy, which naturally distracts from the creative process.

Source: ArtTactic South Asian Art Market Report 2018