september auctions: glut or glory?

There have been a number of articles in the recent press speculating the ‘glut effect’ of the upcoming auctions in September but I would like to present a contrarian view on the same.

The year 2006 will be the ‘tipping point’ for Indian art. A lot of people including well healed ‘art insiders’ thought I was crazy when at the beginning of this year I shared this chart suggesting that we will touch US$150 million in auction sales. It looked unattainable. The towers were already at dizzying heights and growing at 300% year over year. Where are the buyers? What will they buy? Prices have already reached sky high and bursting at the seams. Is there appetite for more?

Auction sales have already crossed US$ 70 million in the first six months of 2006 beating total auction sales of 2005 by 40% and the best of this year is yet to come! If H1 of this year is anything to go by, we are well on our way of achieving and even surpassing the $150 million estimate. As a matter of fact, I am fairly confident that this number will be breached with new world records for almost category before the year closes

There are not only more willing buyers but they are also prepared to pay more. As a matter of fact, the average auction sale price has risen from a modest $12,000 in 2003 to a staggering $82,000 per lot sold. (This is partly fueled by 90 paintings that sold for over $200,000 this year compared to less than 40 in all of 2005 and 1 in 2004)

This pace of growth is clearly not sustainable and it is not even reasonable to expect an endless terrain of triple digit growth however it will probably be a few more auction cycles and the economics of demand and supply (of money and of top quality art) before any price leveling begins.