India's economic boom fuels investment in art by new rich

(AFP)- India's economic boom has fuelled demand for condos, cars and company stocks but some of the new wealth created in Asia's third-biggest economy is finding its way into art.

Entrepreneurs and young professionals, the biggest beneficiaries of India's financial prosperity, are buying works of art both to signal they have arrived in life and as a safe-haven investment, auctioneers and gallery owners say.

The trend was on show last week at a Bangalore sale to snap up works by modern Indian artists such as Maqbool Fida Husain , Jamini Roy, Vasudeo Gaitonde and F.N. Souza.

"The interest in art is part of the lifestyle change we are witnessing," said Maher Dadha , 54, chairman of Bid and Hammer Auctioneers, who estimated the minimum value of the combined collection at 100 million rupees.

"Wealth has percolated down and people are buying art just like they are buying penthouses," he said.

The hammer went down on a 1971 Husain watercolour on paper, entitled Shiva, at 3.4 million rupees (86,374 dollars), the top price paid at the auction. At the start of this decade, Husain's works fetched less than 600,000 rupees.

Auctions of modern and contemporary Indian art have raised millions of dollars overseas in recent years, with Christie's selling a Tyeb Mehta painting for 1.6 million dollars in 2005.

"Now it's an internal trend, where Indian art is getting recognition in India itself," said Dadha , adding that India's rich "don't blink for a moment over cost."

Economic growth running at an annual nine percent, a stock market that rose a record 47 percent last year and surging salaries for finance and technology professionals have created a middle-class clientele for art.

Collecting Indian art has been traditionally a pursuit of former maharajahs, industrial houses, overseas collectors and rich expatriates.

The local art market -- both gallery sales and auctions -- is worth between 400 and 450 million dollars and expanding as prices jump, said Arun Vadehra , owner of Vadehra Art Gallery in New Delhi and a consultant to Christie's.

Gallery sales have jumped from barely two million dollars in 2000 to 150 million dollars, said Vadehra .

"The art market is very hot," said prominent Indian art critic Ella Datta .

"The collector base is growing with lots of of people like doctors, lawyers and IT professionals who can afford art coming into the market," she said. "The vaster base should sustain the market's growth -- I don't see it crumbling."

According to Bid and Hammer, the most renowned Indian art currently delivers solid annual returns of 35 percent.

"Eight years ago, I bought a Jaya Jhaveri for a small throwaway price and today it is worth at least 100,000 rupees," said Bangalore entrepreneur Sudhir Udayakanth , 34. "Today art has become an investment," he said.

In 2006, auction house Osian's raised 1.02 billion rupees for a fund dedicated to art, luring investors with the promise of converting the country's cultural wealth into capital assets.

The fund was open to those capable of depositing at least one million rupees for three years. Osian's paid a dividend last year, becoming the world's first art fund to share income with investors before the lock-in period ends.

Indians also have access to purchasing art online, with Internet auction sites such as Saffronart opening up.

The online market is worth between 30 and 40 million dollars a year, said Dinesh Vazirani , a co-founder of Mumbai-based Saffronart .

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