Sotheby’s announced plans to launch sales in India in the coming December, one year after Christie’s decided to back down from the Indian market. What’s the reason behind the polarized decisions made by the two leading auction houses?
Christie’s live auction in India in 2013
In 2013 December, Christie’s had its first live auction in India with South Asian Art. The sale took place at Taj Mahal Palace Hotel, Mumbai, totaling INR 965m (USD$15.4m), doubled pre-sale estimates. With a number of auction records made, the sale marked a historic moment at Christie’s.
Christie’s Gallery in Mumbai
The comprising market signals shown in Christie’s first year in India failed to sustain in the next few years. The sale totals dropped to INR 752m (US$12m) in 2014 then rebounded to INR 976m (US$14.7m) in 2015. Then the number fell to INR 721m (US$10.6m) in 2016, which led to Christie’s withdrawal in the following year.
Taj Mahal Palace Hotel
Judging from the sale totals, the performance of Indian market was not too disappointing. However, what Christie’s has to take into account – in addition to the sale total – is the premium they charge from the sale total, which is the actual revenue that they generate from sales. Christie’s average sale total achieved in India over the past four years was US$13m. To simplify the case, let's assume Christie’s roughly charge 20% of the sale total as premium, and the annual revenue they gained in India was only around US$2.6m, before evening deducting all expenses and costs occurred. So one can imagine how much could Christie’s profit, if there is any, from the Indian market.
Entering Indian art market is like holding a hot potato since there remain many unresolved issues that increase the risk and certainty to local operation. In terms of the laws and regulations, red tapes and opacity are long-existed barriers that discourage investors. Infrastructure and transportation facilities in India are far from convenience, bringing difficulty for auction houses to organize viewing exhibitions and shipping consignments. Besides, the immediate vicinity may not really be a plus point to Indian riches, who are used to joining auctions in major cities like New York and London.
Nonetheless, it’s understanding why Sotheby’s wants to capitalize on the increasing art market in India. As the world’s fastest-growing economy, India had recorded a 7.2% economic growth in the quarter ended December 2017, faster than China's growth over the same period. It is expected to outpace China again this year.
Sotheby’s latest move is a response to the ever-growing presence of Indian collectors and exponential growth in their sales of South Asian art. Sotheby’s hopes to gain higher market shares while its rival is leaving the market, so as to put itself in a dominant position when the time is ripe. We will have to wait and see if Sotheby’s has made the right decision, at the right time, in the right place.
Durga Mahisasura Mardini
Back to Sotheby’s inaugural auction in Mumbai, ‘Boundless: India’ is scheduled for December 2018. It will be led by ‘Durga Mahisasura Mardini’, created by Indian modern artist Tyeb Mehta. Durga is a warrior goddess who combats evils and demonic forces. She is often depicted in a manifestation as Mahishasuramardini, slayer of the powerful buffalo. The painting is expected to fetch an exceess of US$3.6m, the artist’s previous auction record.