Wealth

Art auction to test India's demand for luxury

A visitor looks at a painting during a media preview ahead of Christie's first auction in India, in New Delhi on December 6, 2013.
MANAN VATSYAYANA | AFP | Getty Images

After raising $25 million at its inaugural auction in China earlier this year, Christie's will tackle another first next week: an auction in India.

The firm will become the first international auction house to hold an event in India, scheduled to take place at The Taj Mahal Palace Hotel in Mumbai on December 19.

The auction comes amid a drive to provide for the increasingly lavish tastes of Asia's growing wealthy class. India, Asia's third-largest economy, is home to 65 billionaires as of 2013, up from 61 a year earlier, according to Forbes. China, Asia's largest economy, is home to 168 billionaires, up from 113 the previous year.

(Read more: Dylan guitar sale rocks Christie's)

"You begin to see the tell-tale signs, when is it right to come into a market," Paul Hewitt, head of Christie's Growth Markets division, told Reuters last week.

Christie's $500 million auction
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Christie's $500 million auction

"Strategically it is the elephant in the room, so we should be here. We've made significant progress in China over the last year so [we were] almost conspicuous by our absence of doing something in India," Hewitt said.

Christie's first-ever auction in China in September saw 39 of 40 lots sold – including jewelry, art and wine – and netted $25 million.

(Read more: Christie's sells $25 million of goods in its first China auction)

The Mumbai auction will feature 83 lots in total, with works from high-profile Indian artists including Ram Kumar and Syed Haider Raza. Among the highlights will be a 1994 painting by Tyeb Mehta titled Mahishasura. Christie's estimates the piece will fetch between $1.2 and $1.52 million – the highest estimate among the lot.

"Christie's entering India is a very positive sign in the Indian art market," Tushar Sethi, director of The Arts Trust – a Mumbai-based gallery that has been promoting contemporary Indian art since 1990 – told CNBC via e-mail.

"It proves that Christie's as a multinational company believes that India has a bright future and its entry into the market will definitely create a positive buzz," he added.

(Read more: India market euphoria could end in disappointment)

"Christie's intends to make this an annual event from my understanding and this will definitely increase prices and the [Indian] art market shall be at a better platform by the next year," he said.

Hopper painting beats estimates
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Hopper painting beats estimates

Will timing be a factor?

Internationally, the demand for Indian art is on the rise. In March, competing auction house Sotheby's sold 43 works held by private collector Amrita Jhaveri for a total of $6.7 million in a New York auction which set four artist records.

Still, while foreign demand for Indian art is on the rise, Christie's auction comes amid a downturn for the local market.

According to art market analysis firm ArtTactic, confidence among participants in India's art market declined 13.6 percent over the six months to November. The November figure snapped 18 months of steady increases – a period many had hoped would bring India's art market back to its 2008 pre-economic crisis boom levels.

(Read more: China's richest man snaps up $28 million Picasso art)

The shift in sentiment is the result of the country's worsening economic situation and a weaker currency, the report said. There are concerns the imminent tapering of the U.S. Federal Reserve's asset-purchase program, which sparked massive capital outflows out of India earlier this year, would roil sentiment again. The Indian rupee is down around 11 percent against the U.S. dollar year to date.

However The Arts Trust 's Sethi does not see such concerns, or the uncertainty before next year's general elections, as a headwind.

"The art buyers in India are primarily business families who have excess liquidity at their disposal," Sethi said. "Artworks that have been presented at Christie's are rare and buyers interested in acquiring these artworks will acquire them either ways."

— By CNBC's John Phillips. Follow him on Twitter @J_Phillips_CNBC

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