Abstract
In conditions of the stock market instability the art assets could be considered as an attractive investment. The fine art market is very heterogeneous which is featured by uniqueness of the goods, specific costs and risks, various peculiarities of functioning, different effects and, hence, needs special treatment. However, due to the diversity of the fine art market’s goods and the absence of the systematic information about the sales, researchers do not come to the same opinion about the merits of the art assets conducting studies on single segments of the market. We make an attempt to investigate attractiveness of the fine art market for investors. Extensive data was collected to obtain a complete pattern of the market analyzing it within different segments. We use the Heckman model in order to estimate the art asset return and find out the most influential factors of art price dynamics. Based on the estimates obtained we construct monthly art price index and compare it with S&P500 benchmark.
Highlights
The fine art market is supported by the interest from collectors, but the last 10 years’buyers pay more attention to the profit to be obtained from investing in the art
In the descriptive analysis we focus on median prices rather than on average ones due to the fact that median prices are more informative in the case of the fine art market: from time to time paintings are sold for record prices, which biases the average prices
We present the art price index dynamics in comparison with S&P500 index for the largest sector—the modern art (Figure 7); the indexes constructed for other sectors demonstrate the similar behavior
Summary
The fine art market is supported by the interest from collectors, but the last 10 years’buyers pay more attention to the profit to be obtained from investing in the art. It is necessary to highlight the increase of sales on the fine art market. The world auction’s revenue has increased more than three times from $4.15 billion in 2005 to $15.2 billion in 2014. Such indicators as the number of million dollars lots and bought-in rate indicate the positive trends on the market: in 2013 the number of million dollars sales achieved 1519 lots compared to 487 lots in 2005; the bought-in rate keeps the level of 30–35%. Over the last ten years the share of the postwar art has grown up from 15% to 26% due to the growth of popularity and prices for the art works in this sector.
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