Art as an Aternative Asset Class: Risk and Return Characteristics of the Middle Eastern & Northern African Art Markets

27 Pages Posted: 4 Nov 2014 Last revised: 13 Sep 2018

See all articles by Roman Kräussl

Roman Kräussl

Luxembourg School of Finance; Hoover Institution, Stanford University

Date Written: November 2, 2014

Abstract

This chapter analyzes the risk and return characteristics of investments in artists from the Middle East and Northern Africa (MENA) region over the sample period 2000 to 2012. With hedonic regression modeling we create an annual index that is based on 3,544 paintings created by 663 MENA artists. Our empirical results prove that investing in such a hypothetical index provides strong financial returns. While the results show an exponential growth in sales since 2006, the geometric annual return of the MENA art index is a stable 13.9 percent over the whole period. We conclude that investing in MENA paintings would have been profitable but also note that we examined the performance of an emerging art market that has only seen an upward trend without any correction, yet.

Keywords: Alternative investments, Art price index, Optimal Asset Allocation

JEL Classification: G11, Z11

Suggested Citation

Kraeussl, Roman, Art as an Aternative Asset Class: Risk and Return Characteristics of the Middle Eastern & Northern African Art Markets (November 2, 2014). Available at SSRN: https://ssrn.com/abstract=2518131 or http://dx.doi.org/10.2139/ssrn.2518131

Roman Kraeussl (Contact Author)

Luxembourg School of Finance ( email )

4, rue Albert Borschette
Luxembourg, 1246
Luxembourg
+3524666445442 (Phone)

HOME PAGE: http://www.art-finance.com

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

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