Empirical Analysis of Investments on the Fine Art Market

Abstract

In conditions of the stock market instability the art assets could be considered as an attractive investment. However, due to the heterogeneity 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 construct hedonic art price indexes using parametric and semi-parametric methodologies and assess the risk via CAPM model. The artworks in the high price sector are the potentially most profitable assets on the market, but the investments in paintings are associated with high risk.

Keywords: Investment Decisions, Art Market, Art Rate of Return, Hedonic Art Price Index

JEL Classification: D14, G11, G12, C21