Hedonic art price index of the „most liquid” Polish painters

Given the situation in financial markets investors tend to look for alternative investments to diversify their portfolio. A relatively new approach toward investing is to collect pieces of art as an investment instrument or collateral. In order to decide whether art is a good investment, it is necessary to evaluate expected returns, which might be obtained from such investment thus an art price index should be developed.

It is worth mentioning that the global art market equaled 47.4 billion of euro (in total sales of art and antiques) in 2013, and it is close to its highest-ever recorded total in 2007. It means that the global art and antiques market is almost back to the extraordinary heights of the pre-recession boom years powered by buyers in America and by rising prices for major Post-War and Contemporary artists. In 2012 the Polish art market value was estimated for 300-350 millions PLN (i.e. approximately about 75- 90 millions euro), while auction sales was 60.5 million PLN, and it was the highest result from 1989 (Deloitte 2013). Thus it is easy to conclude that Polish art market is very small since it is about 0.2% of the world sales, however it has been developing dynamically.

The aim of the paper is to evaluate price indexes of paintings produced by 17 Polish artists whose artworks were traded the most often on auctions that were held in Poland in the years 2007-2013. In our research, employing data concerning 1710 objects, we apply hedonic index methodology to estimate returns from the paintings market. The results of our investigation justify the opinion that art can be treated as a safe asset class, especially in comparison to the equity market

Keywords: Investment, Art Market, Hedonic Price Index