The premier business education institution IIM Ahmedabad and Aura Art Development jointly rolled out IAIAI (IIMA-AuraArt Indian Art Index), an index to track the prices of art works made by select Indian artists, and to assess the price trajectory of these art works.
There is a little doubt that the art is emerging as a significant asset to reckon with with the total value of art works auctioned in one year in India amounting to $100 million. No wonder then IIM Ahmedabad came up with this index to address the growing needs of art investing community and to acknowledge the growing significance of art as a viable asset class.
About the index
The index has been put together using a data-driven methodology that analyses price variations in artwork auctions of top 25 Indian artists across the globe over 20-years. These artists include Akbar Padamsee, Anjolie Ela Menon, B Prabha, Baddri Narayan, Bhupen Khakhar, Bikash Bhattacharjee,, FN Souza, Ganesh Pyne, Jamini Roy and Jehangir Sabavala among others.
The index will be a boon to a number of stakeholders which include art enthusiasts, financiers, insurers, and others across the sector in computing the change in the likely market price of an artwork over a period of time.
Hedonic pricing model
The art index is based on a hedonic pricing model. This is a model that identifies price factors according to the assumption that price is a function of both internal characteristics of the product (art piece in this case) being sold and external factors that influence it.
The most common example of the hedonic pricing method is in the real estate market, wherein the price of a flat is determined by the features of the property (like its size, appearance) as well as those of its surroundings (such as if the neighbourhood).
Similarity of art to real estate
In fact, some believe that art is similar to real estate in a way that each unit is unique and the final products are not identical even if multiple copies of the same product are produced.
Professor Prashant Das, IIMA professor who ideated the programme algorithm for development of the index, said, “As an asset class, art has a great similarity with real estate: Each asset is unique, and the market is stratified. Even if produced in multiple copies, the products are not identical. Clubbing such assets into a unified price index is an analytical challenge that we attempt to address through this index. The index is broadly relevant irrespective of which quality of art works dominated the sample over time.”