While art has always been considered a passion asset, tremendous growth in the art market has compelled more and more people to consider art as an alternative asset class. As art has become more investable in recent years, the worlds of art and financing inevitably - and increasingly - coalesce.
The nature of the strong bluechip art market has opened opportunities, allowing collectors to leverage their art as a form of collateral. As art is considered a liquid asset, banks, storage companies, private lenders, and even auction houses have found a fruitful sector in art lending. This article illuminates what art financing is, and the opportunities your art collection could offer for future alternative investments.
According to Art Basel, between 2020 and 2021, the global art market grew by 29% with aggregate sales of art and antiques reaching an estimated $65.1billion. Values even surpassed the pre-pandemic levels of 2019. Sought after by art enthusiasts and investors alike, there has never been a better time to invest in art to add to your alternative portfolio.
Art financing is an increasingly attractive way to release valuable capital from your bluechip art collection. Here's the how and why, and the options available when it comes to art lending:
Using your art collection as collateral, art financing - AKA art-based lending - allows you to unlock the capital associated with your art. By borrowing against your collection, art financing lets you quickly realise liquidity without having to sell.
Art financing is no longer restricted to ultra-wealthy collectors seeking loans from private banks and auction houses. In recent years, a plethora of private specialised lending companies have made art financing more accessible for collectors at all levels - with a low minimum threshold and lower interest rates. Most firms offer around 50% of the appraised value of works, widening opportunities for other alternative investments.
You might consider an art-backed loan if:
Your bluechip art collection can be a dynamic financial tool. Here are some of the types of art lending solutions you might consider:
By using your art collection as a form of collateral, you afford yourself the opportunity to grow a valuable collection without selling any existing pieces. As the value of art is expected to increase over time, art financing can be a lucrative way to release valuable capital and further other alternative investments. More and more specialist lenders and banks are making it easier to leverage art to unlock liquidity quickly, and is attractive because of the ability to drive business across multiple divisions of the company sector.
For those with a strong bluechip art collection, art financing allows you to make the most of your investments as they continue to grow in value. If you're not prepared to commit to a full-time sale, art-backed loans are an opportunity to extend your capital while you make other investments, or wait for the right time to sell.
Once you decide to finance your art collection, there are various avenues to explore. Here are some of the key players in art lending:
There are a plethora of options available to bluechip art collectors when it comes to art financing. While many private banks and auction houses serve primarily Ultra High Net Worth collectors, certain lenders are offering opportunities to collectors who want to make smaller investments. Our partner Art Money - who have recently received investment from Christie's - allow avid collectors to spread the cost of their purchase across 10 months in 10 payments for artworks ranging from £1,000-£100,000. Art financing is becoming more accessible, giving collectors the opportunity to invest and grow a strong bluechip collection.