Did you know that more than half of art collectors surveyed are interested in using their collections as collateral? The financialization of art has steadily grown in popularity and our team at Heather James Art Advisory has outlined 10 things to know.
10 Things to Know About Art as Investment
BlackRock’s Larry Fink stated, “the two greatest stores of wealth internationally today include contemporary art … and I don’t mean that as a joke, I mean that as a serious asset class, and the other store of wealth today is apartments in Manhattan, Vancouver and London.”
Art transactions account for an average of $62 billion annually in recent years and totaled $67.8 billion in 2022.1
Art held privately is estimated to total more than $2 trillion.2
Art is estimated to comprise up to 10-15% of ultra-high-net-worth individuals’ assets.3
Financial advisors at Morgan Stanley note that 84% of their clients own art and collectibles, according to a recent survey.4
The size of the art loan market is approximately $26.6 – 31.3 billion.5
In recent years, about half of collectors (49%) have identified art-secured lending as one of the most relevant services to them, with 51% stating they would be interested in using their collection as collateral.6
Art-secured loans help defer associated costs, such as the capital gains on art, which is 28% as opposed to 20% for other assets.
With art taxed at a higher capital gains rate (28%) than other assets (20%), advisors can help collectors plan wisely with tools such as a Charitable Remainder Unitrusts to defer capital gains payable.
Looking ahead, experts predict an expansion of art investments, including bonds to finance museum exhibitions, art futures, and more.
Sources:
1 McAndrew, Clare PhD. “The Art Market 2023: A Report by Art Basel & UBS.”, 2023. https://theartmarket.artbasel.com/download/The-Art-Basel-and-UBS-Art-Market-Report-2023.pdf
2-6 McDaniel, Sarah D. CFA, and Ferdousi Islam. “Art Resources Team (ART): Art as an Asset.” Morgan Stanley, May 2023.
If you’d like to learn more about Heather James Art Advisory and our holistic approach to collecting and managing art, visit us at https://www.heatherjames.com/advisory/ or email us at [email protected].
