Financing also has a love of art. Loans backed by works of art are a growing reality that can be accessed by individuals and companies that own a collection of works of art. Around them, there is a growing market of financiers specialising in this area. One of them belongs to the world’s most famous auction gallery: Sotheby’s Financial Services, which increased its annual turnover in 2022 by 50% and its loan portfolio reached $1 billion. It is just one example of a financial product whose figures have skyrocketed, with loans secured by works of art estimated at $31 billion worldwide in 2022.
The market currently offers liquidity backed by art pieces, both through financial firms specialising in art and through traditional and alternative banking financiers. Nowadays, resorting to artistic heritage as collateral to obtain liquidity is an option of maximum interest, as access to credit has become much tougher and rates have soared. In this sense, Kaizen Consulting has access to a wide variety of financiers working in all areas of specialisation, including those who provide liquidity using works of art as collateral and anywhere in the world.
Art is currently the most profitable luxury investment. A trend consolidated in recent years and corroborated a few days ago by The Wealth Report, the annual report by the international consultancy firm Knight Frank. In 2022, the increase in prices worldwide was 29%, above the revaluation of other rising products, such as classic cars or luxury watches. Art auctions continue to set records thanks to the prices paid by collectors. This means that works of art continue to be a desirable object for investors. An asset that, as we have seen, can also serve as collateral and become a financing formula. As announced by Bloomberg, Sotheby’s Financial Services is the first art finance firm to launch an ABS (Asset-Backed Security) product on the market.
The high value of Spanish art is an argument in favour of those who invest because its value can also serve as a guarantee to obtain a loan and liquidity from alternative and traditional banks. When faced with a financial need, those who own a significant artistic heritage may consider using it as collateral to access the liquidity they are seeking. In these cases, we recommend that owners of works of art explore the possibilities of converting this wealth into liquidity without disposing of it.
At Kaizen Consulting we are experts in maximising financing options and we advise companies and individuals on the possibilities of obtaining liquidity by putting their works of art as collateral, outside CIRBE, in an agile, simple way, without intermediation, and without limiting the capacity of indebtedness with traditional banks because art is also a rising price for obtaining financing.
José Roca Barrachina
Founding partner of Kaizen Consulting