With the ongoing pandemic affecting business across the globe, the rich are looking beyond the present, and bracing for the effects it may have on their respective economies.
The current situation is forcing the rich to tap into their art collections for quick cash. Art can be used just like taking out a mortgage on a house. You can borrow against blue-chip artists like Picasso, Miro, Chagall, and Dali, at one of the lowest interest rates than ever.
Art experts and lenders are reporting a rise of art-borrowing activity as COVID-19 hits the net worth of “collectors.”
“For those collectors or dealers who have large stocks of stored art that is not being hung or transacted, that art generates funds rather than sits as a static asset,” Elizabeth von Habsburg, managing director of Winston Art Group in New York, tells Business Insider.
Her firm appraised more than $3 billion worth of art for collateralized loans last year. This year could be even bigger.
“Art can be held and hung on collectors’ walls even while being used as collateral,” she says. “It is an alternate source of liquidity in a normally rather illiquid asset.”
Cue Monet’s “Water Lilies.”
If loans continue to rise it will have consequences. If things don’t bounce back, many great works could soon be put up for auction in less than ideal circumstances.
“The market has a sharp nose for works being sold under duress, which can lead to lower than normal financial results,” according to von Habsburg.