This page considers art-based finance.
It covers -
As noted elsewhere on this site, it is recurrently fashionable
to characterise art - or other commodities such as violins
and gold coins - as "the new asset class" and
even as an commodity that will generate exceptional returns
for an investor who is visionary or merely advised by
an outstanding consultant. (Proponents of investment in
domain names have voiced similar claims in trading
individual names or portfolios.)
There has thus been interest - arguably more from journalists
and advisers than from holders of substantial capital
- in the development of art
investment funds, discussed in more detail elsewhere
on this site.
Commercial financing of art purchases has varied over
time and by jurisdiction. A preceding paragraph noted
concerns regarding soft financing (and problematical reporting)
by leading auction houses of high profile purchases by
figures such as Alan Bond.
Some houses have promoted affinity cards or other finance
schemes to encourage consumption by their customers.
Institutions have also sought to capture some of the value
during periods of exceptional increases. During the 1980s
property bubble, for example,
Japanese banks offered special finance based art assets.
Typically they would lend up to 50% of a work's value
at 2% above Japan's long-term lending rate but substantially
lower than the US prime, with much borrowing on a speculative
basis for acquisition of other works and accordingly criticised
as fuelling "abnormal" price increases. Leading
institutions such as Daiichi Kangyo Bank, Mitsubishi Bank,
Fuji Bank and other entities such as department stores
(eg Saison-Seibu), trading houses (eg Itoman) and consumer
credit companies (eg Daishinpan) offered art-secured loans.
Collapse of the bubble after belated action by the Bank
of Japan saw attempts to unload holdings and suggestions
that a decade later lenders held some 10,000 paintings,
with a notional value of US$9.5 billion, as collateral
against loans to defunct or ailing enterprises. Property
developer Maruko Inc. famously sold shares in 11 paintings
by Picasso, Renoir and Chagall before paying ¥1.2
billion for Modigliani's La Juvie and offering
individuals "investment shares" at ¥10 million
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