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Why Art Loans Are Popular among the Ultra-Wealthy in Good Economic Times and Bad

ICF Faculty Director William Goetzmann and ICF Research Coordinator Milad Nozari mentioned for their paper on “Art as Collateral.”

Art lending is big business. Deloitte put the industry at an estimated $17 to $20 billion in 2017 in the U.S. alone, a 13.3 percent rise from the prior year.

As the art market continues to expand in value and in geographic scope, the amount of money borrowed against art is poised to grow as well. But rich people have always collected art. Why are they so keen to borrow money against it now?

Industry leaders cited several factors driving the growth in lending, such as the changing demographics of the U.S. and global collector base, the high values of private art collections as works have become more expensive, and a historically low-interest rate environment that makes it attractive to borrow in order to pursue other business opportunities.

“The value of art has increased more than anyone ever thought it would, and people all of a sudden have a lot of value hanging on their wall,” said Suzanne Gyorgy, Managing Director, Art Advisory & Finance at Citi Private Bank. “I think it’s just become more commonplace…why not take some of the value out and take advantage of some opportunities to invest, or to buy more art?”

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