Skate’s Art Market Notes for July highlight that ultra-high net-worth individuals (UHNWIs) are purchasing more art and the trend is likely to continue. According to high-level estimates of Skate’s (based on its extensive data mining), only about 11% of global UHNWIs with assets in excess of $100 million are currently invested in art. These figures demonstrate that there is significant growth in the art ownership penetration ratio among global UHNWIs and a significant growth upside potential remains.
Skate’s hints that with the release of its Global Art Lending Report scheduled for next month, the impressive growth of the art lending business over the past few years will be revealed and a “perfect stage” for significant growth in global art lending will be portrayed based on the following factors:
(1) very low share of art assets leveraged today; (2) historically low interest-rate environment; (3) unparalleled growth in high-end art market liquidity; and (4) quickly expanding availability of stand-alone art lenders.”
Skate’s observes that with the above four factors working in synergy together, the art market is on the brink of a “leverage boom” that should drive further high-end art sales, supporting both supply (e.g., forced liquidation of art collateral) and demand (e.g., availability of leverage for key art purchases) sides. Skate’s points out that the United States, which is the predominant art market globally (see Exhibit 1), offers the world’s preeminent infrastructure for art lending in view of simple and efficient liens registrations for art assets via a Uniform Commercial Code filing procedure that is “increasingly used in the global art trade to secure pledge over art as loans collateral.”
To access Skate’s latest Art Market Notes for July, including the World’s Largest Art Markets by High-End Art Auction Volumes for 2014 (Exhibit 1), click here.