Artelligence: how to manage one’s art collection

   |  25 August 2011  |  AMA  |  Tweet  |  LinkedIn

New York, 25 August 2011, Art Media Agency (AMA).

In a recent article, Bloomberg tried to decipher what the present mood on the New York art market is in these times of crisis. The agency interviewed former art trader and gallery owner Asher Edelman. He was not particularly reassuring. Edelman declared that on the secondary market, people are ready to sell for a loss of 20% of the price they had initially hoped to obtain.

According to Edelman, this significant drop is linked to the fear and insecurity currently prevailing over the financial markets. He said: “I believe that people are very frightened. They are scared of what’s happening in the world and want to derive some profit out of their works of art.” Interviewed by the Journal des Arts in 2008 when Lehman Brothers went under, the business man had a similar point of view, indicating: “We are at the beginning of a fall in the art market, which always follows on from the movements of the rest of the economy. Suddenly, pieces will not find a buyer. Obviously, if you are selling a superb Malevitch, you will find someone to buy it. And if you sell pieces at 10 to 20% less than their last result in public auction, you will also find buyers.”

For investors who do not want to sell at a loss but wish to recover a part of their money invested in art, another solution is possible: a loan guaranteed by using one or several of their works of art as collateral. It’s a way of anticipating the market’s volatility to obtain a certain amount of money. However, this option is not always the most profitable. As a general rule, the loan is never higher than half the actual value of the work, interest rates remain fairly high (approximately 10%) and the lending institutions are extremely wary of such situations as they have to ensure the authenticity ot each piece, as well as whether it has already been used as a guarantee.

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