There was an interesting article in The Wall Street Journal last week. It dealt with the concern that the credit crunch may result in art collectors--who previously collateralized their art--having to pony up more capital or lose the credit that has been extended to them. The precedent for this can be found in the early 1990s, when there was a spate of defaults on art-backed loans triggered by a very serious correction in both the real-estate and art markets. People that are under water with their real estate loans are more likely to default on their art loans.
Some art loans are similar to reverse mortgages, as they allow borrowers to receive monthly payments against the value of their art, rather than selling it outright and taking a capital-gains tax hit.
Elsewhere, Americans are definitely more interested in art. For instance, Cincinnati's Contemporary Arts Center saw attendance rise 85% between 2002 and 2006. Also, according to the American Association of Museums, about 40% of U.S. museums have recently renovated, are currently undergoing renovations or are preparing for renovations.
These are some of the issues that will be discussed at IncreMental Advantage's Intelligently Purchasing and Selling Fine Art and Collectibles Conference that will take place in New York City on October 17. For more information, please visit www.incrementaladvantage.com or contact Neomi Barazani at neomi@incrementaladvantage.com.
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