While Masterpiece is the dealer’s domain, it attracts a whole host of fascinating and important players. Certainly, art financiers play a crucial role – pumping liquidity into the art market, and facilitating purchases across the industry. Tim Hunter, Vice President of art financier Falcon Fine Art – a co-partner of Masterpiece – discusses the art financing industry, the fair, and the potential impact of Brexit.
While well-established and popular in the US, the art financing industry remains in its infancy on this side of the pond. Can you describe the different kinds of art
Hunter: Straight, simple, art financing – what we offer at Falcon Fine Art (FFA) – is a service for collectors whereby they can free-up money that is tied-up in their art collection, without the need to sell. It is a medium-term service – between one to five years – and doesn’t leverage any assets other than the art collection itself.
In some situations a collector may plan to sell an artwork but requires some liquidity in the interim period – often known as a bridge loan or an advance prior to a sale. The specialists in this area tend to be auction houses, and the loan is often tied into a sale at the end of the financing period.
Thirdly, there are some financiers that will enable a collector to leverage their artwork over a shorter period of time – between 1-12 months, for instance. This is often provided for situations where the collector needs liquidity quickly, but in exchange must pay much higher interest than they would for medium-term financing.
Banks in general don’t offer specialised art-backed lending. However, certain banks might consider providing solutions to an existing client with a range of assets. In general, these offerings leverage not just the art collection, but also other assets that a bank might have under management.
If art financing prevents the need to sell, does this mean a collector can still keep and display their artwork?
Hunter: Most art financing, especially in the UK and Europe, requires the artworks to be placed in secure storage. I believe FFA is the only financier in the region that allows art collectors keep artworks on their walls, throughout the financing period.
Do you see any business that emerges directly as a result of fairs such as Masterpiece?
Hunter: Yes we do see business emerge from Masterpiece. This is the second year we’ve co-partnered the fair and our name is now more established, and we have had interest from collectors at the fair, keen to raise liquidity from their existing collections.
This year we were also able to get our message across to art dealers – many of whom see the virtue of their clients taking out art-backed financing in order to purchase new works of art.
Finally, Masterpiece is not just a good place to meet collectors and dealers, but also advisors who have clients who could be interested in art-backed financing.
Do you think art financing could have an impact on the way fairs like Masterpiece work?
Hunter: Yes I do. The art financing industry is already significant in the US, and will only grow more prominent across Europe and the UK.
In general it creates more liquidity, and can help clients buy a work they may not have otherwise had the means to purchase at that particular moment.
Art financing might also lead to dealers being paid more promptly. Currently, dealers often provide an extended payment period, where they let the artwork go, but sometimes wait up to a year or more to be paid. By providing art financing, and therefore liquidity to the collector, we could speed up, or entirely eliminate, this process.
Masterpiece is perhaps one of the largest and most awaited events in the art world’s calendar. What is it that makes it so popular?
Hunter: Masterpiece is a very encyclopaedic fair. It has a mixture of categories – from antiquities through to Renaissance sculpture, modern pictures, British art, jewellery, silver, clocks, furniture – the list is extensive, and it appeals to a wide range of individuals.
It is also a beautifully designed, open, fair – in the heart of one of the world’s great cities.
Have you noticed any trends at Masterpiece, or across the art market in general this year?
Hunter: There was a strong sale of Old Master pictures at Christie’s at the beginning of July – during Masterpiece – which slightly bucked the trend: Old Masters sold surprisingly well given many people have been writing them off over the past few years.
The volume in the contemporary market has gone down slightly – with the totals from Christie’s and Sotheby’s Contemporary and Post-War sales decreasing over the last year. That said, the underlying market is still strong and the prices are still high for the art that has been consigned.
Consigning is the key – the conclusion you might draw, when looking at the contemporary art market, is that individuals aren’t consigning works. Of course, this means that it is a good time to take financing out against such artworks –giving the collector the luxury to sell when the time is right.
Masterpiece came in the immediate aftermath of the UK’s EU referendum. Could Brexit slow the rise of art financing across Europe, or impact the way in which you operate?
Hunter: I think it is difficult to predict what might happen. For FFA in particular, it could mean our role is more important than ever. Brexit uncertainty means credit is difficult to access, and collectors are nervous about selling artworks when they can’t predict the impact on the art market. They’re in a situation where they need liquidity, but don’t want to sell – art financing provides the solution.