Art is like Schrödinger's cat, its value is only determined when it changes owner.
If someone pays 1M€ for a piece of art, it is "valued at $1M" and you can use it for collateral for a loan at some percentage of its valuation.
Will it actually be 1M€ if it needs to be liquidated? Nobody knows. It can be worthless or it can be worth 10M€ - it all depends on what the next person is willing to pay for it. But until that point it's "worth" 1M€.
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This is why there are so many empty (commercial) properties, they were valued at a specific €/m2 price and were used to take loans based on that value.
Until they're rented/leased again, that is their worth and value. Could the owner get someone in the property by lowering the price? Definitely.
Would that also cause a rolling cascade of loans not having enough collateral to back them up? Yup.
but then you do not get the tax benefits discussed above.
The market for "investment art" I huge and everyone involved
has an upside by art appreciating in value.
> The artist may get more money (since the artist only gets paid in the
initial transaction the artist may only get a fraction of the value
as it increases. The artist may find that later work will become more
valuable as other investors want more of his art.
>The gallery gets more money, and it may attract more art investors
> and the auction house gets more money if it ends up there.
How much art is worth is difficult to estimate on its own.
I mean a white canvas painted uniformly white is worh a lot
of money if a famous artist does it.
It is worth entirely nothing if I do it.
I expect then that the market decides the value.
All investors want art to get more valuable and are in on it.
As an art lover, this is such a tragic scheme.
Unknown amount of art that will never been seen by the public.
Locked up inside a storage facility in a big box
Often the investor has no interest in the art at all, just an
investment made by some form of a broker.
theshrike79|1 year ago
If someone pays 1M€ for a piece of art, it is "valued at $1M" and you can use it for collateral for a loan at some percentage of its valuation.
Will it actually be 1M€ if it needs to be liquidated? Nobody knows. It can be worthless or it can be worth 10M€ - it all depends on what the next person is willing to pay for it. But until that point it's "worth" 1M€.
---
This is why there are so many empty (commercial) properties, they were valued at a specific €/m2 price and were used to take loans based on that value.
Until they're rented/leased again, that is their worth and value. Could the owner get someone in the property by lowering the price? Definitely.
Would that also cause a rolling cascade of loans not having enough collateral to back them up? Yup.
ThinkBeat|1 year ago
The market for "investment art" I huge and everyone involved has an upside by art appreciating in value.
> The artist may get more money (since the artist only gets paid in the initial transaction the artist may only get a fraction of the value as it increases. The artist may find that later work will become more valuable as other investors want more of his art.
>The gallery gets more money, and it may attract more art investors
> and the auction house gets more money if it ends up there.
How much art is worth is difficult to estimate on its own. I mean a white canvas painted uniformly white is worh a lot of money if a famous artist does it.
It is worth entirely nothing if I do it.
I expect then that the market decides the value. All investors want art to get more valuable and are in on it.
As an art lover, this is such a tragic scheme. Unknown amount of art that will never been seen by the public. Locked up inside a storage facility in a big box Often the investor has no interest in the art at all, just an investment made by some form of a broker.