In a landscape where high-net-worth individuals are increasingly leveraging their valuable assets for liquidity, art has emerged as a formidable financial asset in South Africa. Reflecting global trends, the country is seeing a notable rise in art-secured loans, spearheaded by Lamna Financial, a prominent player in high-end pawnbroking services. According to CEO Charles Meyerowitz, art now stands alongside traditional assets like vehicles and luxury watches as a viable source of immediate funds.

“More clients are recognising that fine art can unlock substantial liquidity, similar to traditional high-value assets,” Meyerowitz says. Lamna’s loans secured against art typically range from 50% to 70% of the artwork’s appraised value, influenced by its quality, provenance, and demand. This financial avenue allows collectors to access significant sums quickly without the need to sell their prized pieces permanently, aligning with a broader global trend.

Lamna Financial’s recently released High-End Pawnbroking Index (LHPI) highlights a 94% year-on-year increase in loan payouts, with a corresponding 61% rise in the number of deals completed. This uptick is underscored by a 20% growth in art-secured loans, a trajectory that Meyerowitz expects to continue as more people explore art as a financial resource.

Global Art Financing Trends

Globally, the art financing market is anticipated to exceed $20 billion by 2025, with art increasingly being used as loan collateral. Major auction houses like Sotheby’s and Christie’s have launched dedicated lending programs, normalising the practice of borrowing against art. This aligns with findings from the Citi Global Wealth Management 2023 Art Report, which highlights a 15% year-on-year growth in art-backed lending driven by increasing art values and flexible financing demand.

According to Deloitte, boutique lenders and auction houses have expanded their art financing services by 119% over the last five years, whereas traditional banks have only seen a 31% increase. This trend is mirrored in South Africa, where the growing fine art market and economic dynamics have made art-secured loans an appealing option for collectors.

Art as a Unique Financial Asset

In contrast to other assets, fine art presents unique benefits in the realm of pawnbroking. “Art loans are particularly good because art is so unique—you can’t simply sell it and buy it back later, unlike a car or watch,” Meyerowitz explains. He highlights the lasting value of blue-chip art, which tends to retain or appreciate in value even during economic fluctuations, making it a secure choice for individuals seeking liquidity without sacrificing long-term asset value.

“While markets fluctuate, blue-chip art retains its value over time, making it an excellent choice for those looking to unlock cash quickly,” Meyerowitz adds. Lamna’s loan portfolio includes significant works by celebrated artists such as Vladimir Tretchikoff, Alexis Preller, William Kentridge, and Robert Hodgins.

Diverse Uses of Art-Secured Loans

Clients at Lamna Financial take out art-backed loans for diverse reasons, ranging from investing in business ventures to managing cash flow and financing personal projects. This flexible financing solution enables art collectors to unlock cash flow without having to part with their art permanently, offering an adaptable option for wealth management.

How Pawnbroking Works Against Artwork

The process of pawnbroking art is straightforward yet thorough. Artworks are evaluated based on factors such as market value, authenticity, and condition. Following this appraisal, the piece is held as collateral while the owner receives a loan based on its estimated value. Once the loan is fully repaid, the artwork is returned to its owner, ensuring their valuable asset remains protected throughout the transaction. “By offering expert evaluations and fair loan terms, Lamna is becoming a trusted partner for those looking to leverage their fine art for financial flexibility,” says Meyerowitz.

For more information on how to secure a loan against fine art, visit Lamna Financial’s website at www.lamna.co.za.