Goldman pitches wealthy Asian heirs on leveraging family art

[HONG KONG] Goldman Sachs Group is building up its art advisory services in Asia, as wealthy families catch up with those in the US and Europe on collections.

The investment bank offers affluent clients tailored advice on everything from art collecting and succession planning for such assets to leveraging them as collateral for loans, said Monica Heslington, head of art and collectibles strategy at the bank’s private wealth management division. Its services extend to bespoke experiences like gallery walk-throughs, she said.

Art was a theme at the Wall Street firm’s third annual summit in Hong Kong for Asian wealthy clients. More than 100 members of families gathered in Hong Kong to learn about investing principles, thought leadership and art investment strategy. The programme also included a tour to Christie’s Asia-Pacific headquarters.

Asian clients are now “at the point where they ask ‘what are we going to do with this collection for the next generation?’” Heslington said in an interview. “What they want to hear about is what we see people in Europe and the US do.”

About US$83 trillion in global wealth is expected to be passed to the next generation in the next two decades, with a large chunk taking place in Asia-Pacific, according to a UBS Group report last year. China’s Greater Bay Area – which includes Hong Kong, Shenzhen and nine other major mainland cities – is home to 510,000 high-net-worth families, according to the report.

Still, total fine-art sales dropped by about 27 per cent last year, according an Artnet database report released in March. For China alone, revenue from such sales decreased by about 46 per cent, the data shows.

One of the main reasons for a sales drop in Greater China is a lack of big-ticket sales, as buyers are less willing to pay for pieces worth US$10 million or more on the back of a challenging economic environment.

Goldman began offering art advisory services in Asia last year, following strong client demand since its launch in the US in 2019 and subsequent expansion to Europe three years ago.

“The art market is in a low correction period,” Heslington said, adding that there has been an increase in inquiries regarding art lending from Asian clients. “When there’s a hesitation to sell, people are looking for other ways to monetise it.”

A US$20 million collection could normally back a loan of about US$10 million if it contains blue-chip pieces with strong secondary market value, according to Heslington.

Wealthy entrepreneurs who built their fortunes in areas such as the property business in the past two decades are increasingly exploring options to leverage art collections.

Warhol, Picasso

The family behind Parkview Group, a private developer in Hong Kong, is trying to offload 300 artworks displayed at its mall in Beijing to repay part of a US$940 million loan, people familiar said in July. That followed an unsuccessful attempt earlier this year to secure a loan from Sotheby’s, using a collection that included works by Andy Warhol and Pablo Picasso.

Goldman’s summit participants, averaging 20 years of age, were invited from families of the bank’s private wealth clients. As part of the activities, participants took part in a mock auction and engaged advisers in discussions about real-world assets versus digital collections in the metaverse, said Heslington, who also visited Singapore and Taiwan during her Asia trip.

She’s also planning more visits to the Middle East, where clients are showing increasing interest in arts and collectibles. Sotheby’s held an inaugural auction in Saudi Arabia in February, and Art Basel is preparing to launch its next edition in Qatar next year.

Last month, a group of high profile art-world figures – including former executives from leading international auction houses such as Christie’s, Sotheby’s, and Phillips – joined forces to create a new firm, New Perspectives Art Partners, to tap clients in the Gulf region.

While the US is still the biggest market for art, “Hong Kong is Asia’s largest hub, and I don’t think that will change any time soon,” said Heslington. BLOOMBERG