Hoffman Claims Chinese Want to Borrow to Buy Art

Phillip Hoffman was on CNBC talking up his business. Hoffman claims to have many Chinese clients who want to buy art using leverage and that he’s opening an office in China to satisfy the demand.

“There is a huge amount of cash sitting in deposit accounts and there is a lot of interest in finding the right work of art.”

Fresh from a trip to China, Hoffman emphasised the buoyant interest from Chinese investors in the Western art market. The company has recently moved into a new line of business to satisfy a niche demand. According to Hoffman, Chinese investors want credit to be arranged and to borrow money against art.

“Leverage into the art market will bring a whole new game into the art market and I think we’ll see a big growth over the next five years.”

This is all fine and good but the fact that Hoffman dodges a question about year-over-year returns on art investing—his primary pitch—by bringing up the story of having bought a Wade Guyton for $40,000 in 2008 and sold it for $100,000 in 2010, should give anyone pause.

There’s a lot of art market water under the bridge to be using an example from the Guyton boom, which peaked several years later. And five-figure buy turned into a low six-figure sale is hardly the kind of deal-making that would support art as an alternative investment for the truly wealthy.

Art investing: Death, divorce or bankruptcy needed to jumpstart this market (CNBC)