For most of its history, the art market has been described in the language of taste. At its upper end, it increasingly needs the language of finance as well. In a Wealth Office X conversation on the secondary market, Michael Macfarlane put the proposition plainly. Collections are being integrated into treasury management, liquidity planning, estate structures and family governance. He cited a Deloitte and ArtTactic projection that the global art-secured lending market could reach between US$42 billion and US$50 billion by 2027.

Catherine Freeman and Bigna Pfenninger, who advise collectors in this market, did not dispute the direction. Their account of how it happened, and what it means, was more measured than the headline figures suggest.

Industrialisation came first

Pfenninger argued that the art market was industrialised before it was financialised. Somewhere around the late 1990s and 2000s, she suggested, the market became more structured, more global and more closely tied to the art fair system and to real estate development. The gallery system became far more industrial. Financialisation followed, and it depended on one thing above all.

You cannot do it before you have the transparent data, so you really owe it to those who started collecting measurable data.

— Bigna Pfenninger, Wealth Office

Freeman made the same point from the lender's side. Market reports, built largely on auction results, now give a trajectory of values over time. Once a bank has a solid reference point for what something is worth, she said, whether a car, a house or a boat, it can lend against it. A painting with a recorded price history becomes collateral in the same way.

A comfortable store of value

The comparison with real estate only goes so far. Macfarlane asked whether collectors now borrow against art in the way property investors use leverage to amplify returns. Pfenninger said that is rarely the initial impetus. Art is still not considered a very liquid asset. For most of her clients, she said, it is a store of value, and a comfortable one. It is movable, inexpensive to store and needs little maintenance. Borrowing against it usually reflects a reluctance to sell, combined with a need for liquidity elsewhere.

Asked how that liquidity is then used, she declined to generalise. It depends on the family, on how wealth is allocated within it, and on who collects and who runs the operating business. Each case is individual.

A market of very few buyers

Liquidity at the top of the market has its own peculiarities. When a work worth a nine-figure sum is to be sold, Pfenninger described a process that is closed and quiet. Many such works sit in freeports and may change owners without moving. Some are held in a company that owns only that work, so that the company can be sold instead, depending on the owner's tax position and jurisdiction. Auction exposes a work to the risk of failing in public, so much of her work is private, global matchmaking.

It's not so many stakeholders in the entire market. For the largest trophy works, there are 2,500 works in the world. That is a scarcity market.

— Bigna Pfenninger, Wealth Office

Macfarlane compared this to the investor relations head of a listed company who knows where to place a large block of shares without moving the price. Pfenninger accepted the parallel and likened her advice to the judgement of whether a company is ready for a public offering. The market, she added, still runs on trusted networks, although rules, regulation and the threat of litigation mean that each step has to be taken in the right order.

The constraints are geopolitical as well as technical. Pfenninger noted that it has become very difficult to transact with certain countries that have large numbers of collectors at this level, which can bring other destinations forward for a time.

Fractions and tokens

The newest instruments attract the most attention. Pfenninger said she tokenised a Picasso in Switzerland in 2021. She sees nothing new in fractional ownership itself. Five brothers who inherit a work already share it, often through cumbersome company structures. Tokenisation, in her view, is simply a cheaper and more effective way of dividing ownership, and it will soon cease to be exciting.

She was less certain about listing collections on stock exchanges, a prospect Macfarlane raised. Such listings might produce trading volume without depth. She saw more natural uses in museum holdings, donorship and joint ownership, where many people hold a stake in a work and a say in what happens to it.

Freeman expects the next generation of collectors to want more transparency and more technology, applied especially to provenance, authentication and archiving. A certificate lost decades ago can still hold up the building of a provenance. Better tools could remove much of that friction.

Taken together, the guests describe an asset whose financial uses are real while its essential character is unchanged. Art can now be valued, lent against, held in corporate structures and divided into fractions. It remains thinly traded, dependent on trust and, at the very top, scarce. For family offices, the practical consequence is that art behaves more like infrastructure than it once did, while its liquidity still depends on a small number of people choosing to buy.