Luxury investments, past, present and future

Handbags

Hermès handbags once again topped the Knight Frank Luxury Investment Index (KFLII). With a more than modest price increase of 17%, according to our index compiler AMR. The luxury handbag maker has benefited from an established online auction presence and the appetite for relatively affordable luxury pick-me-ups during the Covid-19 pandemic, particularly in Asia where many bag collectors are based, helped the asset class retain pole position.

Art

The art market, however, did not fare quite so well with the auction-tracking AMR All Art Index dropping 11% in 2020. But with so many factors impacting the market, there was no single reason for the fall in average values, says AMR’s Sebastian Duthy. “For obvious reasons one of the biggest changes was a shift towards private sales at the major auction houses. The volume of all sales that were publicly auctioned at Sotheby’s and Christie’s last year was down 26% and 46% on 2019, respectively. The problem was compounded by the slowing in supply of quality works as consigners who could afford to wait preferred to sit it out at home.”

However, home working drove a demand for collectors sprucing up their homes. Likewise, new faces on the scene, such as New York based artist ‘Jerkface’, are creating a buzz with original paintings. Joining the likes of Daft Punk, Dr Seuss and of course Banksy, the artist goes under an elusive alias, further boosting the intrigue behind his work. If quirky, 90s nostalgia inspired artwork is your bag, then make sure you check him out.

Coloured diamonds

Diamonds are forever – or are they? Andrew and the panel will delve deeper into the future of this asset at the luxury event focus.

The coloured diamond market was also somewhat stymied by the pandemic. “The logistical lockdown simply made it impossible to conclude transactions in a timely manner,” says Miri Chen of the Fancy Color Research Foundation. “It took much longer for sellers to ship diamonds overseas, and for buyers to transfer funds and to ultimately receive custom-made items in a piece of jewellery.” Prices remained flat consequently, but this year could see a bounce.

Fine wine

Scoring second place in KFLII, wine markets experienced strong growth in 2020 following a year of consolidation, says Miles Davis of Wine Owners, which pulls together the Knight Frank Fine Wine Icons Index. “More than ever, this year has been about timing in the capital markets and, if you got that wrong, the chances are you got it expensively wrong. Not so for wine. Unlike after the global financial crisis, the wine market has held its nerve, merchants did not mark down prices and the market has been stable. Investors are about, and even Bordeaux prices feel like they are firming up.” Global warming has also been cited as having a big impact on wine regions that are starting to feel the heat.

Rare Whisky

Unlike our fine wine tracker, the Knight Frank Whisky Index (KFWI), compiled for us by Rare Whisky 101, lost some momentum in 2020, dropping by 3.5%. “Against many other investments that’s not such a disaster but compared with 2018’s circa 40% increase the volatility of ultra-rare top-end whisky as an investment is evident,” points out director Andy Simpson.

But the broader market rode out the pandemic in better shape, with Rare Whisky 101’s Apex1000 Index increasing by almost 8% during 2020.

Harder economic times show the index underperforming, whilst in a more buoyant economy, such as in 2018, the index outperformed. Simpson suggests now may be a good time to buy. The Luxury Investment Focus event could help you discover whether this investment will leave a sour taste in your mouth in the future.

Classic cars

After a sluggish 2019, where the value of the HAGI Top Index – which we used to track the value of classic cars fell by 7%, 2020 saw cars race back up to third place in KFLII with growth of 6%. Ferraris revved up particularly strongly, with the HAGI F Index rising 14%.

Last year saw many events cancelled, as a result of the pandemic, and sales postponed or moved online. However, it’s predicted that volumes should normalise further in 2021.

The Wealth Report: Luxury Investment Focus

Do you know your Monet from your Manet, Pikachu from your Raichu and Rolls-Royce from your Rover? The Wealth Report: Luxury Investment Focus event will cover a wide range of interesting investments, providing insight into what the future could hold for these investments of passion.

Learn more about the key trends in the luxury investment markets that you are passionate about by joining The Wealth Report: Luxury Investment Focus on Thursday July 1st at 09:00 British Summer Time.

Book your place here.