What lies ahead for investments of passion?

Interestingly, collectors seemed to be unaffected by the global pandemic and continue to pay significant amounts of money for an increasingly eclectic mix of assets including basketball sneakers, comics, and even meteorites.

At an average growth of 16%, watches and wine topped the Knight Frank Luxury Investment Index globally – their strongest annual performance since 2018 – and art (+13%), rare whisky (+9%), and coins (+9%) remained high on the index.

Zooming into Asia-Pacific, art, classic cars, and wines are the top three investments of passion of choice for the region’s respondents – this is a trend that follows the previous edition of The Wealth Report.

Why are investments rising?

The Attitudes Survey also revealed that the top three reasons for investing for Asia-Pacific respondents were the joy of ownership, for investment returns, followed by keeping passions as safe-haven assets.

Director of Opera Gallery Asia-Pacific, Mr Stéphane Le Pelletier puts it this way, “There is a definite and almost exponential rise in art sales volume, for the most part, fuelled by a generation of young collectors who are not just passionate about new kinds of art but also having the purchasing power to collect. One just has to look at the record-high art transactions at major auction houses last year, with young Asian buyers making up a huge percentage of total sales; modern and contemporary art are also selling out more than ever before.”

Crypto and NFTs

Arguably, the biggest trend in the luxury collectables market this year has been the surge in Non-Fungible Tokens (NFT) sales. The world’s main auction houses sold £169 million of NFT or crypto art last year, but in total over £60 billion (Approx USD79 billion) of NFTs were sold via online platforms and this trend looks set to continue.

According to Christie’s, a Britain-based auction house, 75% of those investing in the art category were new collectors, with an average age of 42. The highest profile was from Asia-Pacific, with Singapore-based founder of NFT Investment fund Matapurse Vignesh Sundaresan, or more notably known as MetaKovan, paying USD 69 million for Everydays: The First 5000 Days, an NFT by the artist Beeple in March 2021. In November, underbidder Justin Sun paid USD78 million for Alberto Giacometti’s Le Nez from the Macklowe sale, describing the acquisition as part of his drive to promote the fusion of finance, culture, and art within the crypto community.

Art collectors have changed the way they collect their passions quite radically over the past years, as the marketplace has been largely disrupted by the emergence of NFTs and cryptocurrencies.

The younger generations who are known to be more tech-savvy and the most educated find the NFT art marketplace especially appealing due to the rising and unpredictable prices – which is exciting for them as it is an opportunity for them to flip the collectables into profits digitally while being untraceable. While still nascent, wealth creation in the digital space could grow in the data-driven economy, as it complements the traditional sources of wealth and can be less susceptible to fraud or manipulation. Much like the founders of today’s tech giants, anyone blazing a trail successfully will no doubt have his or her name etched permanently into industry folklore.

Download the Wealth Report 2022 to read more about the Knight Frank Luxury Index.