Top 5 Luxury Investment Assets You Need To Own This Year
We have a new leader in luxury investment assets for 2017 and it’s not what you’d think.
Published on 8 August 2017
Cherished as prize possessions by consumers and collectors, luxury assets also serve as a source of growth in many investment portfolios. The top-performing luxury investment assets over the past 10 years have been consistent, however the past year has seen classic cars knocked from the top spot on the Knight Frank Luxury Investment Index (KFLII) – which tracks the performance of a theoretical basket of selected collectable asset classes using existing third-party indexes.
Buckle up as we count down the top luxury assets you need to add to your investment portfolio this year (based on their ranking on the KFLII). Warning, you may be in for a few surprises!
Having grown 147% over the past 10 years, 2016 saw jewellery value increases taper off to just 3%. That’s not to say there weren’t some high-profile, high-priced sales at auction including the 14.62 carat Oppenheimer Blue, which sold for US$58 million at Christies in Geneva and another blue diamond ring which sold for £1.38 million (approx. US$1,745,000) at Bonhams in London.
Over the last decade, the star among jewellery assets has been pearls, which registered 300% growth, followed by pink diamonds nearing 250%, and blue diamonds hovering above 100%.
The lacklustre 3% growth last year was not a particularly high point for jewellery investors. However, with the record-setting purchase at Sotheby’s of the 59.6 carat “Pink Star” diamond by Chow Tai Fook in April this year, we could see jewellery’s standing on the KFLII start to rise.
Having led watches for the past ten years (182% compared to 65% growth), coins were neck-and-neck with watches for the year ended 31 March 2017 – both asset classes showed growth of 4% from the previous year. This is quite significant, as looking back to the end of 2016 and the year-to-date performance, there was 6% growth for coins and 4% growth for watches.
The most popular watches with investors have been collectibles by the likes of Patek Philippe and Cartier, which have shown growth of more than 50% each over the past 10 years, and Rolex of a little more than 30%. Explaining why recent watch growth isn’t as high as you might think, Jonathan Darracott, Global Head of Watches for Bonhams, said, “Some of the most popular watches today weren’t really considered that desirable when the indices were put together.”
The top coins to invest in according to Stanley Gibbons include the Charles 1 Gold Triple Unite (1642), which was the largest gold coin ever hammered in England and given as gifts by the King. Only 200 of these are known to have been produced and today go for more than US$128,000. Another coin, the Hirohito, Gold 20-Yen, “Showa 7” (1932) was produced from 1930 to 1931 officially and then discontinued in 1932. However, according to Stanley Gibbons, a few were issued with 1932 on them, but never circulated, thus making this coin extremely rare and valued at just over US$42,000.
Collectible cars have trounced the field as a luxury investment for some time. They have grown 404% over the past 10 years to Q1 2017, with Porsche and Ferrari leading the way. The collectible cars segment saw overall growth of 6% for the year ended 31 March 2017 – which by most asset classes would be considered good, however it is less than what’s been seen by classic car collectors in recent years.
Dig deeper into the Kidston 500 Index, which follows the performance of classic cars at auction, and we can see that the cars Ferrari has manufactured up to 1973 are the strongest performing, followed by Porsches (of all ages – defying the mantra that only classics are good car investments). The Historic Automobile Group International reported that Mercedes had the most growth in the value of their marque, with an impressive 16% over a 12-month period to May 2017. And if you’re the very lucky owner of an original McLaren F1, their value has increased 1,000% from their original MSRP.
Finally, vintage wines have claimed the top spot among luxury investment asset classes on the KLFII index. Thanks to a strong performance from California (up 34%) and Burgundy (up 31%) in 2016 and overall growth of 24% on the Knight Frank Fine Wine Icons Index and KFLII for the year ended 31 March 2017.
The 10-year performance of wines is an impressive 256%, beating the overall KLFII index by 99%.
According to the KFLII, over the past ten years, Californian wine has grown the most across all asset classes in the index, however Burgundy and Bordeaux wines have lagged behind. Their recent revival has been the main reason for the overall increases in value of vintage wines.
Luxury investment asset values grew at a sluggish 2% pace in 2016, and that trend appears to have continued into 2017. Other than vintage wines, the rest of the asset classes on the KFLII have been lacklustre. It could be that popular products in certain asset classes are just not listed, as was referenced by Darracott, or we may be seeing consumers’ and collectors’ tastes change. Whatever the case may be, we can’t wait to see if cars can retake the pole position in the KFLII rankings later this year.
What’s Affecting Your Money?
Sign up to receive investment news and ideas