There is good news for lovers and collectors of art. It may not just please your heart but also your bank balance. Art has been the top performer providing a 29 per cent return in the 12 months ending December 2022, as per the Knight Frank Luxury Investment Index (KFLII) — which tracks the value of ten investments of passion – art, cars, watches, handbags, wine, coins, jewellery, furniture, coloured diamonds and rare whisky.
Over a 10-year period, art has given returns of 91 per cent. Andy Warhol’s Shot Sage blue Marilyn sold for $195 million at Christie’s last year. Following the art are classic cars that have revved up their performance by rising 25 per cent year-on-year in 2022, the highest in nine years. Take, for example, a Mercedes-Benz Uhlenhaut Coupé that sold in 2022 for $143 million, setting a record for the most expensive car ever sold. Over a 10-year period, classic cars have given returns of 185 per cent.
In 2022, watches took third place on the luxury index list with an 18 per cent annual appreciation on investment. They provided a return of 147 per cent over a 10-year period. “The watch market at the top three auction houses grew 33 per cent in 2022 to a total of £475 million. This included 40 watches that sold for over £1 million, 12 more than the previous year,” says Sebastian Duthy of Art Market Research. However, he adds that the market is being led by a small number of models.
Luxury bags, wines and jewellery slipped from their top positions to 5th, 6th and 8th respectively. Bags gave a return of 15 per cent, wine 10 per cent and jewellery only 6 per cent. Coins came in at number seven, giving returns of 8 per cent. While rare whisky as a category gave returns of only 3 per cent last year, it has given extraordinary returns of 373 per cent over a 10-year period.
“The results of our index and some of the staggering sums paid for investments of passion over the past 12 months highlight just how important their collections are to UHNWIs (Ultra high-net-worth individuals) and how resilient many of these asset classes are to economic and geopolitical events. Gen Z and Millennial wealth are also having a profound impact with new collectable markets emerging all the time,” says Andrew Shirley, author of the Knight Frank Luxury Investment Index.
The Knight Frank Luxury Investment Index is part of Knight Frank’s annual flagship report The Wealth Report. The Wealth Report 2023, which conducts an extensive survey across markets globally, also released its ‘Attitudes Survey’ which points out that approximately 53 per cent of ultra-wealthy in India are likely to purchase art amongst passion-led investments along with watches and luxury handbags, followed by jewellery at 41 per cent.
Classic cars came in as the fifth most preferred investment of passion with 29 per cent of respondents showing a preference to purchase one in 2023. These investment asset classes have been performing well over the global index which has led many UHNWIs to continue their investments. Globally, art (59%), watches (46%) and wine (39%) make up the top three categories of passion-led investments.
“With the domestic and global market offering significantly higher returns for such collectables, Indian ultra-wealthy are actively seeking investment opportunities in passion-led investments. The demand for rare articles has been rising across different generations in India and with the rise in wealth in India, we can expect more investments in these asset categories,” says Shishir Baijal, Chairman and Managing Director, Knight Frank India.
