Luxury investments have broken more price records during 2015, with art and cars driving double-digit growth and outperforming London residential property investments.
During the 12 months to the end of September the value of the Knight Frank Luxury Investment Index (KFLII) rose by 10 percent. This compares with an 8 percent drop in the value of the London Stock Exchange 100 equities Index and a rise of only 1 percent for the top end of the London residential property market.
But the headline figure masks a mixed performance by the 10 asset classes in the KFLII. Classic cars (+18 percent) continue to top the league, but art was a close second – up 15 percent. Just behind wine on 7 percent as many Bordeaux vintages have now returned to a period of growth after prices slumped during 2011, said Nick Martin of Wine Owners.
Jewellery rose 5 percent, outperforming both prime London residential property and equities. Furniture was the only asset to record negative growth with a further 12-month drop of 6 percent.
A slew of stellar auction results throughout the year has kept luxury investments firmly in the media spotlight. Even furniture secured a new high for a living maker when a Marc Newson Lockheed Lounge sofa was sold in April for £ 2.4 million by Phillips.
Although no classic car has managed to beat the record set by Bonhams last year when it auctioned a 1962 Ferrari 250 GTO Berlinetta for US$ 38 million, eight of the 25 cars ever to have sold for more than US$ 10 million at auction went under the hammer in 2015. These included all-time highs for Jaguar (US $13.2 million), Porsche (US$ 10.1 million) and, interestingly because of its youth, McLaren (US$ 13.75 million).
Strong demand for coloured stones helped Bonhams set a new per-carat record for a spinel, when it sold the 50-carat Hope Spinel brooch for £962,500 in September.The short-term growth of coloured diamond prices has been more muted. This is due to a lull in Chinese buyer activity, said Oren Schneider, co-founder of Adama Partners, a New York venture firm, and member of the board of advisors to the Fancy Color Research Foundation.
But a Hong Kong-based billionaire still set the all-time record for a gem or piece of jewellery when he bid US$ 48.4 million for the Blue Moon, a rare fancy vivid blue diamond auctioned by Sotheby’s Geneva during November. The day before he paid US$ 28.5 million for a vivid pink diamond sold by Christie’s.
Although Knight Frank does not include white diamonds in KFLII, larger stones have shown 5 percent annual growth over the past six years
“Diamonds, especially larger and rarer ones, could represent a viable means for wealth preservation owing to their increasing rarity and to their low correlation in prices with other assets.” said Ehud Laniado, principal of diamond pricing consultancy Mercury Diamond.
Contemporary and modern artists have performed particularly strongly, with Picasso’s The Women of Algiers setting an all-time auction high of US$ 179 million with Christie’s in May. Many other artists, including Modigliani (US$ 170 million) and Twombly (US$ 70.5 million) also scored personal bests.
However, Celine Fressart of art advisory business 1858 Ltd, said the market is less robust than the headline results would suggest, with a relatively high number of auction lots remaining unsold at many sales.
“Works that are fresh to the market will continue to achieve top prices, but things that have sold more recently won’t attract as much interest.
“Our clients are becoming more careful and more interested in the more affordable middle markets.”
Ralph Taylor, Head of Post-War and Contemporary Art at Bonhams, agreed that there can be an imbalance between quality and price. He says less known, but highly influential artists, such as Adolf Luther of the Zero movement, and Italy’s Lucio Fontana, offer real opportunities for the connoisseur.
The Knight Frank Luxury Investment Index (KFLII) tracks the performance of a theoretical basket of selected collectable asset classes using existing third-party indices. Each asset class is weighted to reflect its relative importance and value within the basket. The third-party indices selected are widely used by the media and analysts to track the performance of each asset class.
