Luxury Collectibles Lead The Way For Investors

Lisa Smith, BA (Hons), CeFA
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Collectibles are showing returns that are steadily outperforming inflation and many financial investments.

The luxury investment index from property and wealth consultancy Knight Frank saw a 7% gain in the 12 months to the end of June 2013.

Although equities in the FTSE 100 show a better return over the period at 12%, taking a longer term view, collectibles are striding ahead 174% to the FTSE’s 55% over the past decade.

“The huge gains in the value of collectibles clearly marks out that wealthy investors have an appetite for investing in possessions they can see and enjoy,” said the report.

Classic cars are a clear favourite – recording a massive 430% surge in the past decade and up 21% in the second quarter of 2013.

Classic cars

In fact, a recent vintage car auction by Bonhams at Goodwood, Sussex, saw a 1935 Alfa Romeo Tipo sell for £5.93 million. The price crashed through the previous high for an Alfa Romeo set at £4.2 million for a 1933 Alfa Romeo 8 cylinder Monza 2300 sold in 2010.

Bonhams also set the world record for a classic car price in July 2013 selling driver Juan Manuel Fangio’s Mercedes W196 for £18.25 million.

In comparison, prime London property increased in value by 135%. Gold was up 235%, despite taking a recent nose dive on the markets.

The table from the index shows how key collectibles have performed over the past 10 years:

Luxury Collectibles Lead The Way For Investors

 

 

 

 

 

 

 

 

 

Antique furniture has fallen from grace with a steady decline, while coins, stamps and cars have roared ahead.

Trends and bubbles

Much of their gain has to do with a penchant by nouveaux riches Asian collectors.

“Over the decade, the value of collectibles has only fallen in four half year periods, but even then, the fall was no more than a single per cent,” said a spokesman for the firm.

“Investors should consider that collectibles are volatile markets both as a whole and for individual items that gain or lose fashion. Our research has shown collecting wine and art are more volatile than equities.

“Collectors need to be aware of trends for certain items and understand that price bubbles can quickly inflate or deflate.”

Indeed, the argument holds good that if someone intends investing in collectibles, the first consideration should be whether they like the item – if they do and the price rises or falls, then the value does not matter as much as investing for gain.

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