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Classic cars, art, handbags, whiskey or wine – which of these luxury investments performed the best and worst in 2021?
In 2020, COVID-19 had a big impact on the performance of a range of asset classes and luxury investments were no exception. However, by the end of 2021 luxury investment had mostly recovered. The Knight Frank Luxury Investment Index (KFLII), which assesses the performance of various luxury investments, found that all luxury investments grew year-on-year, although some much more than others. The Wealth Report, that they release annually, demonstrates over the past decade, the Knight Frank Luxury Investment Index increase of 123% outperformed the Australian Prime Residential Index at 51%.
Wine was the top performer for 2021. Their value grew by 16% over the year. The next best performing luxuries last year were watches and art.
Furniture was the worst-performing luxury investment of 2021 with values only growing by 1%, followed by coloured diamond and jewellery which grew by 2%.
Knight Frank Luxury Investment Index, Q4 2021
| Asset class | 2020-2021
% annual change |
2012-2022
% 10-year change |
|---|---|---|
| Wine | 16% | 137% |
| Watches | 16% | 108% |
| Art | 13% | 75% |
| Coins | 9% | 64% |
| Rare whiskey | 9% | 428% |
| Handbags | 7% | 78% |
| Cars | 3% | 164% |
| Jewellery | 2% | 57% |
| Coloured diamonds | 2% | 23% |
| Furniture | 1% | 19% |
Source: Knight Frank’s The Wealth Report 2022. The Knight Frank Luxury Investment Index is the weighted average of the change in value of each asset class over a given period.
How luxury investments performed
Wine
Increasing in value by 16% over the year, wine was the best performer. Champagne (+31%) and Burgundy (+25%) performed particularly well. According to the report, Champagne from the 2008 vintage stood out thanks to huge consumer and investment demand and some supply chain concerns.
Wine has been a strong performer over the long term as well, growing by 137% over the past 10 years.
Related article: Investing in Wine could be easier than you think
Watches
Watches were the second best-performing luxury investment of 2021. In fact, total sales of watches topped AU$750 million at auction worldwide. It was a huge year for watches, which were once seen as a gateway to the main business of selling art.
Independent watchmakers set new records for this luxury category. Watchmakers like George Daniels, Roger Smith, Christian Klings and Philippe Dufour were particular stand-outs in 2021.
Art
In 2020, Art was the worst-performing luxury item according to the report. A year later it has really made a comeback, with sales growing by 13% year-on-year. For several notable artists, records were set, including: Jackson Pollock’s Number 17, which achieved US$61.2 million, and Cy Twombly’s Untitled, which went for US$58.9 million.
Related article: Investing in Art – is it a sound investment?
A huge trend taking off in the art world is the emergence of non-fungible tokens (NFTs), and this has seen a fresh wave of buyers into auction houses. NFTs represent proof of ownership over digital assets, such as images, videos, art, in-game assets and collectibles. NFTs are particularly popular in Asia and it is predicted that in 2022 there will be a continued rise of NFTs competing with sales of art.
Rare whiskey
The value of rare whiskey grew by 9%, according to the Knight Frank Whisky Index (KFWI), compiled by Rare Whisky 101.
Standout sales in the rare whisky category include Glenfiddich’s The 1950s Collection, which contained four bottles of rare spirit, all distilled in the 1950s – which sold for just over AU$1.7 million. Over the past 10 years, though, rare whiskey has been the top-performing luxury investment growing by a whopping 428%!
Classic cars
Classic cars took seventh place in the KFLII with prices up 3% over the year, particularly sluggish given that last year the HAGI Top Index – which Knight Frank uses to track the value of classic cars – grew by 6%.
There were still very strong results for certain cars. Classic Lamborghinis and Porsche both outperformed the index, with sales growing 15% and 8% respectively.
Over the past 10 years cars have been the second best-performing luxury investment growing by 164%.
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Cover image source: Ann Haritonenko/Shutterstock.com
This content was reviewed by Content Producer Isabella Shoard as part of our fact-checking process.
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