Guide to the Top Luxury Investments

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The Forbes billionaires list demonstrated the high number of art collectors. From Bill Gates who famously purchased Leonardo da Vinci’s notebooks, known as the Codex Leicester, for £29 million to Carlos Smith who founded his own private museum in Mexico City with over 66,000 works, life’s ultimate luxuries are absorbing the interest of wealthy people like never before. Although a slowdown is forecast by some commentators, the rarity of art, classic cars, special gemstones and trophy properties means that prices will remain resolute. Matthew Weigman, Worldwide Director of Sales Communications at Sotheby’s, looks back on what billionaires bought in 2015 and offers his tips.

PROPERTY

The Penthouse, Carlton House Terrace, London SW1According to Knight Frank’s Wealth Report, residential property is the most popular sector to invest in, with 81% of wealth advisors saying their clients were becoming more interested in it. Though, the report points to the UK’s private-rented sector as a future trend for UHNW investment, which makes sense given the government’s policy on housing and fiscal stance on high value residential property.

In relation to commercial property, UK commercial property delivered average total returns of 14.4% to the end of September 2015 according to IPD index making five years of double digit annualised increases. For example rents in London’s West End offices space surged to 21.6%. This is not just a London problem souring rents in cities are forcing art galleries to rethink how they reach the billionaires showing for art.

Tip: The UK market has already been impacted by the tax changes, however, London remains a global city where the super-rich demand to own property. With a flight to quality expected, demand for the most prestigious streets and rarest properties will sustain prices for the very best homes.

CLASSIC CARS

Janis Joplin's 1964 Porsche 356Classic cars are the best performing of all luxury assets over recent years. According to Knight Frank’s Wealth Report, classic cars have been the strongest performer with the value of the HAGI Top Index rising by an astounding 487% over the past 10 years. At the recent Driven by Disruption event in New York City on 10 December, RM Sotheby’s generated an amazing $73.5 million in sales with 31 of the world’s finest motor cars on offer. Along with the most expensive car sold at auction in 2015, the historic ex-Fangio 1956 Ferrari 290 MM, a new benchmark was set for Janis Joplin’s 1964 Porsche 356 SC selling for an unprecedented $1.6 million. Paul Hudson, writing in the Weekend Telegraph, stated that he will ‘eat his hat if (classic car) prices do not continue to escalate’.

Tip: First and foremost, you should buy what you like as that is what will ultimately bring you the most enjoyment. From then on, do your homework to authenticate the vehicle and its history.

JEWELLERY

The Blue MoonAccording to Knight Frank’s Wealth Report, robust returns on diamonds of more than one carat, mounting demand from Asia and the prospect of mines running dry are pointing to the increased attractiveness of precious natural diamonds as an investment asset. The most desirable are pieces evoke the lifestyle of the personalities who once owned them. A notable recent example, reflecting the allure of a celebrity provenance, is a rare 9.75 carat Fancy Vivid Blue Diamond Pendant from the Collection of Mrs. Paul Mellon. At 48,634,000 CHF, ‘The Blue Moon’, an exceptional cushion-shaped Fancy Vivid Blue 12.03 carat Diamond mounted as a ring set a new world record price for a diamond, gemstone or jewel in November.

Tip: The internet era has made information available to collectors from all over the world. Auctions are now bringing to sale rare jewels which have been in private collections for decades, as well as unique creations by all of the great jewellers.

WATCHES

Patek Philippe, the Henry Graves JrSales of luxury watches have seen significant growth over the last 10 years with Patek Philippe and Rolex the most sought-after models at auction. A Patek Philippe gold pocket watch, the Henry Graves Jr, was sold for 23,237,000 CHF in November 2014 and remains the record price for any timepiece sold at auction.

Tip: Global interest in watches has seen significant growth in participation and our sales have seen growth of 200-300% in the last 10-12 years. Increasing wealth in Asia and the Middle East, the nouveau rich, has contributed enormously to demand for collectible watches with this trend showing no signs of abating.

 

 

 

CONTEMPORARY ART

Gerhard Richter, FujiAfter a few years of relatively languid performance, art appears to be bouncing back, with annual growth of 15%, according to data from Art Market Research. The report also showed that Post-War and Contemporary art was the largest sec­tor of the fine art market, representing 48% of all fine art sales by value. This growth has continued into 2015 with record-breaking figures at London’s showpiece February sales. The most eye-catching of these was undoubted­ly the $46.3 million paid for Gerhard Richter’s Abstraktes Bild, 1968, a new high for any living European artist. Alongside the auction houses, the contemporary scene is also dominated by a series of high-profile fairs across the globe: prominent among these are Frieze in London and New York, Art Basel in Hong Kong, Basel and Miami and Art Dubai in the Middle East. Record-breaking figures were also achieved in June at Sotheby’s Contemporary Art sale in Paris.

Tip: New collectors should visit as many exhibitions and auc­tions as they can, learn about the art­ists, and discover the work that they really like. This could be paintings or prints by giants of contemporary art like Warhol and Richter, or younger artists such as Jonas Wood and Jia Alli. Follow your passion.

PENTHOUSE CARLTON HOUSE TERRACE IMAGE SUPPLIED BY SOTHEBY’S INTERNATIONAL REALTY; JANIS JOPLIN’S 1964 PORSCHE IMAGE SUPPLIED BY R.M. SOTHBY’S; ALL OTHER IMAGES SUPPLIED BY SOTHEBY’S.