Which luxury goods should you invest in?

From Hermès handbags to Rolex watches, which luxury goods should you invest in?

After examining Knight Frank’s updated index of investment attractiveness of luxury goods, AstroDollar tells you about five options worth keeping a close eye on this year

On March 2, the consulting firm Knight Frank presented The Wealth Report 2021, a global study of the world’s wealth, with an updated index of the investment attractiveness of luxury goods. The study found that only five of the ten components of the index added value in 2020.

Designer bags

Value growth in 2020: +17%

10 years value growth: +108%

For the second year in a row, Hermès bags have become the most profitable commodity of all luxury goods. According to Knight Frank’s calculations, their value increased by 17% by 2020, and at the end of the year a new price record was set for a bag from the French house: a model Himalayan Niloticus Crocodile Retourne Kelly 25 went under the hammer for $437,330 at Christie’s November auction. The final amount of four times exceeded the stated estimate. By the way, the previous record for the value of Hermès bags, set in 2017 (380 thousand dollars), was beaten twice at the 2020 auction: the bag Himalaya Niloticus Crocodile Birkin 25 was sold for 388.7 thousand dollars.

As Knight Frank notes, the most popular luxury bags are used by buyers from Asia – hence the price records set at online auctions in Hong Kong. Rare handbags, often unique or with a distinctive feature, will have real investment appeal. In the case of the Himalayan models, this involves a unique gradient color, achieved by hand. At the same Christie’s auction in November, the top lot was also a crocodile bag dyed to match the facade of the Hermès boutique.

hermes bag
Himalaya Niloticus Crocodile Retourne Kelly 25, Hermès

To resell your bag at a profit, keep it in its original packaging, complete with all accessories, from the duster to the care advice cards.

Collectible Wine

Value growth in 2020: +13%

Value growth over 10 years: +127%

As Miles Davis of Wine Owners, with whom Knight Frank calculates the Fine Wine Icons Index, notes, unlike previous financial crises, the COVID-19-induced economic downturn has had no effect on the collectible wine market. Much more important for this segment is the effect of global warming. For example, the taste of pinot noir, which is sensitive to rising temperatures, is changing. And indeed some experts say that 2019 is a transition year for Burgundy wines. So interest in vintage brands continues to grow: red wines from Tuscany are up 18%, vintage Champagne is up 14%, Burgundy is up 11.5%.

Miles David recommends looking out for 2014 and 2016 wines: they remain very affordable for now, but may become quite rare in the near future.

Classic cars

2020 value growth: +6%

10-year value growth: +193%

At the end of 2019, the HAGI Top index, which reflects the value dynamics of rare cars and motorcycles, fell by 7%, but for 2020 it shows growth again. Subsequently, the index’s creators linked the decline to changes in many countries’ environmental laws, which temporarily deterred collectors from buying.

The driving force behind classic car sales in 2020 was online bidding, and it gives hope that with the removal of the restrictive measures imposed because of the pandemic, the assets could increase in value even more in 2021. After all, most bids are at special shows and rallies.

The HAGI F-index, which tracks the value of Ferrari models, is rising for the second year in a row: by the end of 2020 it will be up 14%.

Watches

Growth in value for 2020: +5%

Growth in value over 10 years: +89%

Patek Philippe and Rolex continue to be the newsmakers at watch auctions. It is not only the numerous complications that are particularly appreciated: an unusual combination of materials or an unusual detail can also increase interest in a model and thus its value. As in the case of the 2018 Rolex GMT-Master II “Pepsi” steel watch (so named because of its red and blue bezel). At a Phillips auction in November 2020, it sold for nearly 24,000 Swiss francs, twice its estimeat. The whole thing is that the watch came in a series of models with a Jubilee bracelet, while the GMT-Master has much more the Oyster bracelet.

watch
GMT-Master II Pepsi, Rolex

Particularly sought after by Rolex collectors is the so-called “new old stock”: models made several years ago but not worn by the owner and kept unopened with the labels still attached.

Design furniture

Value growth in 2020: +4%

Value increase in 10 years: +22%

Design objects have never been considered a good investment, but in the past year they have outperformed coins, colored diamonds, jewelry, rare whiskeys and works of art. However, it should be taken into account that the methodology for calculating the index has changed: Knight Frank now focuses on furniture from the Art Nouveau era and the mid-20th century.

In general, furniture rarely goes under the hammer much higher than the estimate: as a rule, the final price is within limits. The works of great masters of the past, such as René Lalique, Josef Hoffmann and Eileen Gray, who is still one of the most successful architects when it comes to auction sales, continue to attract interest.

chair
“The Dragon Chair” by Eileen Gray, 1917-1919.

“The Dragon Chair” by Eileen Gray from the collection of Yves Saint Laurent has become the most expensive piece of furniture of the 20th century. At Christie’s auction in 2019, it was sold for 21.9 million Euros with an upper limit of 3 million Euros.

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