_Latest Luxury Investment Index findings

Whisky Galore

Whisky surged straight to the top of KFLII when we introduced it to the index at the end of 2018 to reflect the growing interest from UHNWI collectors, particularly in China and the wider Asia-Pacific region.

Since then, market growth – as measured by the Knight Frank Rare Whisky 100 Index, compiled for us by the experts at Rare Whisky 101 – has moderated slightly, but prices still rose by 23% during the 12 months to the end of June, far ahead of any of the other asset classes in the index.

Andy Simpson of Rare Whisky 101 says a steep downturn in prices for The Macallan – a mainstay of the investment market by both volume and value – coupled with plenty of supply, was one of the main reasons the index stuttered, but he predicts values will rise again during the rest of 2019.

“Things have since picked up significantly, so we’re expecting a wholly better set of results at the year end.”

Elsewhere in the KFLII, we have seen a mixed picture among some of the more mainstream asset classes. Growth in the classic car market, for example, has slipped into reverse gear, but investment-grade wine and art have both performed strongly.

Supercars

Mr Dietrich Hatlapa of HAGI, which provides our classic car data, says the dip is down to speculative investors leaving the market to genuine enthusiasts who are more circumspect about paying over the odds for vehicles.

However, the most desirable cars are still fetching big money. A McLaren F1“LM” spec supercar was the top seller at the recent benchmark Monterey sales in California fetching almost US$20 million – a marque record. The market for Formula 1 cars is also hot right now, points out Mr Hatlapa. A Nicki Lauder-driven 312T Ferrari fetched US$6 million at Monterey.

Image: A 1994 McLaren F1 “LM spec” sold at the Monterey auctions by RM Sotheby’s for US$19.8m. IMAGE COURTESY RM SOTHEBY’S

Art boom 

By contrast, art managed double-digit  growth with the Art Market Research (AMR) World Index, which tracks global auction results, growing by 10%. AMR’s Veronika Lukasova-Duthy says multiple sectors of the market helped drive the index up.

“The 2019 art market got off to a cracking start in New York when a painting by Elisabeth-Louise Vigée Le Brun sold for US$7.2 million at Sotheby’s Old Masters. The price paid for the portrait  of Muhammad Dervish Khan, Indian  Ambassador to France, was a record  not just for the artist but also for women Old Masters.

“Last year, David Hockney’s canvas Portrait of an Artist broke the record for a living artist when it sold for US$90 million at Christie’s in New York. The record didn’t last long, however, as a private collector paid US$91 million for Jeff Koons’s gleaming stainless-steel Rabbit at Christie’s Postwar and Contemporary sale in May.

“Art inspired by street culture is just as  alluring to many younger collectors as works by blue chip and established artists were for their parents. The Kaws Album by American graffiti-turned-acrylic artist KAWS was the subject of fierce bidding at Sotheby’s April auction NIGOLDENYE in Hong Kong. When the work was finally sold for US$14.7 million,the figure more than quadrupled the artist’s previous record.”

Image: Rabbit by Jeff Koons. Sold for around US$91m by Christie’s

Burgundy

With growth of 9% to the end of the second quarter fine wine was just behind art in terms of performance. “Fine wine Red  Burgundies led the charge, and were also  responsible for the biggest fallers,” says Nick Martin of Wine Owners, which compiles the Knight Frank Fine Wine Icons Index for us.

“This reflects the volatility of blue chip producers such as Rousseau and Domaine de la Romanée Conti as they reach vertiginous heights,” he explains. “In fact if you look at the specialist Wine Owners Burgundy 80 Index, it has fallen 10% off its peak earlier this year, but is still up 191% over the past 10 years.”