Art the leading luxury investment, not real estate

According to Knight Frank’s Luxury Investment Index, (KFLII) art prices rose by 30 per cent over the 12 months to the end of June 2023.

While watches and jewellery, both recorded growth of 10 per cent.

Classic cars, which came in second in 2022 with growth of 25 per cent, fell to fifth spot, with growth of 5 per cent over the past 12 months.

Overall, the KFLII rose seven per cent in the 12 months to the end of June 2023, ahead of real estate and gold, but behind the S&P/ASX 200.

Knight Frank Head of Residential Research Michelle Ciesielski said this was a credible performance compared with prime luxury residential prices across Australia which grew 1.7 per cent over the same period.

“It was, however, the weakest annual performance by KFLII since Q2 2021, proving that even tangible assets are not immune to market uncertainty,” Ms Ciesielski said.

Ms Ciesielski said the strong results of most luxury assets, show that people are still willing to spend on personal luxury items, despite economic uncertainty and interest rate rises.

“It is the slowdown in the wine and classic car markets, both in sixth and seventh place respectively with five per cent growth over the past 12 months, that have tempered overall growth, as these asset classes previously have had double-digit rises that have often underpinned the index’s performance,” she said. 

“Despite the investible car market being up five per cent on an annual basis, it has fallen seven per cent so far this year off-the-back of the mixed performance of classic cars

“We may experience a similar trajectory with the performance of art collections over the coming year given the slower auction results in 2023, challenging the asset class topping the luxury index.”

Knight Frank Head of Residential Erin van Tuil said there was a strong link between prime residential real estate and luxury investments.

“The collections of high-net-worth-individuals can shape their homes, but equally their homes can shape their collections,” Ms van Tuil said. 

“Space to show off luxury collectibles is often on the wish list for wealthy home hunters, including garage spaces, great wine storage, a safe for watches and jewellery, and space to hang their art. 

“Accordingly, developers are also increasingly factoring the collecting habits of potential buyers into their projects.”

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