Despite rampant inflation, the luxury goods market is proving to be remarkably resilient in 2022.
We look at luxury asset investment trends and see what investors can expect from key high-end collectibles over the next 12 to 18 months.
Global growth in luxury goods markets
Following a strong performance in 2021 and buoyed by positive consumer sentiment, the luxury goods market grew by almost 20% year-on-year in Q1 2022.
Even China, with its protracted pandemic-related lockdown, registered double-digit growth over the same period.
According to recent forecasts, the insatiable demand for luxury wristwatches, classic cars, rare whiskies and fine art is expected to drive the value of the market from €288 billion in 2021 to a high of €380 billion by 2025.
Young, tech-savvy consumers in Asia, Europe and the USA are behind the V-shaped recovery, with particularly robust holiday-season spending leading the way.
Hyperinflation, the conflict in the Ukraine and subdued economic expansion have had no impact on the market’s growth trajectory.
On the contrary, investors looking for a hedge against current macroeconomic challenges are opting to put their money into luxury goods.
2022 reports on luxury asset performance
The 2022 Knight Frank Wealth Report provides interesting insights into global wealth distribution and investment trends, especially in the real estate and luxury asset markets.
Released in mid-2022, the Bain & Company Luxury 2022 Spring Update also provides information about luxury asset investment trends.
Luxury asset investment trends for 2022
The digital economy is shaping core asset investment trends for 2022 and beyond. Here are expert predictions for six luxury asset classes.
In 2021, sales of high-end watches at auction leapt by 54% compared to the previous year.
Pieces by independent watchmakers, such as F.P. Journe, Richard Mille, Greubel Forsey and Philippe Dufour, were particularly in demand.
So, too, were Rolex Sports Watches – GMT-Master II, Daytona, Explorer, Sea-Dweller, Submariner and Yacht-Master.
The fine art market was strong in 2021. Works by artists like Frieda Kahlo and Jackson Pollock registered record prices at auction.
Jackson Pollock One: Number 31, 1950
Non-fungible tokens (NFT) of digital artworks by the likes of Beeple also made headlines when they smashed through the US$50 million mark.
Fancy coloured diamonds
Buyers in Asia, the USA and Europe drove the demand for natural fancy coloured diamonds in 2021. Rare pink stones and yellow and vivid yellow diamonds recorded the highest sales.
In 2021, sales of rare burgundy and Champagne increased by 25% and 31% respectively year-on-year.
An increasing demand for more expensive wines is an emerging post-pandemic trend in a market affected by logistical and supply-chain challenges.
The demand for low-mileage, high-performance sports cars is expected to continue beyond 2022. Young wealthy tech barons have displayed an appetite for early-model Lamborghini, Ferrari, Mercedes-Benz, Bugatti and Porsche supercars.
The demand for older, discontinued whiskies is expected to outpace that of limited editions in 2022. After a difficult 2021, the market for rare, expensive bottles has shown promising signs of recovery.
As with wine producers, the whisky industry has seen the emergence of non-fungible tokens (NFTs). Applications range from NFTs as provenance to using tokens as purchase vouchers.
Using a luxury asset to secure funds
As the owner of a luxury asset, it’s possible to raise capital against that asset (without selling).
At Lamna, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.
Client borrows R10,000 for 90 days.
Total Cost of Loan
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.