We look at 2024 luxury asset investments trends, reviewing the overall performance of asset classes from collectible cars through to fine art.
Globally, the luxury goods market is booming, giving these goods significant investment value.
Geopolitical tensions and macroeconomic challenges had surprisingly little effect on the resilience of the luxury goods market over the last few years. What is happening now, and which passion investments are offering the best returns?
Luxury market experiences record growth
Despite conflicts in the Ukraine and Sudan, negative sentiment in China and higher inflation worldwide, the global luxury goods market grew by an estimated 11 to 13% year-on-year in 2023.
As can be expected, there were losers and winners. Luxury travel and adventure experiences drove the surge. Europe, Australia, Saudi Arabia and the Far East all performed well in the sector.
This year, the luxury market is continuing to grow. According to Knight Frank projections, it is expected to grow at an annualised rate of 3.22% over the next five years. Its global value is forecast to reach US$419 billion by 2028.
Passion investments deliver a soft performance overall
Despite a positive all-round market performance, the sales of high-end investments were subdued.
Of the 10 asset classes tracked by the Knight Frank Luxury Investment Index, only six exhibited gains. At -1%, the index itself is in negative territory for only the second time in history.
According to some commentators, downward adjustments were largely price corrections following extended market booms.
Sales of rare whiskies, for example, have experienced rampant growth of 280% over the past 10 years.
Even taking the 9% drop in annual performance into account, scarce and limited-edition bottles remain an attractive investment.
Luxury asset investment trends for 2024
Core factors in a constantly changing investment landscape are increasing numbers of economically independent women and young high-net-worth individuals.
Here are the trends for five luxury asset segments, based on data from Knight Frank.
Fine art
The fine art market showed solid gains of 11%.
Following a brief foray into the ultra-modern digitised and non-fungible token (NFT) sector, investor appetite returned for works by Old Masters and established artists.
A painting by Pablo Picasso sold for US$139.4 million, shattering previous auction records.
Luxury watches
Rare, limited-edition wristwatches by iconic brands remain sought-after by collectors.
Overall, the value of the market increased by 5%. Sales at the three largest auction houses reached £488 million, slightly up on the previous year.
A Patek Philippe World Time watch went under the hammer for US$8.5 million. Timepieces by independent watchmakers such as Richard Mille and Philippe DuFour also shone, driving the indie niche market to a 40% year-on-year gain.
Coloured diamonds
Coloured diamonds continued to dazzle, albeit not as brightly as in preceding years.
Last year, the market grew by just 2%, with smaller stones and deeper colours taking precedence.
Despite a decline in demand for pink and blue stones, a 10.57-carat fancy pink diamond grabbed headlines when it triggered a bidding war, eventually selling for a record US$34.8 million.
Handbags
Due to the tumbling share price of luxury brands, investor sentiment for high-end handbags declined by 4%.
That, together with the cost-of-living crisis, is driving the shift towards lower price point exotic leather bags.
Collectible cars
Overall, the collectible car market has taken a hit. Internationally, sales declined by 6%.
Despite the dampening of investor sentiment, cars favoured by younger collectors bucked the trend. Demand for Lamborghinis and BMWs rose by 18% and 9% respectively.
Leveraging the embedded equity of a luxury asset to raise funds
It’s possible to sell a luxury asset to access equity. However, it can take time and know-how to secure a reasonable price. It also means having to part with the asset.
As an alternative, it’s quicker and easier than ever before to use a luxury asset to secure short-term funding.
The asset-based loans market has continued to grow, in South Africa and internationally. It provides a reputable and convenient way to unlock the value of luxury assets – without having to sell.
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. For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
Fixed rates range from 36% to 60% APR and payment terms range from a minimum of 3 months to a maximum of 24 months. Apart from the initiation and monthly fees shown in the table, the only additional fee is credit life insurance if the borrower does not have this already.
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