Hermès handbags top Knight Frank’s luxury investment index

By Sabuhi Gard

Hermès handbags have topped the Knight Frank Luxury Investment Index (KFIL), despite the ongoing turmoil of the Covid-19 pandemic.

 

Asian handbag collectors continued to snap up these affordable luxury pick-me-ups with prices rising 17% last year.

Fine wine, art, coloured diamonds, rare whiskey, and classic cars all get a mention the index.

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Source: Knight Frank Research

Art

The art market didn’t do that well with the AMR All-Art Index dropping 11% in 2020, with no single reason given for the fall. AMR’s Sebastian Duthy said: “For obvious reasons, one of the biggest changes was a shift towards private sales at the major auction houses. The volume of all sales that were publicly auctioned at Sotheby’s and Christie’s last year was down 26% and 46% in 2019, respectively. The problem was compounded by the slowing in the supply of quality works as consigners who could afford to wait preferred to sit it out at home.”

 

Things, however, picked up during the second half of the year as people remained at home and wanted to spruce up their luxury homes with art and collectibles, according to Duthy: “A new kind of auction sale emerged, catering to this need with eclectic showcases mixing art, collectibles, and antiques.”

Fine wine

In contrast to the art market, the wine market soared into second place in the KFIL. Miles Davis of Wine Owners which pulls together the Knight Frank Fine Wine Icons Index said: “More than ever, this year [2020] has been about timing in the capital markets and, if you got that wrong, then chances are you got it expensively wrong. Not so for wine. Unlike after the global financial crisis, the wine market has been stable. Investors are about, and even Bordeaux prices feel like they are firming up.”

While Covid-19 has disrupted the luxury markets, the biggest disruptor for the global wine markets is climate change. Davis says: “Global warming is affecting classic wine regions. Burgundy markedly so given the sensitivity of Pinot Noir to excessive heat. One merchant talked of 2019 being a benchmark vintage of the ‘New Burgundy’ – in a warmer and richer mould. Perhaps now is the time to load up on the more affordable 2014 and 2016 classic vintages, the likes of which we may see only rarely in the future.”

Classic cars

Last year was a bit of a ‘damp squib’ for the collector and auction enthusiast as a result of the pandemic as sales were moved online. According to the HAGI Top Index (which was used to track classic cars’ value), classic cars saw a growth of 6% in 2020. Ferraris revved up particularly strongly, with the HAGI F Index rising 14%.

HAGI’s Dietrich Hatlapa said: “Volumes should normalise further in 2021, with classic car events and live auctions once again able to take place as the Covid-19 crisis becomes more manageable due to vaccines. High-quality cars should achieve better prices again.”

Knight Frank 

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