Luxury investments: 2023 full of challenges, art will be saved

2023 was a year full of challenges for the Luxury investments. What was saved was art, which, with a price increase of 11%, is at the top of the ranking of the best-performing goods. This is revealed by Knight Frank’s Luxury Investment Index (KFLII), known for monitoring luxury investments across ten segments, revealing that art was the only index component to record double-digit growth, with positive numbers particularly in the first half of the year.

Photography is different, again in the art field, provided by UBS what comes into the spotlight auction sales, decreased on both sides of the Atlantic. However, the 2023 annual art market report published by Art Basel and UBS only saw a 4% decline in market value, estimated at $65 billion. However, that number is still higher than the pre-pandemic 2019 estimate of $64.4 billion.

The Economist Clare McAndrewthe report’s author, attributed the decline to several factors, including high interest rates, inflationary pressures and geopolitical instability, which contributed to a slowdown in sales, particularly at the high end of the market (artworks sell for $10 million or more). .

Looking ahead to 2024, retailers in the report were cautiously optimistic: 36% predicted an increase in sales and only 16% predicted a decline. But many dealers said the future looked difficult, with political and economic uncertainty looming in the market and the costs of maintaining customer relationships and attending art fairs among the biggest concerns.

The whiskey is bad, the jewels are saved

Let’s go back to Knight Frank’s Luxury Investment Index (KFLII). Art was the best performing segment Jewelry (8%), watches (5%), coins (4%) and colored diamonds (2%)which represent the five categories with the best results, while the rare whiskey bottles (-9%) mark the worst performance within the index.

Among declining assets, I stand outInvestments in whiskey. “While the 50 worst-performing bottles saw an overall loss of 26%, the remaining 50 gained 5%, with the top 20 bottles actually gaining, at a respectable +20%,” says Andy Simpson of Simpson Reserved, who reports a return of some bottles predicts products that will have suffered significant losses in 2023 because they are rare and, at least for now, undervalued.

The Antique car With a decline of 6% in 2023, they rank just ahead of whiskey as the second worst category in the ranking. Industry expert Dietrich Hatlapa commented: “After 22% growth in 2022, a 6% decline is not negative.” Investors have likely been attracted to other assets and this extremely limited market will have been impacted by small changes in portfolio allocation. However, some brands such as BMW (+9%) and Lamborghini (+18%) have bucked this trend in 2023 and targeted a younger collector audience.”

Even the Luxury bags (-4%), which had previously dominated the KFLII, suffered a significant decline. In the Knight Frank Fine Wine Icons Index (KFFWII), not even the wine segment shines good wines, which recorded an increase of just 1%. Nick Martin from Wine Owners said: “After a period of advancement we didn’t have high expectations. Some wines from small producers that have seen high growth have seen the steepest price falls, skyrocketing in the past, with £50 bottles going for £200 or £300.”