Passion investing a better bet in 2015

Singapore

YOU would have been better off if you had invested with your heart than with your head last year.

Putting your money in objects of passion like classic cars, wine, old coins, art, stamps, pricey watches and jewellery in 2015 would have fetched higher returns than if you had left the money with your stockbroker or property agent, according to The Wealth Report 2016.

The yearly report, which is in its 10th year and is put out by global property consultancy Knight Frank, says its luxury investment index (KFLII) based on 10 luxury assets (which include the objects of passion named above) jumped 7 per cent in value last year - against a 5 per cent drop in the value of the FTSE 100 equities index and a one per cent rise in the top end of the London residential market at the same time.

"Luxury investments have continued to capture the media spotlight following a slew of stellar auction results throughout the year," says Andrew Shirley, editor of The Wealth Report. "It is no surprise that the KFLII outperformed the FTSE 100 and the prime London housing market, as these kinds of luxury investments are hugely popular with ultra-high-net-worth individuals (UHNWIs)."

Classic cars were the top gainers in the KFLII in 2015, up 17 per cent. Coins, which climbed 13 per cent, came in second and were the only luxury class to post a double-digit growth. Vintage furniture continued to underperform, sitting in last place with its value down 6 per cent.

"Although no classic car managed to beat the record set by Bonhams (auction house) in 2014 when it auctioned a 1962 Ferrari 250 GTO Berlinetta for US$38 million, eight of the 25 cars ever to have sold for over US$10 million at auction went under the hammer in 2015," says Graeme Thompson, director of jewellery at Bonhams Asia.

Even furniture, which has put up a poor showing over the last decade, hit a new high for a living maker when a Marc Newson "Lockheed Lounge" sofa was sold in April for US$3.74 million by Phillips auction house.

Other standout auction sales in 2015 included a Patek Philippe Doctor's Chronograph (US$4.99 million), Picasso's Women of Algiers (US$179.3 million) and the 12-carat Blue Moon Josephine (US$48.4 million), according to Nicholas Holt, Knight Frank's Asia Pacific head of research.

Bonhams' Mr Thompson indicated that the value of yellow diamonds jumped 44 per cent in the past decade. In the same period, blue diamonds' value went up 147 per cent, while pink diamonds' rose 283 per cent. Even more spectacular has been the price of pearls, which saw a 462 per cent spike from 2000 to 2015.

In art, the value of European 19th century works jumped 77 per cent in the last 10 years. Old Masters were up 106 per cent; European impressionists increased 274 per cent; contemporary art rose 293 per cent; and modern art surged 330 per cent in the same period.

The report also identified the Pacific as the "standout" region in a new index tracking the luxury spending trends of UHNWIs - defined as those with US$30 million in assets or more.