Singaporean collectors continue to invest in luxury goods despite Covid-19

Singapore

ULTRA-high-net-worth individuals (UHNWIs) in Singapore have continued to invest in luxury goods during the pandemic, according to Knight Frank's The Attitude Survey.

The poll of over 600 private bankers, wealth advisers, intermediaries and family offices managing approximately US$3.3 trillion on behalf of UHNWIs across the globe found that 36 per cent of Singaporean UHNWIs increased their spending on passion investments over the last year.

They are also keen to acquire luxury watches, art and wine in the near future.

The survey also found art to be one of the most popular passion investments in Asia-Pacific, excluding Cambodia, Indonesia, and Thailand, followed by classic cars and watches.

"Despite the relative volatility of luxury collectables, they continue to be an integral part of our UHNW clients' investments portfolio not only for investment returns but for enjoyment of the assets too, said Victoria Garrett, head of residential, Asia-Pacific at Knight Frank.

During the pandemic, art auction houses had to move online, but this allowed them to attract new audiences and "bounce back quickly in H2 2020", added Ms Garrett.

"This emphasised the enduring appeal of art as a form of investment in the eyes of the UHNWIs; we saw this particularly in South Korea (86 per cent), New Zealand (83 per cent) and Taiwan (69 per cent), where art remains the investment of passion of choice."

That being said, the art market did not fare well globally during the pandemic, dropping by 11 per cent in 2020.

According to The Wealth Report 2021 by Knight Frank, the asset classes that grew during the pandemic include handbags (17 per cent), fine wine (13 per cent), and cars (6 per cent).

Hermès' handbags performed particularly well, securing its position on top of The Knight Frank Luxury Investment Index (KFLII) for the second year in a row.

The manufacturer's success can be attributed to its established online auction presence, which the luxury market "relies on for much of its profile", said Andrew Shirley, The Wealth Report editor at Knight Frank.

The pandemic has also sparked an appetite for relatively affordable luxury pick-me-ups, particularly in Asia, where many bag collectors are based.

Unlike fine wine, rare whisky sales declined by 3.5 per cent, a significant drop when compared to its 40 per cent growth in 2018. This points to the volatility of rare whisky as an investment.

The coloured diamond market was also somewhat stymied by the pandemic. Prices remained flat, but Knight Frank predicted that this year could see a bounce.