Whisky tops the Knight Frank Luxury Investment Index

The data providers for the Knight Frank Luxury Investment Index share their thoughts on the past and future performance of some of the most popular asset classes in the index. We also include details of the standout auction sale of the past 12 months for each category.

At a glance:

Top sales

  1. Art: Portrait of an Artist (Pool with Two Figures) by David Hockney. Sold by Christie’s for US$90 million. Most expensive work by a living artist.
  2. Whisky: A bottle of The Macallan 1926, hand painted by Michael Dillon. Sold by Christies for US$1.5 million. Most expensive bottle of whisky.
  3. Jewellery: The Marie Antoinette pearl pendant. Sold by Sotheby’s for US$36 million. Most expensive piece of pearl jewellery sold at auction.
  4. Watch: 1970 Rolex Daytona “Unicorn”. Sold by Phillips with Bacs & Russo for US$5.9 million. Most expensive watch sold at auction in 2018.
  5. Classic cars: 1962 Ferrari 250 GTO. Sold by RM Sotheby’s for US$48.4 million. Most expensive car sold at auction.
  6. Wine: Bottle of 1945 Romanée-Conti. Sold by Sotheby’s for $US558,000. Most expensive bottle of wine sold at auction.
  7. Stamps: 1918 Jenny Invert 24 cent. Sold by Robert A. Siegel Auction Galleries for US$1.6 million. Most expensive US stamp sold at auction.
  8. Coins: 1621 Polish gold 100 ducat. Sold by the Classic Numismatic Group for US$2.2 million. Most expensive Polish coin.
  9. Coloured diamonds: The Winston Pink Legacy, 19-carat fancy vivid pink diamond. Sold by Christie’s for US$50 million. Most expensive pink diamond per carat.
  10. Furniture: 1766 Chippendale commode with ivory inlays sold previously in 1991 for £935,000, a record price for a piece of English furniture. Offered for auction by Christie’s with the inlays removed and an upper estimate of £5 million. Failed to sell.

 

Classic cars

  • The HAGI Top Index for rare classic cars, which includes 50 models from 19 marques, rose almost 2.5% in 2018.
  • New market entrants who joined five years ago have exited. As a result, there are a lot of opportunities for buyers in the current market. 
  • Longer term, collectors will want to continue to buy into those young and upcoming producers from Burgundy and Piedmont whose vineyard holdings are best located. 
  • Highlights of the year included the sale of two 1960s Ferrari 250 GTOs for US$48 million (an auction record) and US$70 million (privately).

Wine

  • 2018 saw further rapid price escalation of Burgundies, with top Grands Crus from the “R”s (Raveneau, Romanée-Conti, Roumier and Rousseau) accelerating, and driving our Burgundy index up 33%. 
  • It’s likely that the pattern of polarisation favouring blue chip wine from top producers will continue, with prices accelerating in particular as the wines approach their drinking windows.

Art

  • Social media marketing is vitally important to auction houses at a time when profits for big ticket sales are increasingly split with third party guarantors. 
  • Record-breaking sales at Sotheby’s and Christie’s capped another impressive year for the big auction houses in 2018.
  • Works by African-American and women artists have long been considered under-valued but this level of interest may have taken even the experts by surprise. This trend is set to continue.

Whisky

  • A transformational 2018 for rare single malt Scotch whisky. We saw one bottle set a new world record price of £700,000 in October, only to be beaten one month later when another bottle sold for £1 million.
  • Looking to 2019 prices will continue to harden for the right bottles from the right distilleries, as well as increased interest in more affordable bottles from those in the second tier. Both were bottles of The Macallan distilled in 1926.
  • The Knight Frank Rare Whisky 100 Index (KFRW100), which tracks actual UK auction hammer prices, increased by almost 40% through 2018.

Coloured diamonds

  • 2018 was a fairly positive year for fancy coloured diamonds with expected continued pricing stability. Prices across all colours and sizes rose slightly on average even though the Chinese economic slowdown caused a decline in the number of fancy colour diamond retail transactions.
  • Blue diamonds were the top performers in 2018, with yellow values weakening slightly and pinks remaining stable.
A transformational 2018 for rare single malt Scotch whisky. We saw one bottle set a new world record price of £700,000 in October, only to be beaten one month later when another bottle sold for £1 million.

 

The full read

Classic cars - Dietrich Hatlapa, HAGI

The HAGI Top Index for rare classic cars, which includes 50 models from 19 marques, rose almost 2.5% in 2018. However, not every marque recorded an increase. Porsche, for example, fell on average by 6.5%. Highlights of the year included the sale of two 1960s Ferrari 250 GTOs for US$48 million (an auction record) and US$70 million (privately).

A 1935 Duesenberg Model J, once owned by actor Gary Cooper, was auctioned for US $22 million, a record for a pre-war car.
But records aside, the real story of 2018 is the return to moderate market turnover after the classic car bull run of 2012-15, as well as a shift from agency sales to private networks.

A survey of HAGI members revealed that more than 70% of recent transactions were agreed among “friends”. The most influential group in the market remains knowledgeable collectors, and their asset allocation preferences have changed.

No new money was allocated to portfolio expansion in 2018, only to upgrading or replacing existing holdings. In addition, many new entrants who joined the market five years ago have now exited. As a result, there are a lot of opportunities for buyers in the current market.

Coloured diamonds - Oren Schneider, Fancy Color Research Foundation advisory board member 

Last year was a fairly positive year for fancy coloured diamonds and we continue to see pricing stability. Prices across most colours and sizes rose slightly on average, even though the Chinese economic slowdown caused a decline in the number of fancy colour diamond retail transactions.

At the top price points, where supply is permanently short, values were practically unaffected. Traders are holding firm, projecting an improved trading environment in the second half of 2019.

In terms of colour, blue diamonds were the top performers in 2018, with yellow values weakening slightly and pinks remaining stable. Fancy intense blues performed particularly strongly, with some sizes rising in value by almost 12%.

Wine - Nick Martin, Wine Owners

Just when we thought the limits at the top of the market were being tested, 2018 saw further rapid price escalation for Burgundies, notably top Grands Crus from the “Rs” (Raveneau, Romanée-Conti, Roumier and Rousseau), driving our Burgundy index up 33%.

Sotheby’s October sale saw a single bottle of La Romanée-Conti 1945 fetch US$558,000 – somewhat higher than its upper estimate of US$32,000! The sale highlighted the potential premium the market is prepared to pay for impeccable provenance. The maturing Asian fine wine market places a heavy emphasis on history and cosmetic condition.

It’s hard to predict where the top end of the market will go from here, but it’s likely this pattern of polarisation favouring blue chip wine from top producers will continue, with prices accelerating, in particular as the wines approach their drinking windows. On a longer-term view, collectors will want to continue to buy into those young and upcoming Burgundy and Piedmont producers who have the best-located vineyards.

Outside France, our Californian index (up 17.5% in 2018) continues to push ahead, driven by a mix of scarcity, local demand, direct-to-consumer models and, of course, intrinsic quality. It’s also nice to see that undervalued, accessible Spanish Riojas are enjoying a resurgence, with the great estates of Tondonia and CVNE setting the pace.

Whisky - Andy Simpson, Rare Whisky 101

Last year was a transformational one for rare single malt Scotch whisky. One bottle set a new world record of £700,000 in October, only to be beaten a month later by one that sold for £1 million before the buyer’s premium. Both were bottles of The Macallan distilled in 1926.

Values for certain old vintage rarities soared past previous records, achieving almost unimaginable new auction highs. The Knight Frank Rare Whisky 100 Index (KFRW100), which contains 100 bottles of the world’s most desirable rare Scotch whisky and tracks UK auction prices, increased by almost 40% through 2018.

However, 21 bottles in the KFRW100 did lose value last year. The bottom ten would have cost £25,410 at the end of 2017; by the end of 2018, that figure had shrunk by 27%

Art - Veronika Lukasova-Duthy, Art Market Research

Record-breaking sales at Sotheby’s and Christie’s last November capped another impressive year for the big auction houses. In New York, Christie’s US$833 million spring sale of 1,500 objects belonging to the Rockefeller estate was the highest auction total ever for a single collection.

The sale produced individual artist records for Henri Matisse and Diego Rivera, but may be remembered more for the huge media attention it gained worldwide. Social media marketing is vital to auction houses at a time when profits for big ticket sales are increasingly split with third-party guarantors.

The US$90 million sale in November of David Hockney’s iconic work Portrait of an Artist was also surrounded by huge media attention and produced another record, this time for a living artist.

Sotheby’s also set its fair share of records. In London in October, Jenny Saville’s Propped sold for US$12.5 million, more than doubling its estimate and breaking the record for a woman artist. A month later The Businessmen by Jacob Lawrence tripled its estimate, selling for US$6.2 million in New York.

Works by African-American and women artists have long been considered undervalued but this level of interest may have taken even the experts by surprise. I expect the trend to continue.