2024 Wealth Report: Art Leads Luxury Investment Index with Prices Up 11% in 2023

The Douglas Elliman and Knight Frank Luxury Investment Index (KFLII), which tracks the performance of 10 popular investments of passion, reveals that art was the best performing luxury asset class with prices rising 11% in 2023. Despite a year of record-breaking sales in the luxury investment market, for only the second time however, the KFLII edged into marginal negative territory with prices down on average 1% across the index. View full report. “The priciest bottle of Scottish whisky, the most expensive Ferrari 250 GTO, the costliest blue diamond, even the dearest sword—in 2023, the major auction houses achieved a string of record-breaking sales,” said Andrew Shirley, editor of the Knight Frank Luxury Investment Index. “It sounds like a bumper year for luxury investments, however the KFLII reveals a less positive picture. KFLII edged into negative year-end territory in 2023, albeit by a fraction of a percent, as several stalwart members of the index dropped into the red or showed minimal gains. However, a peek behind the headlines reveals it’s not all doom and gloom, with some of the losses are simply down to the froth coming off markets, according to the experts who supply the data for KFLII.” Art was the only one of Knight Frank’s 10 index constituents to hit double-digit growth in 2023, but all of the gains came in the first half of the year with values sliding significantly later on, according to AMR’s All-Art Index. Jewellery (8%), watches (5%), coins (4%) and colour diamonds (2%) make up the top-five best performing assets with rare whisky bottles (-9%) the worst performer in the index. “To some degree, 2023 continued to be a challenging year with the Knight Frank Luxury Whisky Index dipping almost 9%. But while the worst performing 50 bottles lost 26% of their combined value, the remaining 50 bottles gained 5%, with the 20 best performers increasing by a respectable 20%,” explains Andy Simpson of Simpson Reserved. “In my opinion some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued.” Classic cars came in just above whisky as the second worst performing asset class in the index, decreasing in value by 6% over 2023. “ The value of the HAGI Top Index was up 22% in 2022, so a retreat of 6% isn’t all that bad,” said classic car expert Dietrich Hatlapa. “The strong performance of other investment classes such as equities may have dampened collectors’ appetites—it’s a very small market so it only takes a minor change in portfolio allocations to have an effect, and there has also probably also been a degree of profit taking. However, we have seen some marques like BMW (+9%) and Lamborghini (+18%), which appeal to a younger breed of collector, buck the trend in 2023.” Handbags (-4%), which topped KFLII just a few years ago, were also notable fallers. Sebastian Duthy of AMR, which supplies data for a number of the asset classes tracked in the KFLII, says bags are one of the investments of passion more influenced by the retail market. The market for fine wine – up just 1% according to the Knight Frank Fine Wine Icons Index (KFFWII) – is going through a period of price correction, asserts Nick Martin of Wine Owners. “It’s been a hell of a long run, so I’m not that surprised.” Some wines from very small producers that had enjoyed the most exuberant growth have seen the biggest drops. It had got a bit silly, £50 bottles had shot up to £200 or £300.” “We are delighted to witness the continued resilience of the fancy colour market in comparison to colorless diamonds,” said Fancy Color Research Foundation’s Miri Chen on the steady performance of color diamonds. Full results of Knight Frank’s Luxury Investment Index Q4 2023: Asset class 12-month price change (%) 10-year price change (%) Art 11% 105% Jewellery 8% 37% Watches 5% 138% Coins 4% 56% Coloured diamonds 2% 8% Wine 1% 146% KFLII -1% 100% Furniture -2% 40% Handbags -4% 67% Cars -6% 82% Whisky -9% 280%   Sources: Compiled by Knight Frank Research using data from Art Market Research (art, coins, furniture, handbags, jewellery and watches), Fancy Color Research Foundation (colour diamonds), HAGI (cars), Rare Whisky 101 and Wine Owners Notes: All data to q4 2023. KLII is weighted average of individual asset performance.