According to Knight Frank Luxury Investment Index (KFLII), which tracks the value of ten investments of passion, has increased by a healthy 16 per cent during 2022, comfortably outpacing global inflation rate whilst outperforming majority of mainstream investment classes, including equities and gold.
Among the ten passion investments, Knight Frank said art was the top performer with a return of 29 per cent in a 12-month period ending December 2022.
This was followed by classic cars whose price index has appreciated by 25 per cent YoY (year-on-year) in 2022, highest in last 9 years.
As an example, a Mercedes-Benz Uhlenhaut Coupe sold in 2022 for USD 143 million, setting a record for the most expensive car ever sold.
Watches took third place on the luxury index list with 18 per cent annual appreciation on investment.
Luxury handbags, wines and jewellery slipped from their earlier top positions to 5th, 6th, 8th, respectively in 2022. Price index of rare whisky grew only 3 per cent in 2022, but it has given highest return of 373 per cent in the last one decade among all 10 passion investments.
The Macallan The Reach, 81-year-old single malt, got sold for USD 3,00,000.
Knight Frank also released ‘Attitudes Survey’ that suggested that “approximately 53 per cent of ultra-wealthy in India are likely to purchase art amongst passion-led investments along with watches and luxury handbags, followed by jewellery at 41 per cent”.
Classic cars came in as the fifth most preferred investment of passion with 29 per cent respondents showing preference to purchase one in 2023.
These investment asset classes have been performing well over the global index which has led to many UHNWIs to continue their investments.
Globally, art (59 per cent), watches (46 per cent) and wine (39 per cent) make up the top three categories of passion led investments.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “India’s wealthy have always had a penchant for collectibles across categories, however traditionally these were mostly for conservation, rather than investments. With the domestic and global market offering significantly higher returns for such article, Indian ultra-wealthy are actively seeking investment opportunities in passion led investments.”
The demand for rare articles has been rising across different generations in India, he said.
“…with rise in wealth in India, we can expect more investments in these asset categories,” Baijal said.