Handbags, watches and even classic cars made it to a list of top performing luxury investments in 2024, said a Knight Frank report.
Luxury handbags emerged as the top performer in the year, rising 2.8 per cent over 12 months as of Q4 2024, according to the Knight Frank Luxury Investment Index (KFLII).
On a five-year basis, handbags soared 34 per cent.
“The ultimate classic handbag, the Hermes Birkin in black Togo leather, is now more valuable than ever when sold on the secondary market,” the report noted.
Watches came in fourth, with a 1.7 per cent gain in the past 12 months, according to the index. On a five-year basis, this category enjoyed a 52.7 per cent gain.
The “most surprising” was classic cars, the report said, which grew 1.2 per cent through the year following a “sharp bear market” through 2023 and the first half of 2024.
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These findings were revealed in the report on Wednesday (Mar 5), with the luxury index tracking the performance of 10 popular luxury investments, or collectibles.
However, despite financial markets soaring in 2024, the KFLII fell 3.3 per cent for a second year in a row, Knight Frank said. On a five-year basis, the index rose 21.5 per cent, said Knight Frank.
The report said: “Take the long view and luxury collectibles have delivered for investors. If you had invested US$1 million in 2005 and tracked KFLII, your pot would now be worth US$5.4 million. The same amount invested in the S&P 500 would have been worth US$5 million by the end of 2024.”
Declines in fine art, wine and whisky
The weakest performers were fine art, wine and whisky.
Art was down 18.3 per cent, a steeper drop than the 17 per cent decline experienced during the Covid-19 period. The art market has been undergoing significant structural change. The report noted that while the rise of online marketplaces has given new buyers confidence to enter the market and expanded pre-existing definitions of luxury collectibles, it has also intensified competition for investment.
Fine wine also took a hit, declining 9.1 per cent, unlike its bull run during the low interest rate period of the pandemic.
Other than the rise in interest rates, Tom Burchfield, head of market intelligence at Liv-ex, the global fine wine exchange, also noted that the Chinese market has not returned in force. Many traditional fine wine collectors now have enough in their cellars, and the next generation is not yet picking up the slack, he added in the report.
Rare whisky, too, suffered its second poor year with values down 9 per cent, because of the rapid growth in stock in the secondary market.
Why is luxury investment slowing down?
Christine Li, head of research for the Asia-Pacific at Knight Frank, said that the decline in the KFLII reflects a shift in how the wealthy consumes luxury goods. “They increasingly seek more personal and curated experiences as well as cultured expressions of luxury,” she said.
Nicholas Keong, head of residential and private office at Knight Frank Singapore, attributed the drop in the KLFII to the current era of inflation, global uncertainty and unfolding world events. “The appetite for rare collectibles might have taken a breather,” he said.
But he also noted that Singapore is performing well amid this uncertainty and inflation, with 11.2 per cent of the most expensive wines in the world available in the top 20 restaurants in the city-state. The Republic’s hospitality and dining scene also ranked third in the Wealth Report Global Wine Cities Ranking 2025.
High-profile auction sales buck the trend
Though it appeared to be a quiet year for auction houses, some high-profile items captured the spotlight.
In February, Sotheby’s auctioned off six Air Jordan sneakers worn by basketball legend Michael Jordan during his six NBA championships, fetching US$8 million.
In June, a bidding war at Sotheby’s saw the original cover art for JK Rowling’s Harry Potter and the Philosopher’s Stone, by Thomas Taylor, sell for US$1.9 million, setting a new record for Potter-related memorabilia.
In November, a diamond necklace linked to the downfall of French queen Marie Antoinette was sold for US$4.8 million at Sotheby’s.
Knight Frank’s report points out that the impressive performance of equities, attractive cash yields, and traditional safe havens such as gold might give investors pause. But it also suggests that for many, the “joy of ownership” continues to drive investments in luxury assets, even in uncertain times.