As investments go, wine is still on top

Fine wine, cars, jewelry and art are all things the rich love to buy. But some investments are better than others…

Move over luxury cars, investment-grade wine has taken over the top spot for investors, according to Knight Frank’s recently released wealth report. Wine sales were up 24 percent in 2016, compared with the paltry 9 percent increase in the value of the HAGI Top Index, which tracks the performance of the world’s most desirable classic cars.  This was mostly because of the strong growth globally of the top Bordeaux chateaux.

“The top Bordeaux blue chips drove the entire market, growing 9 percent to the end of June. Brexit turbo-charged the market due to the devaluation of sterling, feeding more positive sentiment into a market that had already been gathering significant momentum,” explained Nick Martin of Wine Owners, the firm compiling the Fine Wine Icons Index. To wit: A case of 1988 Romanée-Conti was sold at auction last year via Bonhams for £129,250 (roughly $157,027).

Martin believes Bordeaux’s growth will continue in the coming year as well.

On the other hand, even though it did still enjoy a 9 percent increase, this past year still marked a yellow light for classic car sales overall. 

“Those who were in it just for the money have moved on,” says HAGI’s Dietrich Hatlapa. “The market is now more in the hands of the collectors and specialists, which I think is good news for the real enthusiast.”

Another luxury car expert agrees. “Over the past year or so we’ve seen a shift from a sellers’ to a buyers’ market,” notes Brian Rabold, Vice President of Valuation Services at specialist insurer Hagerty. “People are becoming more selective. Last year there were 26% fewer auction sales of cars over US $1m in North America.”

The index name checks a few other luxury item types that were notable this year. Jewelry experienced some huge record breakers this year, even though the overall performance of the market was not a standout. The biggest gem of a sale took place at Christie’s Geneva where the Oppenheimer Blue, a vivid blue 14.62-carat diamond sold for the equivalent of $51 million, making it the most expensive jewel to ever sell at auction.

Sadly, art sales via auction dropped overall by 14 percent according to auction data analysed for The Wealth Report by Art Market Research. One reason for this, according to  Viola Raikhel-Bolot, Managing Director of 1858 Ltd Art Advisory is that,  “Since the global financial crisis people have been much more wary of overpaying for things.”