Wine has topped the Knight Frank Luxury Investment Index (KFLII), knocking classic cars off pole position into second spot, following strong annual growth in key regions around the world which form the backbone of most investment cellars.
Data from the latest edition of The Wealth Report has revealed the value of The Knight Frank Fine Wine Icons Index, rose 24% in 2016, dwarfing its more modest 5% growth the previous year. Classic cars increased in value by 9%, falling from 17% growth the previous year.
Andrew Shirley, editor of the Wealth Report, commented:
“The stellar performance of wine last year sets it apart from the other investments of passion in our index. However, several other asset classes also produced some record-breakers in 2016, even though their overall performance was relatively muted. The sparkliest was the sale of the Oppenheimer Blue, a vivid blue 14.62-carat diamond sold by Christie’s Geneva for the equivalent of almost US$51m, making it the most expensive jewel to ever sell at auction.”
Nick Martin, founder and executive director at Wine Owners – which compiles the Knight Frank Fine Wine Icons Index – explains why investment-grade wine performed so strongly last year:
“In 2015 we saw growth of around 8% for the whole of the Bordeaux region, off the back of steep declines in 2012-14 following the bursting of the Chinese-induced Bordeaux bubble in late 2011.
“But 2016 was completely different. The top Bordeaux blue chips drove the entire market, growing 9% to the end of June. Brexit turbo-charged the market due to the devaluation of sterling, feeding more positive sentiment into a market had already been gathering significant momentum. The first growth rose a further18% between June and November 2016, resulting in an annualised performance of over 30%.”
The strong performance of wine could not prevent the KFLII, which tracks the performance of 10 luxury investment sectors, from posting annual growth of just 2% however, its weakest performance since experiencing a 2% drop in 2009.
Despite the KFLII’s lacklustre overall performance several of the asset classes that feature in Index produced record-breaking sales in 2016. Some examples include:
- A Ferrari 1957 335 Sport became the most expensive car to go under the hammer ever, in euro terms at least, when it was sold by Artcurial in Paris for €32m.
- The Oppenheimer Blue became the most expensive jewel to ever sell at auction
- A rare stainless steel 1941 Patek Philippe ref. 1518 perpetual calendar chronograph with moon phases broke the record for the most expensive wristwatch sold at auction when it went under the hammer with Phillips Geneva for US$11m
- Bonhams London sold a 14.13-carat ring for £1.4m in December against a high estimate of £800,000
- A 1962 Ferrari 250 GTO sold privately is thought to have exceeded the highest sum ever paid at auction last year (US$38m for another 250 GTO sold by Bonhams) for a classic car and was possibly the biggest deal ever struck
The Knight Frank Luxury Investment Index (to Q4 2016)*
| Luxury asset | Price Growth | |
| 12-month | 10-year | |
| Wine | 24% | 267% |
| Cars | 9% | 457% |
| Coins | 6% | 195% |
| Watches | 4% | 66% |
| Jewellery | 3% | 147% |
| Stamps | 1% | 133% |
| Coloured Diamonds | 0.4% | 111% |
| Furniture | -5% | -31% |
| Chinese ceramics | -14% | 6% |
| Art | -14% | 139% |
| KFLII | 2% | 171% |
Sources: Artmarketresearch.com (Art, Watches, Furniture, Jewellery, Chinese Ceramics); Stanley Gibbons (Stamps, coins); HAGI (Classic cars); Wine Owners (Wine); Fancy Color Research Foundation (Coloured diamonds)
**KFLII is weighted based on the contribution of each component to a nominal portfolio of luxury assets.
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.
