Knight Frank Luxury Investment Index: Home is Where The Art is

Luxury real estate and luxury investments have a mutually influential relationship, as high-net-worth individuals shape their homes based on their collections, and vice versa, according to the latest Knight Frank Luxury Investment Index (KFLII) arguably the most comprehensive guide to the performance of luxury investments available.

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“Space to show off their prized passions is often top of the wish list for wealthy home-hunters,” writes. Knight Frank’s Andrew Shirley. “It’s clear that collection, collector and home form a unique trinity.”

In many cases, HNWI clients across the globe look for specific features in a property to suit their collections, such an extremely spacious garage or sophisticated wine storage. According to Pia Arrieta, Managing Partner at DM Properties "we are familiar with this type of requirements, as Marbella has long since joined the select group of resort destinations that are instantly associated with luxury, style and privilege, and the affluent clientele drawn to this city seeks more than just real estate".

The work of numerous interior designers and architects is significantly shaped by their clients’ possessions and they frequently structure their work around specific pieces, in some cases suggesting new acquisitions that harmonize with the specific project. Simultaneously, a growing trend reveals that a greater number of residential property developments are now drawing inspiration from the notion of communal collecting.

Key Findings

The KFLII reveals that the value of luxury investments rose globally by 7% in the 12 months to June 2023.
While a 7% rise was more than the growth experienced in house prices in Prime Central London, FTSE 100 equities, and gold, it was the slowest growth since Q2 2021, showing that the uncertain market had an impact.

Art had the highest growth in the KFLII, rising by 30%. However, recent auction results suggest that its growth might be slowing down. Watches and jewellery also did well with a 10% increase, while coins saw an 8% rise. On the other hand, the wine and classic car markets, which usually have a big effect on the index, had more modest growth at 5%. Classic cars, in particular, had difficulties because of the economy, which affected the overall performance of the luxury index.

The outlook for luxury collectables is clouded by economic uncertainty and higher interest rates, prompting Andrew Shirley, editor of the Knight Frank Luxury Investment Index, to advise novice collectors to focus on personal joy, as guaranteed value appreciation in these asset classes is no longer assured.

Read the Knight Frank Luxury Investment Index which includes:

• The latest price growth analysis across ten key asset classes, from art to diamonds
• Interviews with industry leaders around the world on art, whisky, handbags and watches
• A deep dive into the classic car and electric vehicle markets

Mar Poza, 09 Aug 2023 - Intelligence