The surprising passions paying off for investors
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The surprising passions paying off for investors

The Knight Frank Luxury Investment Index reveals investments of passion are paying strong dividends, in some areas at least

By Bronwyn Allen
Tue, Apr 9, 2024 12:29pmGrey Clock 4 min

Art was the investment of passion that gained the most in value in 2023, according to Knight Frank’s Luxury Investment Index (KFLII). This is the second consecutive year that art has risen the most among the 10 popular investments tracked by the index, up 11 percent in 2023 and 29 percent in 2022. Art was followed by 8 percent growth in jewellery, 5 percent growth in watches, 4 percent growth in coins and 2 percent growth in coloured diamonds last year.

The weakest performers were rare whisky bottles, which lost nine percent of their value, classic cars down six percent and designer handbags down four percent. Luxury collectables are typically held by ultra-high-net-worth individuals (UHNWIs) who have a net worth of US$30 million or more. Knight Frank research shows 20 percent of UHNWI investment asset portfolios are allocated to collectables.

In 2023, the KFLII fell for only the second time, with prices down 1 percent on average.

Despite record-breaking individual sales in 2023, a surge in financial market returns contributed to a shift in allocations impacting on luxury asset value,” the report said. “… our assessment reveals a need for an ever more discerning approach from investors, with significant volatility by sub-market.

Sebastian Duthy of AMR said the 2023 art auction year began with notable sales including a record price for a Bronzino piece. But confidence waned as the year went on.

“It was telling that in May, Sotheby’s inserted one of its top Old Master lots – a Rubens’ portrait – into a 20th Century Modern evening sale. But by then, it was clear that the confidence among sellers, set by the previous year’s record-busting figures, was ebbing away. In the same month, modern and contemporary works from the collection of the late financier Gerald Fineberg sold well below pre-auction estimates.”

The value of ultra contemporary or red-chip’ art contracted the most in 2023.

“Works by a growing group of artists born after 1980 have been heavily promoted by mega galleries and auction houses in recent years. With freshly painted works in excess of £100,000 almost doubling in 2022, it was little surprise that this sector was one of the biggest casualties last year. There is a risk there are now simply too many fresh paint artists with none really standing out.”

In the jewellery market, Mr Duthy noted that demand was strongest for coloured gemstones of exceptional quality, iconic signed period jewels, single-owner collections, and items with historic provenance in 2023. In the watches market, Mr Duthy said collectors chased the most iconic and rare timepieces.

A Rolex John Player Special broke the model record when it sold for £2 million at Sotheby’s in May, double the price for a similar example sold at Phillips in 2021,” he said.

Although whisky was the worst-performing collectable in 2023, it has delivered the highest return on investment among the 10 items tracked by the index over the past decade, up 280 percent. Andy Simpson of Simpson Reserved, said 2023 was a challenging year but the best of the best bottles gained 20 percent in value. In my opinion some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued, Mr Simpson said.

Whisky was the worst performing collectable in 2023 but it had highest return on investment over a 10-year period. Image: Shutterstock

Classic car expert Dietrich Hatlapa said the 6 percent fall in collectable vehicle values in 2023 followed a 22 percent surge in 2022. The strong performance of other investment classes such as equities may have dampened collectors’ appetites it’s a very small market so it only takes a minor change in portfolio allocations to have an effect, and there has also probably been a degree of profit taking. However, we have seen some marques like BMW (up 9 percent in value) and Lamborghini (up 18 percent), which appeal to a younger breed of collector, buck the trend in 2023.”

Mr Duthy said a dip in the share price of the top luxury handbag brands last Autumn appeared to spook investors. Last autumn it was possible to pick up an Hermès white Niloticus Himalaya Birkin in good condition for under £50,000. The recent slide reflects a general correction at the upper end that’s been underway for some time rather than changing attitudes to the harvesting of exotic skins.

According to Knight Frank’s Attitudes Survey, the top five investments of passion among Australian UHNWIs are classic cars, art and wine. Fine wine values gained just 1 percent in 2023 as the market continued its correction, said Nick Martin of Wine Owners. “It’s been a hell of a long run, so I’m not that surprised. Some wines from very small producers that had enjoyed the most exuberant growth have seen the biggest drops. It had got a bit silly, £50 bottles had shot up to £200 or £300.”

Favourite investments of passion: Australia vs Global

1. Classic cars (61 percent of Australian UHNWIs vs 38 percent of global UHNWIs)
2. Art (58 percent vs 48 percent)
3. Wine (48 percent vs 35 percent)
4. Watches (42 percent vs 42 percent)
5. Jewellery (18 percent vs 28 percent)

Best returns among investments of passion (10 years)

1. Whisky 280 percent
2. Wine 146 percent
3. Watches 138 percent
4. Art 105 percent
5. Cars 82 percent



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Lamborghini CEO Stephan Winkelmann  has made it clear the company, which makes some of the fastest cars in the world, would not speed into the era of electrification.

“Our first steps in that (electrification) direction will be plug-in hybrids throughout the lineup,” he said in a 2022 interview with Penta. “This is all very easily welcomed at Lamborghini. The equations are easy. We always promise more performance than the generation before for all our cars, and we will do so while maintaining sustainability. By 2025, we will be able to cut our overall emissions by 50% with all of the hybrid models added.”

Proving Lamborghini and Winkelmann are as good as their collective word, the time of watts and volts arrived in Bologna, Italy, with the debut of the 2025 Lamborghini Urus SE. The first hybrid super-SUV from the proud Italian firm, which starts at $275,000 marries the familiar internal combustion specs of its growling engines with battery power looking not so much to save the planet as to propel vehicles across it with more alacrity.

The Urus SE is the first hybrid plug-in version of Lamborghini’s SUV, and it’s aimed to outperform its all-internal combustion rivals, such as the Aston Martin DBX707 and the Bentley Bentayga. The PHEV (Plug-in Hybrid Electric Vehicle) Urus SE relies on an 800 CV hybrid powertrain, surpassing any previous Lamborghini SUV model in torque and power numbers.

As for external styling on the Urus, Lamborghini takes after its competition at Aston Martin or Ferrari by trying to make an SUV that looks as little like an SUV as possible.
Courtesy of Lamborghini

The machine’s twin-turbo 4.0-litre V-8 engine is reengineered and partnered with an electric powertrain to produce 620 CV. For the uninitiated, CV is the abbreviation of Chevaux-Vapeur and is similar to horsepower. Usually, HP converts to just a little less than CV—at least allowing the automotive enthusiasts from the U.S. and Europe to get a traditional sense of vehicle power for gas-powered or hybrid vehicles without needing a conversion calculator.

To make a long engineering story as quick as the Urus SE, if you add together the internal contrition power plant and the e-motor, the final output is 800 CV. The result is a Lamborghini that cuts its emissions by 80% without sacrificing performance, comfort, or driving excitement.

The thinking process on when and how to release this plug-in hybrid began before the company’s 2021 pledge to cut CO2 emissions, says Stefano Cossalter, the Urus model line director.

Courtesy of Lamborghini

“This plan gave momentum to a profound and constant research of opportunities and challenges involved in the transition to electrification,” Cossalter says. “The plan started in 2023 with the launch of the Revuelto [sold out into 2026], our first HPEV (high performance electrified vehicle), and continues with the launch of the hybrid version of our Super SUV Urus SE.”

Cossalter lays out that the slow and steady march to electrification will continue next year with the release of the Temerario, described by Lamborghini as the successor to the popular Huracan and “the first super sports car in the history of the … brand to be equipped with a V-8 twin-turbo engine paired with three electric motors.” Then, the automaker will look to the horizon for its introduction of the Lanzador, the company’s first BEV (battery electric vehicle) in 2028.

The hybrid version offers improved performance over the 100% gas Urus. A magnet synchronous electric motor located inside the SE’s eight-speed automatic transmission tied into the four-wheel-drive system can boost the V-8 engine, offering additional acceleration. Meanwhile, that motor can provide enough power to transform the Urus SE into a totally electric vehicle with a range of about 35 miles in EV mode.

With the new drive system noted, Lamborghini’s engineers could turn to performance specs. They built in a new, centrally located longitudinal electric torque vectoring system with an electro-hydraulic multi-plate clutch. That’s a lot of fancy tech talk to say the vehicle can throw power and grip back and forth between the front and rear axles wherever the onboard system senses it’s needed. A new electronic limited-slip differential on the rear axle helps give the Urus SE oversteering when needed. The end result is an SUV that packs the feel of a Huracan on the road.

That supercar feel in an SUV is the experience Lamborghini refuses to abandon in the Urus SE, Cossalter says.

“We didn’t come to compromises in the hybridisation process,” he says. “We wanted the Urus SE to preserve the DNA of the original project and enhance the experience for the driver. For those reasons, we decided not to downsize. We kept a V-8 engine with its strong character and voice, and then added some spice to the dynamic behavior by changing the all-wheel-drive architecture. The result is we have more power, more torque, more speed, more fun.”

As for external styling on the Urus, Lamborghini takes after its competition at Aston Martin or Ferrari by trying to make an SUV that looks as little like an SUV as possible. The profile is lowered, and the lines sweeping and tapering from nose to tail, as though Lambo’s in-house designers want to hide the size and functionality of an SUV inside the shape of the familiar Lamborghini supercars of the past.

However, driving the Urus does not feel much like a traditional Lamborghini supercar simply because the driving position is higher and more upright compared to, say, an Avantador that puts the driver’s backside close to pavement. Regardless of where one sits, the acceleration, noise, and tight handling lives in a Urus as happily as it does in any other Lambo.

As its first volume consumer step into the hybrid world, the Urus SE tells Italian supercar enthusiasts to keep the faith.

“The Urus SE points to the future with electrification while keeping its heritage intact,” Cossalter says.

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