High-end collectors tighten their belts as rising cost of living bites

Cost-of-living pressures show no favours, with the ultra-rich tightening their belts, resulting in a decline in the demand for high-end art, upmarket jewellery and handbags, and collectable cars.

While prices of artworks are still showing strong growth, thanks to some cashed-up investors, higher interest rates and inflationary concerns weighed down the rate of demand growth in 2023, the latest Knight Frank Wealth Report reveals.

Pablo Picasso’s Femme a la montre, 1932, signed Picasso (upper left) fetched the second highest price at auction for the artist.Credit: Sotheby’s

The Knight Frank’s Luxury Investment Index, which tracks the value of 10 popular collectable investments of passion, edged into marginal negative territory for only the second time, with prices down on average 1 per cent across the index, despite a year of record-breaking sales in the luxury market.

Andrew Shirley, editor of the Wealth Report, said it sounded like a bumper year for luxury investments; however, the index reveals a less positive picture.

The Himalaya Niloticus crocodile diamond Birkin 30 with 18k white gold and diamond hardware.Credit: Christie’s

“The index edged into negative year-end territory in 2023, albeit by a fraction of a per cent, as several stalwart members of the index dropped into the red or showed minimal gains,” Shirley said.

“However, a peek behind the headlines reveals it’s not all doom and gloom, with some of the losses simply down to the froth coming off markets, according to the experts who supply the data [for the index].”

Overall, art topped the index with price growth of 11 per cent in 2023; jewellery gained 8 per cent; watches 5 per cent and coloured diamonds prices rose 2 per cent. However, a former favourite for collectors – rare whisky, fermented on the shelf – recorded a 9 per cent drop in prices.

In contrast, last year’s index showed art prices rising by 29 per cent, followed by classic cars, up 25 per cent, and watches, up 18 per cent.

In the latest report, the most expensive piece of art sold was the Femme a la montre, by Picasso, which RM Sotheby’s sold for $US139.4 million ($213 million).

The most expensive car was a 1962 Ferrari 330 LM/250 GTO, which changed hands for $US51.7 million.

Collectable handbags, a stalwart of previous years, had prices drop 4 per cent.

The biggest handbag deal was the Himalaya Niloticus crocodile diamond Birkin 25, with 18-carat white gold and diamond clasp and key, which sold at Christie’s for $US360,000. In 2022, Sotheby’s sold a Himalaya Birkin 30 with diamond-encrusted white gold for $US450,000.

Sebastian Duthy of Christie’s, which supplies data for a number of the asset classes tracked in the index, says handbags are one of the investments of passion more influenced by the retail market.

“At times of great economic stress, it is normal for people to reach for reliable fashion standards. The ongoing cost-of-living crisis appears to have encouraged the same behaviour,” Duthy said.

“The secondary market for handbags follows the retail market more closely than any other collectable. A dip in the share price of the top luxury brands last autumn appears to have spooked collectors wanting top-of-the-range bags.”

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