According to Knight Frank India, Indians are likely to buy art along with watches and luxury handbags this year as investments driven by passion.
According to Knight Frank India, more than half of ultra-high net worth individuals (UHNWIs) in India are likely to spend in art this year in addition to watches and designer handbags.
Wednesday saw the virtual conference publication of “The Wealth Report 2023” by real estate consultancy Knight Frank.
Knight Frank Luxury Investment Index (KFLII), which tracks the value of ten investments made out of passion, reports that during 2022, the value of ten such investments increased by a healthy 16%, comfortably outpacing the rate of inflation worldwide and outperforming the majority of popular investment classes, such as equities and gold.
Knight Frank reported that art was the greatest performance among the 10 passion investments, with a return of 29% over a 12-month period ending in December 2022.
Classic cars came next, with a price index increase of 25% YoY (year over year) in 2022—the highest in the previous nine years.
A Mercedes-Benz Uhlenhaut Coup, for instance, set a record for the most expensive vehicle ever sold in 2022 when it went for USD 143 million.
With an 18% yearly return on investment, watches ranked third on the luxury index ranking.
From its former top spots, luxury handbags, wines, and jewellery fell to fifth, sixth, and eighth place in 2022, respectively.
Even though the price index for rare whisky only increased by 3% in 2022, it produced the largest return—373%—over the course of the previous ten years among all 10 passion investments.
For USD $3,000, an 81-year-old single malt called The Macallan The Reach was sold.
Knight Frank also released ‘Attitudes Study’ that revealed that “about 53 per cent of ultra-wealthy in India are likely to purchase art amongst passion-led investments along with watches and luxury handbags, followed by jewellery at 41 per cent”.
In terms of investments for love, classic automobiles ranked fifth, with 29% of respondents saying they would like to buy one in 2023.
Since these financial asset classes have outperformed the global index, many UHNWIs have decided to keep investing in them.
The top three categories of passion-driven investments worldwide are art (59%) watches (46%), and wine (39%).
“India’s elite have long had a propensity for collections across categories, but traditionally these were largely for conservation, rather than investments,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India. Indian ultra-wealthy are actively looking for investment opportunities in passion-driven investments because the domestic and international markets give much better returns for such articles.
According to him, India’s demand for rare items has been growing among all generations.
We may anticipate increased investments in these asset categories as India’s wealth increases, according to Baijal.