PROF­IT­ING FROM A HOBBY

The leisure pur­suits of the rich are no longer just ex­trav­a­gant in­dul­gences – they can now of­fi­cially be seen as in­vest­ments.

Robb Report (Malaysia) - - Global Luxury - By ALYWIN CHEW

P as­sion in­vest­ing has been grow­ing over the past few years, with an in­dex by Coutts show­ing that such in­vest­ments have gen­er­ated a 77 per cent in­crease in re­turns since 2005.

“Since the fi­nan­cial cri­sis in 2009, there has been a con­sid­er­able ero­sion of trust in non-tan­gi­ble in­vest­ment classes. Ad­di­tion­ally, the poor per­for­mance of so-called ab­so­lute re­turn hedge funds and the age of low in­ter­est rates have meant that tra­di­tional in­vest­ment cat­e­gories haven’t been work­ing for in­vestors,” says Wealth-x re­search direc­tor Win­ston Ch­ester­field.

The 2016 Pas­sion In­vest­ing Re­port by fi­nan­cial firm Edge found that the value of Fer­raris made in the mid-1960s has grown by some 270 per cent since the 2007-2008 global fi­nan­cial cri­sis.

In 2014, a 1963 Fer­rari 250 GTO set a world record in car auc­tions when it fetched a price of US$38 mil­lion at a Bon­hams’ auc­tion. Thanks to the craze, the cof­fers of clas­sic Fer­rari bro­ker Talacrest ( talacrest.com) have been ex­pand­ing ex­po­nen­tially. Ac­cord­ing to Talacrest chair­man John Collins, the com­pany’s over­seas earn­ings had mush­roomed from a mere £433,000 in 2010 to £59.3 mil­lion in the year to March 2015.

While au­to­mo­tive col­lec­tors have lit­tle to lose should they de­cide to take their clas­sic cars out for a spin, the same can’t be said for wine col­lec­tors.

Bot­tles of rare wine have been fly­ing off the auc­tion blocks, par­tic­u­larly in Hong Kong, at a

In 2014, a 1963 Fer­rari 250 GTO set a world record in car auc­tions.

phe­nom­e­nal rate, with Si­mon Yam, h ead o f wine for Christie’s Asia ( www. christies. com), de­scrib­ing the city as the “wine epi­cen­tre of the world”.

Last year, the auc­tion house’s Finest and Rarest Wines: Di­rect from Great Es­tates auc­tion in May made HK$7.9 mil­lion (S$1.5 mil­lion) in sales. An­other auc­tion in Novem­ber, which in­cluded a se­lec­tion of Classed Growth Bordeaux and Mou­ton Roth­schild, gen­er­ated HK$25.2 mil­lion.

But the wealthy aren’t just look­ing to buy bot­tles. Hav­ing iden­ti­fied bur­geon­ing in­ter­est in vine­yards in re­cent times, Christie’s In­ter­na­tional Real Es­tate in 2013 launched an ad­vi­sory ser­vice for peo­ple seek­ing to own vine­yards.

De­spite pas­sion in­vest­ments in art not be­ing as lu­cra­tive as cars and wine, there is a grow­ing num­ber of wealthy in­di­vid­u­als who are seek­ing them out.

Ac­cord­ing to a re­port by Deloitte last year, 15 per cent more wealth man­agers as com­pared to 2015 said that their clients were look­ing to in­clude art in their in­vest­ment port­fo­lios.

Auc­tion houses saw a flurry of art trans­ac­tions last year. Pablo Picasso’s Femme As­sise be­came the most ex­pen­sive cu­bist paint­ing to be sold when the ham­mer fell at a whop­ping US$63.4 mil­lion (S$90.3 mil­lion) in June. And in Novem­ber, Sotheby’s sold Ed­vard Munch’s Girls on the Bridge for US$54.5 mil­lion.

In Asia- Pa­cific, the most fer­vent in­vestors in art and vine­yards are the high-net-worth main­land Chi­nese. “In­vest­ing in art or wine vine­yards sat­is­fies two im­por­tant driv­ers for China’s rich - a de­sire to re­flect an evolved un­der­stand­ing of lux­ury, as well as the po­ten­tial, al­beit a small one, of in­vest­ing in an in­come-pro­duc­ing as­set,” says An­gelito Tan Jr, CEO

The most fer­vent in­vestors in art and vine­yards are the high­net- worth main­land Chi­nese.

of lux­ury con­sul­tancy RTG ( www. rt­g­con­sult­ing.com). “An­other driver of pas­sion in­vest­ment is a re­newed fo­cus on a ‘slow luxe’ life­style. This is es­sen­tially a phi­los­o­phy to­wards liv­ing that re­flects a re­laxed and un­hur­ried life­style, al­low­ing one space to re­vi­talise.”

The ad­vice that ex­perts have for as­pir­ing pas­sion in­vestors is unan­i­mous – fol­low the heart and not the mind.

“Pas­sion in­vest­ments are high­risk in­vest­ments that do not re­turn a high amount of in­vest­ment, if any at all,” says Tan.

“There is a say­ing among vine­yard own­ers: if you want to be­come a mil­lion­aire as a vine­yard owner, start out as a bil­lion­aire.” ‰

The Fer­rari 250 GTO is one of the world’s most sought-af­ter clas­sic cars.

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