A weaker year for luxuries

Valuations for everything from art to whisky have shot up over the past decade. Some of the shine came off last year, although there is still money to be made by those who know where to look, reckons the latest Wealth Report from estate agency Knight Frank.

For only the second time, the Knight Frank Luxury Investment index (FKLII) – a composite index tracking various “passion plays” – ended the year in negative territory – “albeit only by a fraction of a percent”, says Knight Frank’s Andrew Shirley. Rare whisky, which has appreciated 280% over ten years, was the biggest casualty, with the value of a dram dropping 9% in 2023.

The worst-performing 50 bottles in the Knight Frank Luxury Whisky index lost 26% of their combined value, but the other 50 added 5%, while the top-performing 20 out of the 100 gained a fifth in value. A coveted bottle of The Macallan Adami 1926 sold for $2.7m at auction with Sotheby’s last year.

The overall classic-car index fell 6%, but some brands still saw gains, such as Lamborghini (up 18%). A dip in handbags (-4%) largely reflected a struggling retail market. Fine wine edged up 1%, but the froth was knocked off some bottles from very small producers that had “enjoyed the most exuberant growth”. Vintage watches rose 5%, but with slides in newer watches, and jewellery “put in another strong performance” (+8%).

The art market saw the biggest rise in 2023, with the index up by 11%. But all the gains came in the first half of the year with values “sliding significantly later on”. The “ultra-contemporary” section fared especially badly, as too many freshly painted works flew off the easels, causing a glut in supply.