Classic cars were once again the top performing luxury asset on an annual basis (see page 19), according to the latest figures from the Knight Frank Luxury Investment Index (KFLII).
While the overall value of KFLII increased by just 5% in the 12 months to the end of March 2016 – the lowest annual increase since the first quarter of 2010 – cars outperformed with a 17% surge.
Fine wine saw the second strongest growth, up 9%, with rare coins in third position, rising 6%.
The Bordeaux market is bouncing back strongly after falling sharply between 2012 and 2014, while north Italian wines are continuing to enjoy annual double-digit growth, explains Nick Martin of Wine Owners, which compiles the Knight Frank Fine Wine Icons Index.
Coins remain in strong demand as an investment asset, says Keith Heddle of Stanley Gibbons. A rare 1933 Pattern Penny smashed the world auction record for a copper or bronze coin when it went under the hammer with Baldwins for £72,000 in May, while a 1839 Queen Victoria proof set sold for £504,000, double the previous record, last September.
Art and furniture were the biggest losers, dropping by 5% and 6%, respectively. “We are seeing a natural correction, the rates of growth weren’t sustainable,” says Viola Raikhel-Bolot of art advisor 1858 Ltd. “However, stellar prices are still being paid for really important works of art fresh to the market,” she adds.
Recent figures suggest that the classic car market has also decelerated over the shorter term, despite 2016 seeing the highest price, in sterling and euro terms, ever achieved by a car sold at auction.
Since the beginning of the year, the HAGI Top Index, which tracks the value of 50 of the world’s most desirable motor cars, has risen by just 1%. “May was the first month ever when the index didn’t move at all,” says HAGI founder Dietrich Hatlapa. “The market has been treading water since the end of 2015,” he adds.
But Mr Hatlapa says talk of “bursting bubbles” is premature. “This is more about a market that has gone quiet. Good cars are still selling very well, but buyers are in less of a hurry – the perception is that they now have time to track down what they want via a dealer rather than getting into a bidding war at an auction.”
This is evidenced by some recent relatively lacklustre auctions in the UK and Monaco where many cars remained unsold after failing to meet their low estimates.
James Knight, Group Motoring Director at auctioneer Bonhams, says he is not surprised: “A year or so ago, I said the market was letting off steam for motor cars that had become very fashionable to acquire, but could be bought every weekend of the year.
“We still have many collectors wanting to buy these examples, but they naturally want to feel they’re paying a fair market price. They will find new homes if they’re priced accordingly - perhaps down 20% from the highs of a couple of years ago. Only ‘best-inclass’ examples will knock on the door of the previous high levels.”
Mr Knight says there was interest from 12 bidders willing to pay over £3m for a Jaguar C-Type in original condition that he auctioned in Monaco in May 2016. The car sold for £5.75m.
However, the standout sale of the year has to be our cover star, a gorgeous 1957 Ferrari 335 S Scaglietti, which fetched €32.1m (£24.7m) when it was sold in Paris by Artcurial at the Retromobile Salon 2016 event this February.
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Of the 10 asset classes we include in the Knight Luxury Investment Index (KFLII), classic cars arguably capture the imagination more than anything else. Not only has their performance in terms of price over the past decade been staggering, but the thrill of owning such visceral and often historic vehicles is hard to beat. I’m therefore delighted that this edition of KFLII focuses on these amazing machines, including a host of fascinating facts and figures from our data partner HAGI. I hope you enjoy reading it as much as I did writing and researching it.