The latest issue of The Wealth Report, reveals that the Knight Frank Luxury Investment Index (KFLII) has risen in value by 7% over the 12 months to the end of Q4 2017.

The asset leading the index at the end of 2017 was art, which saw outstanding growth of 21% over the course of the year*. This strong performance follows a number of years when art had fallen behind other asset classes such as classic cars and wine.

But last year’s record-breaking sale of Leonardo da Vinci’s Salvator Mundi for US$450million – surpassing the previous world record by a staggering US$271million – epitomises art’s recovery.

Wine, KFLII’s top performing asset class in 2016, also had a strong year and saw double-digit growth (11%)**. Scarcity driven markets, particularly for Burgundy, remained strong and demand from Asia and the Middle East continued to buoy prices.

Record-breaking sales also took place for a number of the index’s other asset classes in 2017:

• In the classic car market, a 1956 Aston Martin DBR1, raced by Stirling Moss, sold at auction for US$22.5milion – a record for a British car
• Actor Paul Newman’s Rolex Daytona watch sold for US$17.8million, having been guided at US$1million
• Hong Kong jeweller Chow Tai Fook paid HK$553million for the Pink Star 59.6 carat vivid pink diamond – a world record for a diamond or piece of jewellery
• Estimated at £200,000, a set of four rare 16th or 17th century Chinese huanghuall chairs sold to an Asian buyer for £5.3million

Andrew Shirley, Editor of The Wealth Report and KFLII, commented: “The strong performance of the Knight Frank Luxury Investment Index in 2017 reflects the stunning prices paid for objects of passion throughout the year. The US$450m bid for a painting by Leonardo da Vinci shows that keen collectors will stop at almost nothing to acquire the most sought-after and cleverly marketed works of art. The record price achieved by Paul Newman’s Rolex Daytona watch also highlights the importance of provenance to collectors.”

Knight Frank Luxury Investment Index (to Q4 2017)

Notes: All data to Q4 2017
Sources: artmarketresearch.com (art, Chinese ceramics, watches, jewellery), HAGI (classic cars), Wine Owners (wine) Stanley Gibbons (stamps, coins), Fancy Color Research Foundation (coloured diamonds). For methodology details please contact andrew.shirley@knightfrank.com

Comparative assets

*Knight Frank Prime Central London Index

Reasons for buying luxury investments

1. Joy of ownership
2. Capital appreciation
3. Safe haven for capital
4. nvestment portfolio diversification
5. Status among peers

Source: The Wealth Report Attitudes Survey 2018

To download the report, please click: www.knightfrank.com/wealthreport

*Art Market Research (AMR) data
**Knight Frank Fine Wines Index, compiled by Wine Owners