Hermes handbags, cars and fine wine got the ultra-rich through COVID-19
Although the world was confined indoors for most of the pandemic-hit 2020, this was no barrier to those with cash buying high-end luxury goods, accessories and upmarket homes, the Knight Frank Luxury Investment Index says.
The market for high-end collectables and investments was mixed, with cars, upmarket overseas holidays and artwork hit, with investors preferring to invest in “passion” sectors, such as bitcoins and accessories.
The must-have item, fashion house Hermes’ handbags, topped the list for the world’s ultra wealthy, as defined as having a net worth of more than $US30 million including their prime residence, and can retail for anything from $2000 for an everyday shoulder bag, to the Hermès Himalaya Niloticus Crocodile Retourné Kelly 25 handbag, which sold at auction by Christie’s for $US437,330, ($552,487) in November 2020.
Cars raced back up to third place in the index in 2020 with growth of 6 per cent -Ferrari was one of the preferred choices to grace the garage.
The report says with cross-border flows largely halted by travel bans, markets reliant on large inflows of international demand, such as Monaco and Dubai, saw prime sales volumes decline, while Vancouver and Miami saw domestic buyers step in to fill the gap.
Closer to home, the east coast of Tasmania was a sought-after travel destination.
Knight Frank’s head of residential research, Australia Michelle Ciesielski said, the market for luxury collectables, which largely relies on the auction market, has been detrimentally impacted by COVID-19.
“Some luxury investments are performing better than others, particularly the higher-value investments. Handbags, for instance, have performed far better than the top end of the art market where no painting sold for over $US100 million in 2020 for the first time in a number of years,” Ms Ciesielski said.
To make the enforced lockdown more palatable, fine wine came in second place in data supplied by Art Market Research for Knight Frank’s The Wealth Report 2021, released on Wednesday.
Following a year of consolidation, wine markets experienced strong growth in 2020, up 13 per cent compared to a year earlier according to Wine Owners, which pulls together the Fine Wine Icons Index.
Unlike the global financial crisis, the wine market has held its nerve throughout the pandemic, merchants did not mark down prices and the market has been stable, the report says.
With cross-border flows largely halted by travel bans, those markets reliant on large inflowsof international demand, such as Monaco and Dubai, saw prime sales volumes decline, while Vancouver and Miami saw domestic buyers step in to fill the gap.
When looking at the performance prime property, Ms Ciesielski said growth in the number of ultra-wealthy people in Australia was 4.5 times higher than the growth seen in this population globally in 2020, despite the slowdown in economic growth following the global pandemic.
Sydney had the highest share of both ultra-high-net-worth individuals with 33 per cent and high-net-worth individuals – with a net worth of over $10 million – of 25 per cent, followed by Melbourne, Perth then Brisbane.
“Our four major capital cities of Australia comprise 74 per cent of the ultra-high-net-worth population and 66 per cent of the high-net-worth population,” she said.
