This September, an Hermès Kelly bag sold for $346,000 at a Sotheby’s auction in Paris, making it the most expensive bag ever sold in Europe. In 2019, a bottle of 60-year-old Macallan Single Malt sold for $1.9 million. The Patek Philippe Nautilus is the most coveted watch at auction. A Patek Philippe Nautilus steel sport watch with a Tiffany Blue face sold at auction last December for $6.5 million. Then, of course, there is the art market where auctions often result in new records being set.
What if you have one of these bags, watches, whiskey, wine or art collections? In other words, put your money where your love is. Invest in your passion.
Passion investing refers to investing in non-traditional assets – such as classic cars, handbags, watches, art and whiskey – that typically allow you to enjoy asset ownership while holding them in your portfolio. The Knight Frank Luxury Investment Index provides an indication of the most coveted items of desire each year. In Q42021, watches and wine topped the investment index. “With an average growth of 16 per cent, the two asset classes reflected a generally strong year for luxury investments,” the report said. Other high performers on the index include art (+13 percent), rare whiskey (+9 percent), and coins (+9 percent).
“I think there are two parts to passion investing. First passion and then investment, in that order. First and foremost, you must be passionate about what you buy. If on the way it gives you a good return on investment does, I think it’s ideal,” says Dillon Bhatt, head of international business development at Millwood Kane International, a leading investment consulting firm. Bhatt himself is an avid watch collector and has a special fondness for Rolexes. He Recommend that one needs to have a long-term horizon of a decade or more.” If you’re willing to have a watch for a 10-15 year horizon, you’re likely to make money on it. and even if you don’t [make money]You can always pass it down as an heirloom,” he says.
COVID-19 has created a huge gap between the demand and supply of collectible watches. While demand increased with people having more disposable income due to less spending on travel, eating out, etc., supply was constrained as manufacturing units were shut for almost six months, leading to a huge backlog. This resulted in a rapid increase in the prices of watches on the secondary market. Bhatt gives the example of a Rolex Steel Daytona that retailed for $11,000–$15,000, but was selling for around $50,000 on the secondary market. The same is the case with other collectible watches such as the Royal Oak line from Audemars Piguet and the Nautilus range from Patek Philippe.
Bhatt suggests checking out organizations like Watchbox that specialize in pre-loved watches to get an idea of prices and also as a platform to buy and sell watches.
From watches to wine. “A new wave of investment money has flowed into the wine market, some of it led by macro factors, such as inflation concerns – wine is being seen as a hedge – but also by more local factors such as weather conditions. Shortage in supply due to …” says a Knight Frank report. Sonal Holland, a wine educator and the only Indian to be awarded the title of Master of Wine by the UK-based Institute of Masters of Wine, says that a lot of people who invest in wine They feel that if they buy a wine at a certain price as part of a futures – even before it is bottled or released to market – and then if the price rises during its drinking window increases by 100,000, they will make a profit. They usually sell a part of it and drink a part of it.
“The profits they make, in turn, pay for the bottles they consume. Therefore, the passion investment can end up in the consumption of some of the finest and rarest wines from around the world at little to no cost. However, she cautions that as simple as this may sound, one must keep in mind that only some of the best wines made around the world are capable of that level of growth, maturation and value appreciation. About 85 percent comes from Bordeaux and Burgundy, made by some of those regions’ most prestigious wine producers, followed by Tuscany and then some California wines.
Holland says you need around `10-15 lakh to start with and then the recurring cost of keeping the wines safe and in pristine condition in professional storage units in London or Dubai. “This is for people who really understand wine. If you don’t but still want to invest, get the advice of a professional,” she says, adding that it is better to restock a wine collection or Not easy to sell.” This is called investing in a liquid, but it may be the most illiquid investment. So, you need to be patient and ready to wait for a long time.”
Holland invested in the 2009 vintage and its wine is in storage in London. The prices have shot up, especially after the pandemic and she is making a notional profit. “I haven’t finished it yet. I’m turning 50 next year and I’m looking forward to opening a few bottles and drinking it. That’s the problem with the obsession with investing in wine. You can’t drink it.” Tempted for,” she laughs.
And now from wine to art. According to the Knight Frank Luxury Investment Index, the art market has seen a strong resurgence. “Sotheby’s projects record sales of $7.3 billion in 2021, while Christie’s records five-year high of $7.1 billion,” the report said.
For those looking to invest in Indian artists, Arvind Vijaymohan, founder and CEO, Artery India, an art asset advisory, suggests that if your risk appetite is low, you should look to modern masters like VS Gaitonde, FN Souza, SH should invest in Raza or MF Hussain, but then your investment amount should be above `1.5-2 cr. “These are all established performers who have a reference point of 30 years of acceptance and growth. Hence, there is a fair degree of assurance in terms of investment payoff,” says Vijayamohan. Or you can consider investing in contemporary artists like Atul Dodiya, Bharti Kher, Subodh Gupta and Jitish Kalat.
“These are safe bets. Their prices have stabilised. However, there is always a risk in buying young artists as they need to establish their pedigree and their potential is yet to be fully measured. Then emerging bracket, where your entry point is at the very bottom. You can buy something for `10,000-30,000 and up to `2.5 lakh.” While there is no certainty in terms of these pricey investments, the chances of discovering a superstar are high when Hai when the superstar was still a budding. If you see a winner, you have the upside in terms of having capital investment gains,” says Vijayamohan.
@smitabw
