Coutts ‘Objects of Desire’ Index reveals classic cars as top performing asset over 12 years

Coutts 'Objects of Desire' Index reveals classic cars as top performing asset over 12 years

The Coutts Index captures the price return in local currency of 14 'objects of desire' asset categories.

Economic Analysis

06 September 2017

A line-up of colourful classic cars

Classic cars have provided the healthiest returns since 2005 according to the Coutts Index, with average prices rising more than fourfold.

'Objects of desire' assets increased by 1.2% through 2016 and have risen by nearly 77% since the beginning of 2005 according to the latest edition of the Coutts Index. Rare musical instruments have taken top place in the index this year, rising by 16.4%, while classic cars have seen the largest fall at -10.4% Despite this, cars have gained the most across the index categories since 2005, increasing fourfold over the 12 years represented by the data.

The Coutts Index captures the price return in local currency (net of holding costs) of 14 'objects of desire' assets across two broad categories: trophy property and alternative investments. Alternative investments can be further broken down into Fine Art, Collectibles and Precious Items. Trophy Property is divided into Billionaire Property - primary homes - and Leisure Property – second and holiday homes - in ten global capital cities and the leisure locations situated nearby.

Mohammad Kamal Syed, Managing Director at Coutts, said: “Provenance and rarity continue to be the two factors that are pushing prices higher. Classic cars have provided the healthiest returns since 2005, with average prices rising more than fourfold. However, after increasing rapidly in 2013 and 2014, price returns for Classic Cars fell in both 2015 and 2016. Moreover, this reflected falling auction prices for nearly all models in the index. Prices at the very top end of the market remain robust.

“2016 saw the highest ever price paid for a Ferrari 250 GT, with a rare 1961 SWB California Spider barn-find fetching US$18.15m. More recently, a new world record price was set in August 2017 for a British Automobile (1950’s Aston Martin DBR1 at $22.55m). The most coveted cars continue to go up and the gap between the very best and average only widens.”

The Coutts Index incorporates a real estate component supplied by Savills World Research. Trophy Property measures the changing value of properties in the ten prime global city locations, over two classes of property:

  • Billionaire Property – primary homes owned by ultrahigh net worth individuals, typically valued at £10m and above.
  • Leisure Property – second houses or holiday homes located in selected leisure destinations readily accessible from the base cities.

Property - After rebounding strongly following the recession, both categories have delivered modest returns in recent years. Billionaire Property prices grew rapidly from 2008 to 2012, increasing nearly 40%, but have since risen less than6% and increased less than 2% last year. Prices of Leisure Property have generally seen smaller increases, rising around 20% since 2008, but have been very consistent, growing close to 1.5% in each of the past three years. Looking closer at Billionaire Property, returns from the ‘New World’ (Hong Kong, Moscow, Mumbai, Shanghai and Singapore) rose faster before the recession and fell to a greater extent in 2008 than those in the ‘Old World’(London, New York, Paris, Sydney and Tokyo).

Since 2008 prices in both categories have rebounded by around 40%. However, the ‘Old World’ has seen steadier growth in recent years returning over 4% in 2016 while the ‘New World’ saw values decrease by nearly 2%. Of particular note, are Paris and Sydney. Billionaire Property prices in Paris have declined over 30% since 2012 while those in Sydney increased more than 70% during the same period. Leisure Property prices in Paris have held up rather better, although these too have declined in recent years. For Leisure Property, Sydney is again the standout performer with prices rising around 40% since 2012.

Collectibles - Classic cars have provided the healthiest returns since 2005, with average prices rising more than fourfold. Prices at the top of the market remain robust and 2016, saw the highest ever price paid for a Ferrari, 250 GT. Coins remains the only category to have registered increasing prices in every year since 2005. Prices have risen more than 11% per annum on average. Stamps also rose consistently, albeit more modestly, until 2016 when prices fell slightly for the first time. Following four years of contraction, fine wines registered strong price growth of nearly 10% in 2016.

Fine Art - All categories of fine art suffered price falls last year, contributing to a 6% reduction in prices. Traditional Chinese works of art values have fluctuated but this is the only category for which prices have risen significantly since the recession, increasing an impressive 70% since 2008. The impressionist and Modern Art category suffered the largest decrease in 2016, falling around 8% to stand 12% below its 2007 peak.

Precious Items - On average, price returns for jewellery have outstripped those for classic watches. While classic watch prices have recovered in recent years to stand over double their 2005 level, they remain 20% lower than their 2012 peak. Jewellery however reached a new high in 2016, growing nearly 12% on a year earlier and up 150% since 2005.

Mohammad Kamal Syed said “The Index is not just about the value of the underlying asset. The emotional enjoyment of owning and sharing beautiful items is just as important. We understand that passion investing engages the senses, acknowledges the importance of emotion and history and reflects the pleasures of a life well lived.”

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