Luxury items a mixed bag for investors

RETURNS on investments in luxury goods would on average have barely kept pace with inflation in South Africa over the past year.

RETURNS on investments in luxury goods would on average have barely kept pace with inflation in South Africa over the past year.

But over the past five and 10 years, a diversified collection of luxury goods could have returned 44% and 182% respectively.

Global property consultancy Knight Frank has released its Luxury Investment Index for this year, tracking returns of nine types of passion investments to the end of June.

Capital invested in London's FTSE100 returned 9% over the year to June, 59% over the past five years to that date and just 51% over 10 years.

According to London-based Knight Frank, the top end of the luxury residential market there rose 135% over 10 years.

"Only gold, with growth of 254%, has done better, but its performance has been more volatile," the company noted.

The JSE's All-Share index has grown 404% over the 10 years to end-June, throwing into relief Europe's macroeconomic woes since 2008.

Comparing capital appreciation of the asset classes under review, furniture was the worst performer, with negative figures over the short and long term, while cars performed admirably, along with art, coins and jewellery.

Andrew Shirley, who compiled the index for Knight Frank, said these asset classes were seen as investments in their own right - not just desirable objects to own.

"Classic-car performance continues to underpin the index, with the value of the world's most collectable vehicles rising 25% year-on-year, according to the Historic Automotive Group International's TOP index.

"In August, a 1962 Ferrari 250GTO Berlinetta set a new auction record when it went under the hammer for $38-million [R413-million]," Shirley said.

"Coins also put in a strong performance with the Stanley Gibbons 200 Index rising 10% on the year ... [and] the only surviving example of a British Guiana 1856 1c black on magenta cemented its reputation as the world's most desirable stamp when it was sold at auction in New York by Sotheby's for $9.48-million in June."

The caveat is that not every item in these asset classes will appreciate in value.

"Antique furniture, for example, has seen its value consistently eroded over the past 10 years, mainly because it no longer fits with the contemporary design aesthetic of modern homeowners."