Property group, Knight Frank, has released its wealth report for 2019, showing that despite a darkening global economic outlook, wealth creation is set to remain constant in 2019.
The report is one of the key sources of information on the world’s ultra-high-net-worth individuals (UHNWIs ) – people with a net worth of over US$30 million excluding their primary residence.
It forecast that the global UHNWI population is set to rise by 22% over the next five years, meaning an extra 43,000 people will be worth more than US$30 million by 2023.
Beyond an increase in bank balances, the report found that interest in the world of collectables is also expected to expand into new areas.
The rise of whisky
Expect a boom in investment in one drink in particular, Knight Frank said. “Last year was a transformational one for rare single malt Scotch whisky.
“One bottle set a new world record of £700,000 in October, only to be beaten a month later by one that sold for £1 million before the buyer’s premium. Both were bottles of The Macallan distilled in 1926,” it said.
According to Knight Frank, the values for certain old vintage rarities soared past previous records, achieving almost unimaginable new auction highs.
In addition, the Knight Frank Rare Whisky 100 Index (KFRW100), which contains 100 bottles of the world’s most desirable rare Scotch whisky and tracks UK auction prices, increased by almost 40% through 2018.
However, 21 bottles in the KFRW100 did lose value last year. The bottom 10 would have cost £25,410 at the end of 2017 – by the end of 2018, that figure had shrunk by 27% to £18,670.
“As with all investments, the potential for punishing losses is very real,” Knight Frank said.
“Looking to 2019, we see prices continuing to harden for the right bottles from the right distilleries, as well as increased interest in more affordable bottles from the second tier.”
But certain pockets could see a correction, it said.
“To some extent we saw that with The Macallan 18-year-old index, which fell by 2.9% in 2018.
“This followed a 142% increase in 2016 and a further 35% increase in 2017, so perhaps an adjustment was to be expected. From a risk perspective, we believe the incidence of fakes can only increase while prices are so high and demand so robust,” Knight Frank said.
Some of the world’s wealthiest people, including Amazon’s Jeff Bezos, are reportedly big collectors.
But it’s in Asia where the trend seems to be accelerating fastest, said Knight Frank.
Chinese tech entrepreneur Jack Ma’s private jet has been spotted at Aberdeen airport, while whisky tourism was apparently one of the drivers behind the launch of a new non-stop flight from Edinburgh to Beijing in 2018.
Sales of Scotch whisky to India, China and Singapore rose by 44%, 35% and 24% respectively in the first half of 2018 according to the Scotch Whisky Association, with single malts totalling almost 30% of total exports.
“It seems single malts have taken over from wine,” said Sami Robertson, a Knight Frank global property ambassador who works closely with clients based in Singapore.
“People are spending huge amounts on their cellars. I was talking to one of my contacts recently who paid well over £100,000 for a single bottle,” Knight Frank said.
Wine, art and classic cars
Other notable collectable purchases in 2018 include:
- The most expensive work by a living artist, Portrait of an artist by David Hockney, was sold for US$90 million;
- The Marie Antoinette pearl pendant, sold by Sotheby’s for US$36 million, was the most expensive piece of pearl jewellery sold at auction;
- The 1962 Ferrari 250 GTO, sold by RM Sotheby’s for US$48.4 million, was the most expensive car sold at auction;
- A bottle of 1945 Romanée-Conti, sold by Sotheby’s for $US558,000. was the most expensive bottle of wine sold at auction.
The HAGI Top Index for rare classic cars, which includes 50 models from 19 marques, rose almost 2.5% in 2018. However, not every marque recorded an increase. Porsche, for example, fell on average by 6.5%.
Knight Frank noted that the collectable wine market also saw its limits tested, with 2018 seeing further rapid price escalation for Burgundies, notably top Grands Crus from the “Rs” (Raveneau, Romanée-Conti, Roumier and Rousseau).
In the art world, record-breaking sales at Sotheby’s and Christie’s last November also capped another impressive year for the big auction houses.
“In New York, Christie’s US$833 million spring sale of 1,500 objects belonging to the Rockefeller estate was the highest auction total ever for a single collection,” Knight Frank said.