After bumper times, price rises across most of the collectables market have slowed considerably.
By David Walker
Tougher times seem to be coming for the high-end collectables trade. From classic cars to art to stamps and coins, prices of “alternative investments” have stopped rising and some have gone into reverse. With little intrinsic value, their prices are driven by buyer sentiment – and in 2016, buyers are in less of a mood to spend.
The New York Times reports that the city’s normally popular Sotheby’s Impressionist and Modern Art spring auction had its worst result since 2009, with sales down 61 per cent from last year. Meanwhile, art sales at rival Christie’s were down by a third for the first half of 2016, according to The Wall Street Journal.
This decline is in keeping with the Mei Moses World All Art Index, which dropped 3 per cent last year, and
The European Fine Art Foundation, which reported in March that 2015 global sales were down 7 per cent to US$63.8 billion. Conversely, UK-based Art Market Research calculated that the market rose 4 per cent in 2015 – evidence that gaining an accurate picture of the collectables market can be problematic.
Iconic stamp auction house Stanley Gibbons removed its CEO and CFO in July after a year where its auditors quit and its shares lost more than 90 per cent of their value. Stanley Gibbons itself runs the stamp world’s most-watched index, and it reports stamp values rose just 1 per cent in the year to March 2016. Right now, philately is getting you nowhere.
"In 2016, buyers are in less of a mood to spend."
Jewellery and watches
They have risen by around 4 per cent each in the year to March 2016, according to Art Market Research. Coloured diamond prices were flat for the year despite the efforts of the Hong Kong billionaire who paid US$48.4 million for the vivid Blue Moon diamond at an auction in November 2015.
This market has been declining for years – on one measure, it’s down 29 per cent over the past decade.
Global consultancy Knight Frank reports that prices of classic Ferraris, Mercedes-Benzes and other marques collectively rose 17 per cent in 2015. However, the US Hagerty Market Rating, an attempt at estimating the strength of the market, peaked in May 2015 and has been sliding since.
Historic Automobile Group International (HAGI) said in June that prices had risen just 1 per cent for the year to May 2016, compared with a 15 per cent rise in 2015. The classic car market, which HAGI says has delivered investors a 490 per cent increase in value over the past decade, may now be cooling, too.
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This category is a notable exception to the overall trend. After several down years, they have surged through 2016.
None of the numbers for collectables are completely reliable, in part because no index can deal perfectly with items that fail to sell at auction. However, the general picture is of a market stalled after years of expansion.
One theme in many markets is the withdrawal of Chinese buyers. The Chinese Government has been strongly discouraging displays of wealth by the rich of Shanghai and Beijing. The market for Chinese ceramics, for example, was flat in 2015 and down for the year to March 2016.
Further, buyers of collectables elsewhere are doing it a little tougher. Conditions are tight in industries such as investment banking and the prices of stocks and many commodities have fallen. Knight Frank estimates that the ranks of the world’s ultra-rich – people with US$30 million or more in assets – fell 3 per cent in 2015.
Billionaires, however, continue to do well. Wealth X reported in August that the number of billionaires had risen 6.4 per cent in 2015, to 2473.
Who splurges where?
The ultra-rich may be everywhere, but their spending preferences change with geography, according to research done for Knight Frank. Its 2016 Wealth Report says that Europeans remain disproportionately likely to invest in collectables and to buy high-end cars.
Europeans also retain aliking for yachts – but the rich of the Pacific region, not surprisingly, are even more willing to spend on boats.
The rich of Africa, in contrast, are the most likely to spend on private jets, even more than the magnates of North America and Latin America.
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