The Luxury Assets That Beat Property This Year, and Which Ones Lost

Every year Knight Frank publishes an index tracking what happens to the value of the things wealthy people buy for pleasure and keep for investment. It covers ten categories: art, watches, wine, whisky, classic cars, coloured diamonds, jewellery, coins, furniture and handbags.

The headline reading of the latest edition is dull. The overall index moved by minus 0.4 percent, which after two years of losses counts as stabilisation rather than recovery. Over ten years it is up 38.6 percent.

The interesting part is underneath. The average conceals one category having an extraordinary run, another quietly losing money, and a benchmark that most of them failed to beat. Prime residential property, measured across a hundred global luxury markets, rose 3.2 percent over the same window. That is the number to judge everything else against.

#1. Art: the category that ran away from everything else

Fine art was the standout, climbing around 11 percent overall as sales across the major auction houses rose sharply. That alone comfortably beats prime property, but the aggregate figure hides how uneven the surge was.

Impressionist works rose 80.4 percent, the single largest move in the entire index. Old Masters, a category widely written off as a declining market for years, rose 68.7 percent. Modern art rose 19.4 percent.

The pattern is a decisive shift back toward historical, blue-chip and unambiguously scarce material. Buyers who spent the previous cycle chasing contemporary names rotated into work whose supply is fixed and whose attribution is settled.

Next: a single sale that reset the reference point for an entire market.

#2. The sale that turned the art market around

One transaction did a disproportionate amount of work in these numbers. Gustav Klimt’s portrait Bildnis Elisabeth Lederer sold at Sotheby’s in New York for 236.4 million dollars, one of the highest prices ever paid for a painting at auction.

A single sale of that magnitude does more than add to a total. It resets the reference point for every comparable work still in private hands and pulls material onto the market from owners who had been waiting for exactly that signal.

The effect showed up immediately in the segment above ten million dollars, which rose 19.4 percent. That band is where the market’s confidence is genuinely measured, because it is where discretionary sellers decide whether to consign.

Next: two dominant names, and one of them more than doubled the other.

#3. Watches: a solid year, led by Patek

The overall watch market rose 5.1 percent, comfortably ahead of prime property and a marked improvement on the correction of the preceding years.

Within that, the two dominant names diverged. Rolex rose 4.6 percent, with the index noting that nearly all models posted solid performances, which suggests broad-based recovery rather than a few hero references dragging an average upward.

Patek Philippe rose 12.1 percent, more than doubling Rolex’s rate and finishing as one of the strongest performers in the whole index. The gap reflects a market rewarding lower production volumes and complication over brand recognition, which is a reversal of the pattern that drove the previous boom.

Next: the category quietly losing money while being sold as safe.

#4. Wine: the quiet loser

Fine wine fell 2.5 percent, measured on the Liv-ex Fine Wine 100 index, making it one of the few categories to lose value outright.

That continues a difficult run for a category that spent much of the last decade being marketed as a low-volatility alternative asset. Demand from Asian markets softened, Bordeaux pricing at release has been widely criticised as too aggressive, and the supply of investment-grade vintages keeps growing.

Wine also carries costs that indexes do not always make obvious. Professional storage, insurance and eventual sale commissions all erode returns, which means a headline decline of 2.5 percent understates what an individual holder actually experienced.

Next: the brand that can still raise prices but no longer holds its premium.

#5. Handbags: pricing power without price growth

Hermes bags fell 0.2 percent, which is effectively flat and represents a significant cooling for a category that spent several years as the index’s most reliable performer.

The commentary is more interesting than the number. Hermes retained its pricing power, meaning the brand can still raise retail prices without losing demand. What has flattened is the secondary market premium, the gap between what a bag costs in a boutique and what it fetches immediately afterward.

That premium was always the actual investment case. A narrowing gap suggests supply reaching the resale market has caught up with the number of buyers willing to pay above retail to skip the waiting list.

Next: why one colour outperformed, for reasons that are purely geological.

#6. Coloured diamonds: stable, with blue outperforming

Fancy coloured diamonds were broadly stable, which in a year like this one counts as a reasonable outcome. Within the category, blue stones outperformed the others.

The reason is geological rather than fashionable. Blue diamonds owe their colour to boron, and the conditions that produce them are rare enough that the global supply of significant stones is measured in single figures per year.

The Mellon Blue sold for 25.6 million dollars, illustrating the point. Coloured diamonds behave less like a market and more like a series of individual events, which makes index construction difficult and makes the stable reading less informative than it looks.

Next: the only category where trade policy shows up in the numbers.

#7. Classic cars: mixed, and clouded by tariffs

Classic cars returned a mixed performance, and the index singles out tariff uncertainty as the factor clouding the broader outlook.

That is a genuinely unusual thing to see in a collectibles index. Classic cars are unlike art or wine in that they are large, physically complex objects that cross borders constantly for auctions, concours events and private sales. Trade policy affects them directly in a way it does not affect a painting.

The top of the market remains strong for cars with impeccable provenance and competition history. The softness sits in the broad middle, where cars are plentiful, condition varies and buyers have become more disciplined about restoration quality.

Next: the full scoreboard against a house, and it is shorter than expected.

#8. What actually beat property

Set against prime residential property’s 3.2 percent, the scoreboard is short. Art beat it decisively at around 11 percent. Watches beat it at 5.1 percent, with Patek Philippe beating it several times over at 12.1 percent.

Wine lost to it, falling 2.5 percent. Handbags lost to it, at minus 0.2 percent. Coloured diamonds roughly matched it. Classic cars were too mixed to call.

The overall index, at minus 0.4 percent, lost to property. That is the finding worth carrying away, because it inverts the story luxury collectibles are usually sold with. As a class, they underperformed a house.

Next: the single characteristic every winner shared.

#9. What the pattern tells you

One theme runs through every category that performed well: rarity that can be verified and cannot be manufactured. Impressionist paintings, Old Masters, blue diamonds and low-production complicated watches all share that property.

Every category that struggled shares the opposite characteristic. Investment grade wine is produced every year. Handbags are produced continuously. Both depend on a scarcity that is managed rather than absolute, and managed scarcity erodes when supply eventually reaches the secondary market.

Buyers have become more disciplined and more focused on provenance, and the index reflects a market that rewards documented history over brand heat. That is a slower, less exciting market than the previous cycle, and probably a more durable one.