For all the millions spent on
art, wine, coins, stamps, watches, jewellery, Chinese ceramics and
antique furniture, the better investment might be classic cars. At
least, that is what the numbers say.
The London real estate firm Knight Frank's Luxury Investment Index
says that cars have been the biggest gainers among those nine
categories of collectibles over the past decade, rising 25 per cent in
value in the 12-month period that ended in June, according to the
report's most recent update in October.
A new specialist website, the K500 index, started by the
Geneva-based classic car dealer Kidston on Nov 30, says auction values
of the Aston Martin DB5 - made famous by the James Bond film Goldfinger
(1964) - have increased 30-fold since 1995.
Why buy an Andy Warhol silkscreen or a Qianlong-era vase when you
can make more money out of a tangible asset that has a top speed of
almost 240kmh and makes you feel like 007?
As ever with online indexes, the devil is in the methodological
detail. The Knight Frank index, originally published in the company's
annual Wealth Report, compared nine collecting sectors using data from
four external sources.
Car valuations came from the London-based Historic Automobile Group
International's Top Index of 50 exceptional collectable automobiles,
the ever desirable cream at the top of the market.
By using auction sale data from artmarketreport.com for a basket of
"representative" artists from a range of periods, art was calculated as
increasing in value by just 5 per cent over 12 months to June. That
number would have been very different if the index had concentrated on
the booming auction market for contemporary art, or if it had included
the bumper profits collectors have been making from new works bought
privately from galleries, often for less than US$50,000 (S$65,750).
"Wealth managers don't take much notice of these indexes, but some
of their clients do, perhaps more than they deserve," said Mr Greg
Davies, London-based managing director of wealth and investment
management at Barclays.
He points out that Knight Frank's Luxury Investment Index and the
London-based Coutts bank's Objects of Desire index have an "inherent
upward bias" by not including transaction, storage and insurance costs
in the data, and by excluding dividends when making comparisons with
returns on stocks, whose Dow Jones index gained 12.4 per cent over the
monitored period.
Upwardly biased or not, these "passion investment" indexes, with
their headline-making numbers and the publicity generated by sales
prices, such as the US$38.1 million paid for a 1962 Ferrari 250 GTO at
Bonhams in California in August - a record for any car at auction -
have made people increasingly focus on classic cars as a financial
asset.
In January, London-based dealership Hexagon Classics sold a 1965
Aston Martin DB5 for £650,000 (S$1.34 million). Back in 1994, that same
car was selling at auction for as little as US$29,600, according to the
K500 index, which has aggregated the auction results of 500 collectors'
cars over the past 20 years.
The K500 also gives the cars ratings out of 100, like Robert
Parker's wine guides. The Ferrari 250 GTO is viewed as the
Romanee-Conti of the automotive world with a rating of 97 out of 100.
Only 39 of them were made and the best-preserved examples with race
histories are valued at as much as US$50 million.
At the moment, the top end of the market is dominated by Ferrari
two-seat sports cars from the 1950s and 1960s. These accounted for nine
out of the top 10 prices at this August's US$399-million series of
classic car auctions in California, timed to coincide with the Pebble
Beach Concours d'Elegance, which this year was won by a 1954 Ferrari
375 MM Scaglietti Coupe.
Given the commercial hegemony of classic Ferraris, Paris auctioneers
Artcurial were excited to discover a black 1961 short- wheel-base
Ferrari 250 GT SWB California Spyder convertible in a "barn find" of 60
untouched automobiles at a chateau near Poitiers in western France.
One of just 37 made with "closed headlights" and stored in a garage
so it was in relatively good condition, the car had formerly been owned
by French actor Alain Delon before entering the collection of truck
manufacturer Roger Baillon, in whose family it has remained since. It
will be the star lot of Artcurial's Baillon Collection sale in Paris on
Feb 6, with an estimate of €10 million (S$16.1 million).
Another example of this rare car sold for US$15.1 million at Gooding in California in August.
So much for the grand crus. But are value and capital growth to be found lower down the market?
Tellingly, Michigan-based insurers Hagerty, which publishes the most
comprehensive classic-car price index based on private and auction
sales, says that while its Blue Chip and Ferrari indexes have gained
153 per cent and 245 per cent over the past five years, Affordable
Classics have gained just 11 per cent.
"The major movements in price happen only to about 15 per cent of
the cars," said Mr Dave Kinney, publisher of the Hagerty price guide.
"For someone entering the market, they should look down a generation
from themselves. The new buyers want the cars they dreamed about owning
when they were kids in the 1980s and 1990s."
