Why investors are increasingly turning to Collectible Investments

According to the annual World Wealth Report from Capgemini and Merrill Lynch, demand for collectibles is currently rising.

As the report indicates, this rise focused primarily on two specific categories of investments: art and "other" collectibles, referring to the collectibles market which includes stamps, coins, autographs and other unique memorabilia.

The report explained that "With financial markets still in flux, some high net worth investors indicated that they also approached their passion investments as 'investor-collectors', seeking out those items perceived to have tangible long term value."

Towards the end of last year high end service providers, luxury goods makers and most importantly auction houses all reported a steady increase in demand. This year, we are also likely to see an overall increase in the demand for passion investments as wealth levels recover amongst the high net worth investor population.

A Gulf News report pointed to research conducted by Bain & Company as further indication of the market's recovery. The research discovered an overall 4% increase in market revenues over the past year.

According to the research conducted by Bain & Company, a breakdown of the core regions driving luxury industry growth indicates the dominance of Asia and China in the global market. Asia has witnessed a 10% growth in the market, while China has seen growth of 15%.

In truth this 15% increase has been motivated by a quickly developing collectibles market, which has seen world record prices within the Chinese market in the last twelve months alone. In December 2009, a Hong Kong auction witnessed a world record price for a single bottle of Château Pétrus 1982 vintage wine, which was auctioned for an impressive  £62,000 ($94,000).

In January 2010, another Chinese record was smashed with the sale of one of the rare 1897 Red Revenue Stamps which sold for £470,000 ($710,600).

Rare Chinese Snuff Bottle

Then in April this year a piece of Imperial Jade relating to Qianlong of the Qing dynasty sold for a world record price of £8,005,000 ($12,200,000) , at Sotheby's, Hong Kong.

Then a month later, more world records were set as a rare Chinese snuff bottle was auctioned off for £5,800,000 ($8,750,000), to cap off a truly remarkable year in the Chinese collectibles, market.

To put these figures in perspective, we need only look at the growth figures coming from the luxury industry's traditional core market regions. In Europe, strong economic recovery has seen a 3% growth in the market. While in the United States, there has been a steady 4% increase. Only Japan has witnessed a reduction in the market value of some 3% compared with last year's figures.

The Capgemini and Merrill Lynch report explains that luxury collectibles continue to represent the main source of interest for HNWIs seeking investments of passion. Based on the HNWIs surveyed last year, luxury collectibles accounted for around 30% of passion investments undertaken globally.

In terms of collectibles, the United States led the way with the highest proportion of passion investments related to luxury collectibles at 31%. South America and Europe followed closely with around 30% of their passion investments related to the collectibles market.

With around 1 in 3 passion investments in Europe and the Americas now involving luxury collectibles, alongside a 23% global increase in jewellery, gem and watch investment, now may be the perfect time to enter the collectibles investment market.

In the Chinese market alone, world records continue to be set for rare collectibles like stamps and wine. Hong Kong hosted its annual Winexpo event in May, with 880 exhibitors from thirty two countries on show. The three day event saw 12,000 Asian visitors, with a 40% attendance increase from the previous year demonstrating the growing market in the Far East.

The next twelve months could see yet more interest and more world record prices in what is quickly becoming a global collectibles market.


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