Real estate and classic cars are top investments, wealth report finds
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According to a new report, prime residential real estate and classic cars remain solid investments even in the face of geopolitical instability and stock market volatility.
Douglas Elliman and Knight Frank’s The Wealth Report 2016 found that, while many asset classes have seen negligible appreciation over the course of the last 12 months, some maintain a robust outlook. The report, which tracks recent investment history and longer term wealth projections, found that certain assets remained safe.
Howard M. Lorber, CEO of Douglas Elliman, said: "The people who lost 30 per cent in the market [when the Shanghai Stock Exchange and Chinese real estate fell] didn’t want to lose the other 70 per cent. They wanted to as quickly as money out and moved it here, so we saw an uptick in those type of buyers.
“The turmoil creates a need to go to safe havens, and there is no better haven than right here," he added.
The number of high net worth individuals with at least 30 million to their name as increased by 61 per cent over the course of the last decade, the research found. This number is also tipped to rise by a further 41 per cent over the coming decade. As a result, this means people are increasingly looking for investments and a broader selection of asset classes than ever before are being considered.
Regarding collectibles, coins, wine and art have seen the best increases over the last decade, with gains of 232, 241 and 226 per cent respectively. Chinese ceramics and watches saw more modest growth, with gains of 50 and 67 per cent respectively between the end of 2005 and the end of last year. Furniture has not seen a rise. Classic cars far outpaced all other assets, enjoying an average value appreciation of 490 per cent. Overall, the Wealth Report confirmed a gain of seven per cent in 2015 across the ten collectibles markets measured.
McKeel Hagarty, CEO of Hagarty Collectibles, told Luxury Daily: “It was remarkable during the recession to see the whole world on fire and the collector cars even in the worst categories were holding their own or even continuing to increase. When you start talking about things like Ferraris, these are the most investment-worthy cars that you can find.
“We have finally cracked the ability to look at things like classic cars as an asset class and track their movement across the world. People buy a lot of the best classic cars for the purpose of using it for something. There are lots of global tours.
“The only way you can get on the Ferrari GTO tour is to own a Ferrari GTO, and they are $50-60 million each, but you aren’t going on that tour unless you own one. The same applies for a lot of rallies, so buying a car is different than maybe a painting you can put in your study," he added.
Real estate also proved a solid bet, and will continue to be so, especially in the face of the wealth leaving China. Douglas Elliman’s Mr. Lorber confirmed this, saying: “If you own equities, every day you wake up, as I do, with CNBC on, you’re miserable seeing how much you lost the day before and how much you may lose today. Do you ever wake up and think about how much you have lost on your home? It never happens.”
Investors, especially those in the ultra-high-net-worth category, are looking for stability and exclusivity and do not want their investment being affected by market turmoil. This is why real estate and certain collectibles are increasingly taking the place of stocks and bonds in many investors' portfolios.