Classic cars value drops in 2016 but annual return is 14.2% since 2005 – Coutts

Since 12 years, the Coutts Index ‘Objectives of Desire’ provides a glimpse of the passion investing area.

The index, aiming to capture the price return in local currency of 14 so-called passion assets, is divided in two categories: trophy property and alternative investments.

Alternative investments include fine art, collectibles and precious items while the trophy property is split between billionaire property (primary homes) and leisure property (second and holiday homes – in ten global capital cities).

The latest edition of the Coutts Index revealed that the overall value of passion assets has increased by 1.2% over 2016.

According to the Coutts Index, classic cars have seen a short-term drop of 10.4% last year but over the 12-year period covered by Coutts, they remain the top performing assets though, up 331.9% since 2005. The average cost-adjusted annual return of classic cars investments was 14.2% between 2005 and 2016.

Mohammad Kamal Syed, managing director at Coutts, suggested that provenance and rarity continue to be the two factors that are pushing prices higher.

“Classic cars have provided the healthiest returns since 2005, with average prices rising more than fourfold. However, after increasing rapidly in 2013 and 2014, price returns for Classic Cars fell in both 2015 and 2016. Moreover, this reflected falling auction prices for nearly all models in the index. Prices at the very top end of the market remain robust.

“2016 saw the highest ever price paid for a Ferrari 250 GT, with a rare 1961 SWB California Spider barn-find fetching US$18.15m. More recently, a new world record price was set in August 2017 for a British Automobile (1950’s Aston Martin DBR1 at $22.55m). The most coveted cars continue to go up and the gap between the very best and average only widens,” Syed said, commenting the index’s report.

Hugo Reyneri, portfolio manager and co-founder of car investment firm Honoris Cars, and the manager of the Classic Car Fund Filippo Pignatti Morano recently outlined their investment approach to cars to InvestmentEurope.

The ‘winning’ passion assets in 2016 were rare instruments, which have seen their value rising by 16.4% year-on-year, following an 11% drop in 2015.

Also rare coins remain the only asset class to have faced price surges each year since 2005 with an annual 11% increase on average. They have grown by 5.3% yoy in 2016.

Coutts noted that after a four-year period of contraction, prices of fine wines were up again in 2016, by 9.6%. On the other end, the index shows the segment of fine art has suffered bad times last year, all sub-segments having faced a slump in value on a yearly basis (impressionist and modern art by 7.9% , old master and 19th century pieces by 4.3%, post-war and contemporary works by 6.1% and traditional Chinese works of art by 5.8%).

The impressionist and modern art category suffered the largest value decrease in 2016 to stand 12% below its 2007 peak, Coutts observed. The value of masterpieces from the old master and 19th century segment has decreased by 42.1% over the 12-year period covered by the Coutts Index.

Regarding the field of precious items, jewels have peaked to a new high last year, up 12% in value compared to 2015 and up 150% since 2005, according to Coutts’ data.

Lastly, billionaire and leisure properties were up 1.8% and 1.5% yoy in price terms in 2016.

Adrien Paredes-Vanheule
Adrien Paredes-Vanheule is deputy editor and French-Speaking Europe Correspondent for InvestmentEurope, covering France, Belgium, Geneva and Monaco. Prior to joining InvestmentEurope, he spent almost five years writing for various publications in Monaco, primarily as a criminal and financial court reporter. Before that, he worked for newspapers and radio stations in France, in particular in Lyon.

Read more from Adrien Paredes-Vanheule

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