Luxury investments fall as fine art, wine, and whisky prices drop

Fine art experienced the steepest decline among luxury investments, falling 18.3% in 2024, surpassing its 17% drop during the COVID-19 pandemic, as revealed by a recent Knight Frank report. The report noted that only five of the top 10 passion investments saw growth, with handbags leading at 2.8%, followed by jewellery (2.3%) and coins (2.1%). Fine wine and rare whisky declined by 9.1% and 9%, respectively. The report also highlights a shift in next-generation Indian HNWIs’ preferences, with 46.5% favoring luxury cars over real estate (25.7%). India ranks fourth globally in affluent population, presenting new opportunities for luxury brands, particularly in untapped sectors like superyachts.

According to Knight Frank’s The Wealth Report 2025, the art prices experienced the sharpest annual decline among luxury investments, falling by 18.3% in 2024. The global property consultancy’s report highlighted that only five of the top 10 passion investments saw positive growth last year.  The Knight Frank report stated, “The weakest sectors were fine art, wine and whisky. Art was down 18.3 per cent, with the market seeing a total reversal from the double-digit growth of 2023 and a worse performance than during the COVID-19 crisis when values fell 17 per cent.”

Fine art suffered a significant downturn, reversing the strong double-digit growth recorded in 2023. This decline was even steeper than the 17% drop seen during the COVID-19 pandemic.

Fine wine prices fell by 9.1%, reflecting changing consumption trends, while rare whisky declined by 9%, marking its second consecutive year of losses. Since peaking in mid-2022, whisky values have dropped by 19.3%. The absence of Chinese buyers also affected the fine wine market, the report said.

“Rare whisky, a market weighed down by a rapid growth in stock returning to the secondary market after a decade of strong growth, had its second poor year with values down 9 per cent in 2024, and is now lower by 19.3 per cent from the market’s peak in summer 2022,” the report noted.

Furniture from renowned designers decreased by 2.8%, and coloured diamonds saw a 2.2% decline.  The Knight Frank Luxury Investment Index (KFLII), which monitors the performance of 10 popular passion investments, revealed that among the luxury assets, handbags outperformed all other categories, with prices increasing by 2.8%, followed by jewellery (2.3%), coins (2.1%), watches (1.7%), and classic cars (1.2%).

“The ultimate classic handbag, the Hermès Birkin in black Togo leather, is now more valuable than ever when sold on the secondary market,” the report highlights, indicating  the lasting appeal and investment potential of select luxury items.

Overall, Knight Frank’s Luxury Investment Index (KFLII) recorded a 3.3% drop in 2024, marking the second straight year of negative growth. The report emphasized that scarcity alone is no longer a reliable driver of value appreciation in the luxury collectibles market. Despite the recent downturn, luxury assets have delivered strong long-term returns. 

Liam Bailey, Knight Frank’s global head of research, pointed out that a US$ 1 million investment in 2005 tracking KFLII would now be worth US$ 5.4 million. In comparison, the same amount invested in the S&P 500 would have grown to US$5 million by the end of 2024.

A major shift in the preferences of next-generation Indian HNWIs

The Knight Frank report reveals a significant shift in the preferences of next-generation Indian high-net-worth individuals (HNWIs), with luxury cars emerging as the top choice. The report states that 46.5% of Indian HNWIs aged 18 to 35, earning over US$ 125,000, prioritize luxury car ownership over real estate, which ranks second at 25.7%.

Shishir Baijal, Chairman & Managing Director of Knight Frank India, highlighted the importance of recognizing these evolving preferences, emphasizing the need to understand the changing aspirations of the next generation.

He noted, “The next generation of wealthy individuals will play a pivotal role in wealth creation and economic growth. Consequently, their aspirations will be of paramount interest to the global luxury industry. As India’s ultra-high-net-worth population continues to expand, new opportunities will emerge for global luxury brands to establish a stronger presence in the Indian market. Sectors such as superyachts, in particular, remain largely untapped and hold significant potential for growth in India.”

Globally, 29.8% of next-generation HNWIs prefer high-end real estate, followed by luxury cars at 27.8% and private jets at 15.1%. India accounts for 3.7% of the world’s affluent population, ranking fourth behind the United States (905,413 HNWIs), China (471,634 HNWIs), and Japan (122,119 HNWIs).