Passion investments on the rise

The Momentum UK Team 10 January 2014

‘Passion investments’ such as classic cars and watches returned 77% since 2005, according to the Coutts Index. The figures were calculated using local currency terms, and measured between 2005 and 30 June 2013.

The first edition of The Coutts Index: Objects of Desire, hopes to provide a global benchmark for effectively keeping track of the performance of aptly named ‘passion assets’. Private bank Coutts developed the new index with Fathom Consulting.

The 15 kinds of passion investments monitored were split into two categories: trophy property and alternative investments. Alternative investments was then further divided into fine art, collectibles and precious items. The price return in local currency on objects within these categories was monitored over the seven and-a-half-year time period.

Classic cars have raced ahead of other assets with a return of 257%, while classic watches have given a respectable return of 176%. Jewels returned 167%, and there were traditional Chinese artworks also proved to be a rewarding investment, increasing on average by 163%.

Billionaire real estate has doubled in value, according to the index, although it was noted that it severely depreciated globally during the recession. The property element of the study, which looked at ten property investment hotspots for the super-rich around the world, was compiled by Savills World Research.

Head of Strategic Solutions at Coutts, Mohammad Kamal Syed said:

“The Coutts Index has been created to measure passion assets, or objects or desire, in terms of performance, cost of storage and currency. But while many alternatives have provided spectacular returns, there is more to investing in these assets than price appreciation. For many people, profit is furthest from their mind.

As well as the pursuit of financial gain passion investment can also be an emotional investment on the part of the buyer

"The benefit is more than just profit. Owners can bond with like-minded people in an elite network, with assets offering escapism and a chance to re-enact history. Indeed, there is one thing that the Coutts Index, for all its robustness, can’t measure – and that is happiness. The idea of someone paying $50m for an uncomfortable old car, with windows that don’t work and a noisy engine, seems illogical. In many ways it is. But the happiness such a car can bring is immeasurable.”