If selling IWC watches and Picassos is your business, then these are the markets that will you'll be selling more high end goods to in the next four years.
The working and middle class invest in the spread of sports scores. But an increasing number of rich people want something to brag about during dinner parties. Their desires are nothing new, and spending growth is actually in decline in percentage terms.
Still, the one-percenters of God's green Earth are spending more than ever on bragging rights.
Luxury investments increased in value at a compounded annual growth rate of 14.58% from $210 billion in 2008 to $362 billion in 2012, according to WealthInsight's 2020 Foresight Report released recently in London.
Big spending millionaires in the developed countries contributed the largest share in luxury investments, but millionaires from emerging countries registered the strongest growth with a compound rate of 22.24%. Luxury investments went from $43 billion in 2008 to $96 billion in 2012.
From 2013 to 2017, the total luxury investments of millionaires is expected to grow at an annual rate of 10.34% to reach $621 billion. Where are they spending most? On fine wines and collectibles, from paintings they've snatched at Sotheby's auctions to classic cars. Also for the uber-one-percenter, diamonds are a rich girl's best friend.
Gold was yesterday's high end jewelry.
With the increase of diamond prices and price transparency, the rise of individual investors purchasing diamonds is inevitable in the open market. This has coincided with a rise of diamond exchanges, such as the International Diamond Exchange (IDEX IDEX), Israel Diamond Exchange and the recently opened Singapore Diamond Exchange (SDX).
The IDEX Online Polished Diamond index rose 40% from July 2004 to 2012 and since the SDX was launched in 2012, Singapore has become the diamond trading hub of Asia.
Investors are showing huge interest in colored diamonds, particularly in rare shades of yellow, blue and pink. For example, the price of one-carat vivid yellow diamonds appreciated by a whopping 225% between 2000 and 2013, growing from $22,000 in 2000 to $78,000 in 2013.
The WealthInsight report focused on luxury investments, not luxury retail.
Luxury investments covered in the report include art, wine, classic cars, jewelry, gems and watches, selected since they can be seen as "luxury" in that they can be admired, worn, displayed, consumed or driven, while their value rises.
The scope of the report covered 21 countries; 9 developed markets including the United States, the U.K., Germany, France, Switzerland, Australia, Canada, Japan and Poland, and 12 emerging markets: Brazil, Russia, India, China, South Africa, Hong Kong, Singapore, Turkey, Israel, Mexico, Argentina and Indonesia.
These are the countries expected to see the biggest rise in annual growth rates from now until 2017.
Investing In Luxury
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