Vintage cars race past art and wine as asset class for the rich

Over the past eight years, the price of classic models has risen 163 per cent

Driving around in an Aston Martin à la James Bond is a style statement for sure — but it is also a sound investment.

Last month, when liquor baron Vijay Mallya’s vintage cars were up for auction, there was a scramble to buy them. The reason is not hard to guess: Vintage cars are the best-performing investment class for high net-worth individuals (HNIs).

Over the past eight years (2007 to 2015), the price of classic models has risen 163 per cent, according to a study by New World Wealth, a global wealth intelligence and market research company.  

In the period under consideration, cars have outperformed wine and even art as an asset class in the growing collectables market in India, according to India Wealth Report 2016.  

Collectibles include luxury items such as art, vintage cars, fine wine, jewellery, stamps, and top-end watches that hold their value over time.  HNIs are individuals with net assets of $1 million or more.

The study found that the wine index hobbled over the eight year period, while the value of art went down.

“The classic car market is still undeveloped in India and we project strong growth in this segment going forward,” the report said.

Globally, the price of popular classic cars — manufactured in 1950s, 1960s and 1970s — range from $100,000 to $24 million, according to research by New World Wealth.

Take the case of Diljeet Titus, managing partner, Titus & Co, for whom collecting vintage cars has been an “investment hobby”.

"The value of some of these classics have appreciated 6-7 times over the last 15 years, including the cost of restoration," says Titus, who has collection of 76-odd vintage beauties.

The luxury collectible space in India attracted spending worth around $18 billion in 2015, compared to $10 billion in 2007, a jump of around 80 per cent.

Another key segment that has been attracting attention of high net worth individuals is the fine art market. The study points out that Indian fine art market generated a turnover of $49 million in 2015, quoting Artprice.com, making it the 12th largest in the world.

According to research by New World Wealth, there were approximately 236,000 HNWIs living in India, as against 152,000 in 2007.

HNWI wealth rose by 67 per cent from $0.9 trillion in 2007 to $1.5 trillion in 2015, making India a top-performing country during this period.  

The study expects the number of Indian HNWIs to grow by 135 per cent, to reach the 554,000 mark by 2025.

The study said India clocked annual luxury sales of $17.1 billion in 2015, ranking fourth in the Asia-Pacific region, behind China, Japan and Australia.

“The luxury sector generated revenue of $156 billion in 2015 in the Asia Pacific region, out of a global total of US$850 billion,” the report said.

India ranked seventh in the world in 2015 in terms of countries ranked by total individual wealth at $5,200 billion.