Property Valuation
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Luxusinvestments
Are you looking for stable values in uncertain times? Luxury investments offer a unique opportunity, but the market has its own rules. This guide shows you how to unlock return potentials with the right strategy and precise evaluations while avoiding costly mistakes.
With access to Google, BORIS, and Deep Research.
Luxury investments showed a mixed picture in 2023: art increased by 11% and jewellery by 8%, while the overall market slightly declined.
Long-term returns are high (e.g. Whisky +280% in 10 years), but they come with risks such as illiquidity and volatility.
Gains from sales are often tax-free in Germany after a holding period of one year (§ 23 EStG).
How can you protect and grow your wealth when traditional markets fluctuate? Many investors turn to luxury investments, from rare watches to fine wine. These tangible assets promise not only emotional but also financial returns. The Knight Frank Luxury Investment Index shows a value increase of 100% over 10 years. However, the market cooled in 2023 with a slight decline of 1%, highlighting the need for a clear strategy. This article guides you through the opportunities and risks and explains why data-driven neutral valuation is the key to success.
The market for luxury investments showed a mixed performance in 2023. While the overall index declined by 1% according to Knight Frank, individual categories achieved remarkable gains. Art topped the list with an 11% increase in value, followed by jewellery with 8% and watches with 5%. In the long term, the results are even more impressive: Over the past ten years, the value of rare whiskies has risen by 280% and fine wines by 146%. These figures demonstrate the significant potential that lies in tangible assets. However, the recent cooling, with classic cars correcting by around 6% and whisky by 9%, highlights how important thorough market analysis for luxury goods is. Performance is highly dependent on the specific segment and timing. Therefore, the right choice is crucial for investment success.
Certain categories of luxury investments have proven to be particularly resilient and profitable. The market for pre-owned luxury watches grew to a volume of 24 billion USD in 2022 and is expected to rise to 35 billion USD by 2026. Art remains a favourite, with a Picasso piece auctioned in 2023 for 139.4 million USD, highlighting the massive value concentration in individual pieces. Wine and whisky also offer solid, though varied, returns. While wine increased by 146% over 10 years, whisky recently experienced a correction after a phenomenal run. A deep understanding of the value drivers is essential. The following factors significantly determine the price:
Rarity and Provenance: Limited editions or a famous provenance can increase value by up to 50%.
Condition: Original condition and a complete maintenance history are crucial.
Brand Demand: Brands like Rolex or Patek Philippe consistently achieve high prices in the secondary market.
Cultural Relevance: Objects with historical or cultural significance often fetch record prices.
These factors clearly indicate that an investment without deep expertise, as required for a valuation of luxury real estate, is risky.
Despite attractive returns, luxury investments come with specific risks that are often underestimated. The markets are significantly less liquid than stock markets; a sale can take weeks or months and involves high transaction costs of 15-25%. Fashion trends can heavily influence prices, leading to high volatility. For instance, handbags, once a top performer, lost around 4% in value in 2023. Moreover, the market is not very transparent, making it susceptible to counterfeiting and fraud, especially with classic cars and art. Therefore, careful risk assessment is essential. Consider the following points before investing:
Verify authenticity and provenance through recognized experts.
Calculate all additional costs such as storage, insurance, and appraisals, which can account for 1-2% of the value annually.
Plan for a long investment horizon of at least 5-10 years.
Diversify your portfolio and don't invest everything in a single asset class.
A clear understanding of these risks will help you make secure investment decisions and protect your capital.
How do you ensure that the price for a luxury item is fair? An independent, data-driven evaluation is the most important protection against overpriced purchases and unrealistic expectations. Auction houses or dealers often have vested interests, which can lead to biased estimates. A neutral analysis, like the one offered by Auctoa, is purely based on market data and algorithms. This eliminates conflicts of interest and provides an objective value. Especially when it comes to inheritances or sales decisions, this prevents future conflicts and ensures financial clarity. Need a quick assessment? Our ImmoGPT chat can provide you with an initial orientation before you consult an expert in luxury goods. This way, you establish a solid foundation for every negotiation.
Profits from the sale of luxury goods may be taxable in Germany. The decisive factor is the so-called speculation period, which is regulated in § 23 of the Income Tax Act. For most mobile luxury items such as watches, art, or jewellery, a holding period of one year applies. If you sell such an item after this period has expired, the profit is completely tax-free. If you make a profit within one year, this falls under private sales transactions. From 2024, there is an exemption limit of €1,000 per year for this. If your total profit from all private sales is below this limit, you pay no taxes. If the limit is exceeded, the entire profit is taxable. Accurate documentation of purchase date and price is therefore essential for every investor to correctly determine the tax burden and follow expert guidelines.
Luxury investments are a valuable addition to a diversified portfolio, but they require more than just capital. Success depends on deep market knowledge, a realistic assessment of risks, and above all, a precise, independent valuation. The performance in recent years demonstrates potential, yet recent corrections urge caution. Rely on a data-driven strategy instead of gut feeling. With a professional valuation by specialised appraisers, you lay the foundation for long-term success in the complex luxury goods market. Your next investment begins with a solid figure.
The Federal Statistical Office provides comprehensive data on income, consumption, living conditions, assets, and debts in Germany, relevant for understanding the economic environment of luxury investments.
A study by the Deutsche Bundesbank analyses the development of wealth in Germany, including nominal and real changes as well as wealth inequality.
Bain & Company publishes a press release on the current luxury goods study 2024 in Germany, providing key market trends and forecasts.
Statista offers a detailed outlook on the luxury goods market in Germany, including forecasts and segment analyses.
The Federal Ministry for Economic Affairs and Climate Action (BMWK) provides the 2024 monitoring report on the cultural and creative industries in Germany, which also offers relevant insights into the art and luxury market.
Statista provides statistics on the price development of classic cars in Germany, based on the Oldtimer Index.
Do I need an appraisal for my luxury investment?
Yes, an independent appraisal is essential. It protects you from inflated prices when purchasing, provides a realistic basis for selling, and is often necessary for insurance purposes. A neutral, data-driven evaluation gives you negotiation confidence.
Which luxury watch is a good investment?
Models from established brands like Rolex, Patek Philippe, and Audemars Piguet have historically proven to be very stable in value. Limited editions or models with a unique history often achieve high returns on the secondary market, which is expected to grow to 35 billion US dollars by 2026.
How can I verify the authenticity of a luxury item?
The authenticity check should always be conducted by certified experts or the manufacturer itself. Look out for official papers, certificates, and a complete provenance (ownership history). If in doubt, it is better to refrain from purchasing.
Are there ongoing costs with luxury investments?
Yes, ongoing costs are an important factor. These include insurance, professional storage (e.g., in a wine cellar or safe), maintenance (for watches or cars), and potential reappraisals. These can amount to 1-2% of the object's value annually.
Is art a safe investment?
In 2023, art was the best-performing asset class in the KFLII with an 11% increase. However, the market can be highly volatile and subjective. The value is heavily dependent on the artist, period, and provenance. Therefore, investing in art requires deep expertise or professional advice.
