Investments in wine, fine art and even sports teams are on the rise as a growing number of investors look to participate in and from their areas of interest, Knight Frank’s Wealth Report 2012 states. Philanthropy is a part of this with giving also on the rise.
The report noted that the propor-tion of high net worth individuals (HNWIs) expressing an interest in fine art investing has risen by 25% compared to two years ago while interest in wine investments has increased by 11%. Much of this rise is down to the Asia Pacific region where the percentage of HNWIs expressing interest in alternative asset classes during 2011 went up 15% for jewellry, 32% for fine art and 29% for wine.
HNWIs in Asia Pacific are not the only ones looking to art, with 13% of HNWIs in Europe and Russia expressing greater interest as well as 25% more in Latin America. The credentials of art as an asset class are growing. Last year the Mei Moses World All Art index grew in value by more than 10% and has consistently out-performed equities since 2000. Although investors are looking at new works, the focus among inves-tors is currently ‘blue chip’, the article explains, quality artists with established track records.
Meanwhile wine has also been performing strongly since the credit crunch. The value of the wine LIV-EX 100 index has grown some 66% over the past five years, although during that time the index has had a bit of a bumpy road, falling by 15% in 2011. Still, the Knight Frank article points out that going back to 1988, in all but one five-year period the wine index has shown a positive return.
Sports is another area at the receiving end of mounting atten-tion from HNWIs, although pre-dominantly from North Americans. While buying a sports team may seem extreme and somewhat spe-cialist, it is not all that unusual. According to the Knight Frank article all but a handful of the world’s 50 most valuable sporting franchises, as compiled by Forbes, are owned by wealthy individuals and families. Such investments are not merely to fulfill a dream but can be lucrative investments. Media rights, stadiums and merchandise can all generate significant returns, the report reads.
Eastern interest
While at the moment there is greater interest in sports from North Americans, foreign investors from China and Russia have been looking at acquiring US teams.
“Wealthy families appear to be increasingly looking for oppor-tunities wherever in the world they exist, and I think we will see increasing foreign ownership – in both directions. ”
Knight Frank goes on to note the Indian Premier League (IPL) high-lights the enthusiasm for sports investments around the world. “When franchises for the first eight IPL teams were sold in 2007, they attracted huge interest from Indian HNWIs looking for a glamorous investment and sold for a total of almost $750m. With some of the teams having potential local fan bases of over 100 million people, the opportunities are clear.
“According to consultant Brand Finance, the huge interest in the competition saw the IPL brand rise in value to almost $4bn after just four seasons. As a result, when two extra teams joined the league in 2011 they raised over $700m. When it comes to investments of passion, it seems that Asia Pacific could be the region to watch.”
