Handbags outshine luxury market as top-performing asset in 2024

Fine art, wine and whisky were the weakest performers.

Handbags were the best-performing luxury asset in 2024, with prices rising 2.8%, according to the Knight Frank Luxury Investment Index (KFLII).

“The ultimate classic handbag, the Hermès Birkin in black Togo leather, is now more valuable than ever when sold on the secondary market,” the report noted.

Only five out of ten tracked collectible sectors saw growth last year, with even the top performers showing only modest gains.

One of the most  “most surprising” came from classic cars, which managed a 1.2% increase after enduring a sharp downturn in 2023 and early 2024.

Fine art, wine, and whisky were the weakest sectors, with art values plummeting 18.3%, reversing the double-digit growth seen in 2023. This decline was worse than the drop during the COVID-19 crisis, when art values fell by 17%.

Fine wine also struggled, losing 9.1% in value due to shifting consumption patterns. The sector previously enjoyed a surge during the pandemic, driven by low interest rates and speculative investments, particularly in Champagne and Burgundy. The absence of Chinese buyers further weighed on the market.

Meanwhile, rare whisky recorded its second consecutive year of losses, down 9% in 2024 and now 19.3% below its peak in summer 2022. A flood of stock returning to the market following a decade of strong growth has contributed to its decline.

Despite booming financial markets in 2024, the KFLII dropped by 3.3%, marking its second consecutive year of losses.

Liam Bailey, global head of research at Knight Frank, highlighted the long-term strength of luxury collectibles as an investment. A $1m investment in the Knight Frank Luxury Investment Index (KFLII) in 2005 would have grown to $5.4m by the end of 2024, outperforming the S&P 500, which would have reached $5m over the same period.

“Unsurprisingly, the luxury sector weathered the global financial crisis better than financial investments, and with the ability to leverage these investments through financing, the boom for collectibles lasted for well over a decade from 2008,” she said.

“Whilst it took equities several years to catch up, the past decade, and the past five years in particular, has seen a consistent pattern of stronger returns from the financial sector,” Bailey added.

The decline in the Knight Frank Luxury Investment Index (KFLII) shows that wealthy consumers are becoming more selective, favoring experiences and cultural luxury over traditional collectibles, said Christine Li, head of research at Knight Asia-Pacific.

“With Asia-Pacific accounting for a growing share of the world's wealth, the demand for experiential luxury have also grown,” she said.

She noted the region dominates the Global Wine Cities Index, highlighting wine appreciation as a blend of history, culture, and prestige.