Homes, People

Art: The #1 Purchase Made by the Wealthy Last Year

Each year, The Wealth Report is put out by real estate consultant and investment firms, Knight Frank and Douglas Elliman. This overview provides insight into the major purchases made by the world’s ultra high net worth individuals (UHNWI) -- each of which is able to claim at least $30 million in investment assets. Time and time again, the report has consistently shown that the wealthy don’t mind shelling out a pretty penny for the extra size, class, and status that comes from big ticket purchases.

Are times changing? It seems that luxury purchases certainly have.

However, what is perhaps most shocking, is that this Wealth Report illustrates quite a detour in the spending habits of the world’s top earners. To enumerate, this is the first year since 2010 in which our wealthy counterparts spent more on art than ‘investment grade wine.’ The results are especially shocking seeing as investment grade wine was head of the class on last year’s Knight Frank Luxury Investment Index.

How does this Index work though?  Well, it ranks performance of investment of ten various sectors.  Despite being pit against tough competitors like watches, jewelry, and coins, art took the cake.

Credit: The Wealth Report

While the art industry struggled in previous years due to the recession, it’s clear that the tide is changing. The Report notes that Chinese and African art are among the most popular. The record setting check-out of 2017 though came from Leonardo da Vinci’s painting of Salvator Mundi, which went for an incredible $450 million. This breaks the previous $179 million record set by Women of Algiers by Picasso. Not far behind, this year’s painting Untitled by Jean-Michel Basquiat went for a whopping $110.5 million -- the most expensive work ever sold by a U.S. artist.

What is the motivating factor behind luxury purchases?

The Wealth Report doesn’t stop at art. It also delves deeper into the motivations of the world's wealthiest spenders. Most commonly, the ‘joy of ownership’ is cited as the number one motivation for buying luxurious items. Capital appreciation, portfolio diversification, and status were also frequently asserted to be significant catalysts to making major purchases.

Regardless of the motivations and the exact items the wealthy invest in, The Wealth Report makes several observations of note. Key findings included:

Credit: The Wealth Report

The Wealth Report asserts that New York, London, and San Francisco score highest in the luxury rankings. North American cities reign - holding 20 spots. However, Asian cities are a close second for qualities such as wealth, investment, future, and lifestyle. 

Even still, if you want to make money, the experts advise sticking to cars and wine. Until then, art is having a moment in the spotlight!

Click here to read The Wealth Report in its entirety.

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