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Collectible cars top passion investments

The Mercedes Benz W196 auctioned by Bonhams
Press Association

Classic cars have topped a new passion investment index released this week, while when it comes to fine art, traditional Chinese works have provided the most lucrative returns.

According to The Coutts Index: Objects of Desire classic cars saw a 257% return on investment over a seven-and-a-half year period, starting in 2005, well ahead of the next most profitable passion investment, classic watches, which saw returns of 176%.

Fifteen passion assets across the categories of trophy property and alternative assets were included in the first edition of the Coutts Index, which was developed in conjunction with Fathom Consulting.

Alternative investments were further broken down into fine art, collectibles and precious items.

Quentin Willson, broadcaster and classic car specialist, says he has been waiting for the classic car bubble to burst ever since prices started to rise in 2009, but the asset class showed no sign of slowing down in 2013, up 27% in the first six months.

Momentum continued in the second half of the year, with auction house Bonhams selling a Mercedes Benz W196 for the record price of £19.6 million in July.

When it came to fine art, traditional Chinese works increased the most in value, according to Coutts, rising 163% between 2005 and 2013.

Ahead of Christie’s first sale in China in September, Francois Pinault, whose family business, Kering, owns the auction house, said China would become its most important market over the next 20 to 30 years.

Trophy property, comprised of “billionaire” residential and leisure properties located in prime global locations, was up 100% since 2005, despite going down in value in the lead up to the global recession.

Mohammad Kamal Syed, head of strategic solutions at Coutts, said while many passion investments provided significant returns, profits were often furthest from the mind of collectors.

Explaining the non-financial appeal of passion investments, Syed said: “Owners can bond with like-minded people in an elite network, with assets offering escapism and a chance to re-enact history.”

He added: “The idea of someone paying $50 million for an uncomfortable old car, with windows that don’t work and a noisy engine, seems illogical. In many ways it is. But the happiness such a car can bring is immeasurable.”

Last year the inaugural Knight Frank Luxury Index also revealed classic cars provided the strongest returns, increasing a staggering 430% over the past 10 years. 

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