Classic cars are a golden investment
Want to invest in a surefire return? It seems you should forget gold bullion and buy yourself an old car.
The Knight Frank Luxury Investment Index (KFLII) has found that in the 12 months to June 30, 2013 classic cars outperformed traditional collectable investments such as gold, jewellery, wine, watches and furniture.
The study found that in the last financial year, classic car asset values rose 28 per cent, while gold - which has fluctuated violently - dropped 23 per cent.
Cars aren't simply a short-term money spinner, though, with a massive 10-year rise of 430 per cent outdoing items such as wine (up 182 per cent), art (up 183 per cent), coins (up 225 per cent) stamps (up 255 per cent) and gold (273 per cent). The figures for cars are provided by Historic Automobile Group International (HAGI).
"Across every time period classic cars, according to the HAGI Top index, have shown the strongest growth, rising 21 per cent over the past six months and a remarkable 430 per cent over 10 years - better even than gold," the report states.
The retro car investment boom is being spurred on by Asian wealth drawn to the notion of owning a one-of-a-kind item with heritage and a history of its own. However, Knight Frank makes it clear that it's hard to determine just which models are performing best.
Andrew Shirley, editor of The Wealth Report in which the KFLII appeared, says assets such as collectible cars allow investors to hedge their bets.
"The performance of the KFLII shows that investing in a broad range of collectable assets can be a useful way to spread portfolio risk," he says.
In Australia, Shannons national auctions manager Christophe Boribon has been with the company for nearly 20 years, and says he's seen a lot of investors come to the auctions to buy something different to more traditional investments.
"You can actually drive your collectible car - you can't drive your shares," he says.
"Another part of what draws people to classic cars as an investment is the enjoyment, the social side of it. That's what our clients are getting out of it.
"It's a different place to put your money, but they're getting a whole new experience, too."
But Boribon warns that not all classic cars are money spinners.
"The market is strong, but I wouldn't say that every single classic car has gone up in value," he says. "Yes, some cars - rare and collectible cars - double and triple in value, but that doesn't mean that all classic cars have gone up in value."
Just last month at the Monterey auctions in California more than $300 million worth of classic cars were sold under the hammer.
Indeed, earlier in 2013 a formula one racecar driven by legend Juan Manuel Fangio fetched $36m at auction and the Lotus Esprit submarine car from the James Bond film The Spy Who Loved Me sold for over $1m last week.
-Fairfax News Australia