As Australia’s population of high-net-worth individuals (HNWIs) surpasses 42,000, Knight Frank’s latest analysis explores the performance of luxury assets and whether they are outpacing traditional financial markets like the Australian Stock Exchange (ASX) and the S&P 500.
The Knight Frank Luxury Investment Index tracks the value of ten luxury assets, including watches, cars, jewelry, coins, and handbags. While half of the assets saw gains in 2024, the index as a whole declined by 3.3%, compared to the S&P 500’s 23% growth and the ASX 200’s 7.5% increase over the same period.
This marks the second consecutive year of losses for the luxury investment index, although the performance over a 10-year horizon remains strong. Over the decade, the index reported a 72.6% increase, with individual assets like watches, whisky, and furniture seeing growth exceeding 100%. Whisky, despite a 9% drop in 2024, recorded a 191.7% return over the decade.
However, even with these gains, luxury assets have lagged behind financial markets. The S&P 500 returned 181% over the past decade, while the Nasdaq soared 262%. In Australia, the ASX 200 delivered a 35% return in the same timeframe.
Liam Bailey, Knight Frank’s global head of research, emphasized the long-term value of luxury collectibles. He explained that if an investor had placed US$1 million in luxury assets in 2005, it would now be worth US$5.4 million—compared to US$5 million for the same amount invested in the S&P 500 by the end of 2024. Bailey also noted that luxury assets were less affected by the 2008 financial crisis compared to equities and that the collectible market boomed for over a decade post-crisis. However, recent years have seen a shift, with the financial sector delivering stronger returns.
In 2024, handbags emerged as the best-performing asset, appreciating by 2.8%, while artwork suffered an 18.3% decline. This reversal follows a year of double-digit growth in artwork prices, with the 2024 downturn attributed to lower auction sales after a brief recovery during the COVID-19 pandemic. The art market, particularly at major auction houses like Sotheby’s, Christie’s, and Phillips, has been undergoing structural changes, with total auction sales falling 48% from 2022 to 2024.
The total number of Australian HNWIs with assets exceeding US$10 million grew by 3.9% last year, reaching 42,789 individuals. Australia ranks ninth globally in terms of HNWIs, just ahead of Hong Kong and behind France. The U.S. holds the top spot with a significantly larger population of 905,413 individuals. In Australasia, the number of individuals with over US$100 million in assets rose to 1,918, and is expected to exceed 2,000 by 2028.
Despite the short-term volatility in the luxury asset market, long-term growth and the increasing number of affluent individuals suggest that luxury investments continue to hold significant appeal for the wealthiest individuals in Australia and beyond.
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