Jacqueline FoxInvestment doesn’t have to be a serious business. Luxury collectables from cars to fine art are rivalling the returns of blue-ship shares and property.
For a classic or vintage car enthusiast, there is nothing better than driving around in your pride and joy in the knowledge that not only are the cylinders humming nicely, but the car is appreciating in value with every kilometre. After a lull a few years ago, at the height of the global financial crisis, collectable cars have come roaring back in value to the point that they are often now described as an “asset class” all of their own. The bar for classic car prices has been set very high recently with some spectacular sales overseas.
A Jaguar C-Type from 1953 sold for US$13.2 million in California last year.
Locally, an Aston Martin DB5, as driven by James Bond, can now be purchased for $1.75 million, while some Ferrari models have seen gains of more than 300 per cent in the past five years or so.
According to Knight Frank’s The Wealth Report, the value of classic car transactions has spiked 17 per cent in the past year and has outperformed every other luxury category such as coins, watches and fine art. Adding to the beauty of it all is that unlike shares or property, there is no capital gains tax owing when a car is sold.
The rise in classic car values has also had an impact on the value of Australian-made cars. At Bennett’s Classic Auctions in South Australia, owner Larry Bennett says the value of “Australian-made muscle cars”, which are his firm’s specialty, has rebounded after a volatile few years. “It all came to a peak in 2008 or so when things became a bit inflated, and people were quoting $1 million for a GT Falcon,” he says. “But then things calmed down quite a bit to a point where those cars could be bought for $300,000, but now we’ve seen the trend is going upwards again for your Aussie cars such as the Falcon and Monaro.”
Bennett’s also had a successful recent auction of MGs. “Austin Healeys are at the top end of that British sports-car class while the MGs have been a bit like the poor cousins, but the poor cousins are starting to creep up in value,” says Bennett.
He has also had firsthand experience of the so-called “survivor cars,” also known as “barn finds”, where people bring unrestored classic vehicles to the market. The most spectacular example of this, hitting world headlines in 2015, was a treasure trove of 60 rare cars found in the barn of a French farm house. One of these cars, a rusting Ferrari, was sold for a record $28.5 million.
Closer to home, Bennett recently sold a 1965 Ford Falcon utility in completely original condition. “It had somehow escaped the ravages of time and was in original condition, but it was like everything was completely new,” he says. “It drove beautifully, still had the original seat covers and the original 1965 AM band radio still intact, which was a bit spooky.” The ute sold for “twice what another similar model would go for” and reached $20,000 at auction.
Bennett’s advice, however, is to enjoy the cars and not buy them as investments. “What’s the fun in it if you can’t drive around in them,” he says.
It is advice that is echoed, in a completely different context, by Sydney fine art dealer Andrew Shapiro. At his auction house in Woollahra, Shapiro has seen a move away from people buying art through a self-managed superannuation fund (SMSF) to individual purchasing. “There was a big switch about two years ago for people to move out of buying within the SMSF fund,” he says. “And right now people aren’t buying within the fund, they are buying for themselves and to enjoy the work.”
The SMSF “arms-length rules”, which mean investors are not able to hang the art their own homes are, says Shapiro, “too restrictive”. “It’s also too clumsy,” he says. “You have to store it or hang it somewhere else, you can’t live with it. “It just takes all the fun out of it and what is buying art if not for the enjoyment of it?”
While it is a completely different field from classic cars, Shapiro says the art market has also rebounded strongly with contemporary art the standout performer. “I’d say that art has become a blue-chip investment now. It does take research and there’s a whole industry of art dealers out there who are working with clients to build collections which will appreciate significantly in value,” Shapiro says.
Some of the best art investments have been some of the most unlikely. A chaise lounge designed by Australian Marc Newson, which first sold for $10,000 when it was launched in 1986, recently sold for $4.7 million at a London auction. At that price, the question is: would you sit on it or just admire it in the room?