It is no secret that rich people enjoy spending their money in ways that average people do not. While you might have an idea about how they travel and bask in their luxury, you might not know about how they value some things which you might not appreciate. Wine is generally consumed however, ultra rich people enjoy collecting and trading them. Here is why wine is the most valuable collectible for rich people:
Wine Tops The List
Rich people like blowing their money on very expensive things that make them happy. However, for this year, fine wine is now the most popular collectible amongst the wealthiest people as their values soar to as much as 25 percent in just 12 months.
The Knight Frank Luxury Investment Index which tracks the pricing patterns in categories of collectibles found that wine has dethroned vintage cars as the most popular collectible. This surge in price can mainly be attributed to the rising value of Burgundy, Bordeaux and northern Italian wines which pushed fancy wine prices to rise to as much as 25 percent over the past year, and up to 61 percent over the past five years.
What Else They Spend Their Money On
The Knight Frank Wealth Report also gave an insight on what ultra high net worth individuals spend their money on. These individuals are those who have assets of around $30M or more. Real estate only made up a quarter of their spendable wealth while around 70% of those who were asked felt conscious about displaying their wealth in public.
The said report noted that while the demand for luxury property has stagnated since the crash, the appetite for other commodities and collectibles has grown by a very significant amount. Rich people are still in love with cars are Knight Frank recorded a 490% growth in the price of cars in the past 10 years since its last Luxury Index report.
Why Wine is So Valuable Nowadays
This jump in price comes after some drops and hikes in the prices of fine wines following the financial crisis, when Chinese buying reached an all-time high then stagnated for a while. Now, prices are more stable and the Chinese economy remains strong, and this could be why buying has been picking up once more. Wealthy Chinese consumers are not only loading up on the fine wines as they have also developed a taste for vineyards.
Wine prices are also driven by strong economic forces from the USA, Europe and other parts of Asia as well. Chinese buyers, on the other hand, are becoming more expert buyers.
Cars No Longer on Top
Cars have been the most popular thing that rich people splurge on for quite some time, however, they are taking a spill for now. After being on the top of the list for years with dramatic price increases at almost every opportunity, their value only grew for 2 percent over the last twelve months. From the top spot, they now rank at the sixth place for collectibles.
While cars are still very expensive, especially for vintage cars and supercars, they do not really make the best investment if you are after having its value appreciate. Of course, rich people still enjoy going around on an expensive ride.
Art Can Take Top Spot Soon
After wine, art takes the second spot for the most popular collectible amongst the wealthy. Art reported a growth in value of about 7 percent. However, considering the strength of the market and some important masterpieces to go on sale later on this year, the year might end with art getting the top spot. Art buyers have become more selective over time, so it should not be too surprising to see it at the top spot by the time the year ends.
Just like most other economic trends, wine is not expected to be the most valuable collectible forever. With a lot of marketing and economic factors which can affect consumer behavior as well as its price, nobody really knows how long it will be as valuable as it is now. What other things do rich people collect? What do you think about fancy wine being at the top of the list? Share your thoughts with us in the comments below.
