Spotlight on Luxury Collectibles

Despite volatility, look to sub-trends to see what’s in store for art, cars, handbags and more

The luxury collectibles market is undergoing a period of profound transition as younger buyers with new and growing wealth look for ways to diversify their investment portfolios and satisfy a penchant for fineries.

Even as sales in key high-end collectible categories like fine art and wine slumped in 2023, interest by a new generation of buyers has been driving up sales volume and shifting the focus away from traditional segments like paintings by Old Masters and toward works relevant to pop culture and celebrity.

Michael Jordan’s Last Dance jersey, which went for $10.1 million at a Sotheby’s auction in 2022, a pumpkinshaped handbag created by Japanese artist Yayoi Kusama and Louis Vuitton that fetched $151,200 at Christie’s in September, and a Boba Fett Star Wars action figure with a $1.31 million gavel price at Goldin Auctions in August are the types of splashy sales attracting more young folks to collectibles.

NEW COLLECTORS AND A POST-PANDEMIC NORMALIZATION

Beginning in early 2023, Generation-X bidders (those born between 1965 and 1980) accounted for the largest share of bidders in the $1 millionplus market at Sotheby’s auctions, overtaking Baby Boomers (with birth years from 1946 to1964) for the first time, according to the auction house. Younger collectors are particularly active in the high-end market for contemporary artists. Gen X and Millennials (1981-1996) accounted for between 74% and 85% of bids in recent auctions for works of street artist Banksy, sculptor KAWS and painter Adrian Ghenie. This new crop of high-end collectors tends to view collectibles more as assets to be traded rather than to be held for the long term, says Bradley Calleja, a partner at Collect Alpha, a boutique art and collectibles research firm. “Millennials are collecting at two or three times the rate of previous generations and they’re bringing a change of behavior and taste,” he says.

This has contributed to higher levels of volatility. The broad market for collectibles surged during the pandemic, as people had more spare time during lockdowns and digital marketplaces expanded to make it easy to trade from home. Among notable sales during this period were a full T. Rex skeleton sold for $31.8 million at Christie’s and an NFT (non-fungible token) representing a collage called Everydays: The First 5,000 Days by Michael “Beeple” Winkelmann that fetched $69 million, also at Christie’s.

A LOOK AT SUB-TRENDS

To truly understand each collectible segment, Pusz says, look at the sub-trends. For example, in the collectible car market there’s been a notable shift away from 1950s and ’60s classics such as Corvettes, Jaguars and Ferraris to sports cars built between 1980 and 2000. Hagerty’s Blue Chip Index, which tracks classics from the earlier period, was down 3% from 2019 through 2023, while its Supercar Index of more recent models was up over 60%.

In watches and handbags, the scarcest products made by top-tier brands such as Rolex, Hermes and Chanel have the most reliable long-term appreciation, while lower-priced fashion bags are more speculative.

The fine art market is particularly stratified. The under-million segment dried up after the pandemic, while the blue-chip contemporary market is where the interest and action are these days, experts say. “The Warhols and Basquiats and new age established artists being picked up by museums with good auction records—these blue chip contemporary works are doing exceptionally well, and there is a great opportunity for collectors right now,” says Arushi Kapoor, an art advisor and dealer.

After the post-pandemic softening in the market, “it’s easier to find the right pieces that would be phenomenal investments when the market goes back up,” Kapoor says.

Consider the sale of Jean-Michel Basquiat’s 1982 Untitled (ELMAR) at Phillips during the spring of 2024. The auction house estimated a $60 million high sales price, which would have made it the second-highest price ever for a Basquiat work. The final gavel price fell far short, at $40.2 million— essentially, a deal for the collector.

No matter the current climate, collectibles can be good diversifiers in investment portfolios. “They are unique from traditional stocks and bonds with the potential to move in a different pattern,” says Matt McGrath, a managing partner at Evensky & Katz/Foldes Wealth Management. But they present their own unique risks. For example, they can be hard to value, particularly items that are mostly sold at auction.

“This makes many, if not most, collectibles relatively illiquid—you can’t easily convert them to cash,” McGrath says. Given the risks, “you should probably allocate only as much money as you are comfortable losing should things take a bad turn.”