World’s richest are buying fine wine and Hermès handbags

In 2020, the world’s ultra-wealthy population was in growth, with China taking the lead. These ultra-high-net-worth individuals were found to be investing in fine wines and Hermès handbags.

According to the latest Wealth Report announced by world-leading estate agency Knight Frank and real estate brokerage Douglas Elliman, the world’s ultra-wealthy population, referring to UHNWIs with a net worth of US$30 million or more, rose 2.4% to 520,000 in 2020, despite the global downturn.

Topping the list was China with the creation of 9,594 UHNWIs during the year, increasing 15.8% year over year to a total 70,426.

The US saw the addition of 6,080 to 180,060, up 3.5% from the prior year.

The third-largest on the ranking is Japan, with 1,199 more individuals worth more than US$30 million and taking the total population to 14,755.

Liam Bailey, global head of research at Knight Frank, commented in the report, “the US is, and will remain, the world’s dominant wealth hub over our forecast period, but Asia will see the fastest growth in UHNWIs over the next five years.”

24% increase in UHNWIs will be likely to take place in the U.S. from now to 2025, the projected global increase is 27%.

The upcoming growth rate in Asia, with the largest projected increase in the number of UHNWIs, is 39%. Among all, Indonesia and India will be having the greatest potential with a forecasted growth rate of 67% and 63% respectively.

Speaking of the category that these UHNWIs are investing in, ‘collectable handbags’, specifically Hermès bags, take the top spot in the Knight Frank Luxury Investment Index (KFLII) for the second year in a row.

Scoring second in KFLII, wine markets appreciated a strong growth of 13% as compared to 2019.

“Unlike after the global financial crisis, the wine market has held its nerve, merchants did not mark down prices and the market has been stable. Investors are about, and even Bordeaux prices feel like they are firming up,” said Miles Davis, head of professional portfolio management at Wine Owners, who also helped pull together the KFLII.

Rare whisky lost some momentum in 2020, dropping by 3.5%. “Against many other investments that’s not such a disaster, but compared with 2018’s circa 40% increase the volatility of ultra-rare top-end whisky as an investment is evident,” Andy Simpson, director at Rare Whisky 101, commented.

Meanwhile, once a staple luxury asset, art became the worst-performing asset in KFLII 2020, with an 11% price decline year over year.