After two years of sharp corrections across collectibles, the global luxury investment market is showing signs of stabilisation. Knight Frank’s latest Luxury Investment Index (KFLII) recorded a marginal 0.4% decline in 2025, a significant improvement from the broader declines seen in recent years, signalling that the market may be entering a more measured and disciplined phase.
Sources: Knight Frank, Artnet, WatchCharts, LUXUS, Fancy Coloured Research, Liv-Ex, MyArtBroker Notes: All data to Q4 2025. KFLII is a weighted average of individual asset performance.
The slight dip in the KFLII comes after a period marked by extreme volatility—first a pandemic-era boom across collectibles, followed by a correction as liquidity tightened globally.
Over a longer horizon, however, the asset class remains resilient. The index is still up 38.6% over the past decade, underlining the enduring appeal of luxury assets as alternative investments.
What’s changing now is not demand—but how investors are choosing assets.
Art leads the recovery, headline sales drive momentum
Art emerged as the strongest-performing segment in 2025, particularly at the high end of the market.
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Impressionist art surged 13.6%, the best performance among tracked assets -
Modern art rose 7.1%, while post-war art gained 5.2%
The rally was supported by marquee auctions, including Gustav Klimt’s Portrait of Elisabeth Lederer, which fetched $236.4 million, setting a record for a modern artwork.
This reflects a clear trend:
Capital is flowing toward museum-grade works with strong provenance and scarcity
Watches shine as a consistent performer
Luxury watches continued to demonstrate resilience, delivering 5.1% returns in 2025.
Demand remained strong for:
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Patek Philippe’s Nautilus and Aquanaut models -
Iconic Rolex timepieces
These assets benefit from:
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Strong brand equity -
Limited production -
High liquidity in resale markets
For many investors, watches are increasingly seen as portable, tradable stores of value.
Cars correct—but rare models hold value
The classic car segment declined 3.7% in 2025, reflecting broader market cooling.
However, the correction was not uniform.
“Halo” models—rare, historically significant vehicles such as the Ferrari F50—continued to attract strong demand and high auction prices.
Wine and whisky lose momentum after pandemic highs
Some of the biggest losers in 2025 were categories that had surged during the pandemic.
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Whisky prices fell sharply by 10.9% -
Burgundy wine dropped 4.8% -
Broader wine indices declined between 1.7% and 2.5%
Even so, long-term returns remain strong:
Whisky is still up 111.9% over 10 years
Burgundy wine has gained 105.8% over a decade
Interestingly, Super Tuscan wines stood out as a relatively stable segment, showing resilience despite broader weakness.
Diamonds and handbags: Stability over growth
Other luxury assets showed mixed but stable performance:
Coloured diamonds declined marginally by 1%, though blue diamonds saw appreciation in late 2025
Hermès Birkin handbags remained flat (-0.2%), but demand for rare, historically significant pieces surged
A standout example was the sale of Jane Birkin’s personal Birkin bag for $10.1 million, reflecting a growing premium on story, ownership history, and cultural relevance.
A new collector mindset: Provenance over hype
One of the most important shifts highlighted in the report is behavioural.
Collectors are becoming:
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More selective -
More research-driven -
Less speculative
Instead of chasing trends, buyers are focusing on:
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Rarity -
Provenance (ownership history) -
Cultural significance
Young investors reshape access through fractional ownership
A major structural change is coming from younger investors.
Platforms offering fractional ownership of luxury assets—including art, watches, and cars—are seeing rapid growth, particularly among investors under 40.
This model allows:
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Smaller ticket investments -
Portfolio diversification -
Access to assets that were previously unaffordable
“After a cycle defined by extraordinary highs followed by rapid readjustment, the luxury investment market is now entering a more rational and more discerning phase. Collectors are increasingly prioritising rarity, provenance and cultural resonance – and younger generations are reshaping ownership models through digital and fractional platforms,” said Liam Bailey, Global Head of Research at Knight Frank.
Key highlights:
Impressionist art surged 13.6%
Watches rose +5.1%, led by strong demand for Patek Philippe’s Aquanaut and Nautilus models and continued resilience from Rolex
Classic car values fell 3.7%, though ‘halo’ models – such as the Ferrari F50 – remained in fierce demand, with major US and European auctions achieving notable results
Whisky declined 10.9%, while Champagne and Burgundy continued their post boom corrections following exceptional pandemic era growth
Super Tuscans remained the most resilient wine category, showing slight annual gains despite market softness elsewhere
Fancy colour diamonds held their ground, with blue diamonds appreciating in Q4
Luxury resale trends shifted toward patina and provenance, with collectors increasingly seeking well loved, storied pieces – exemplified by the record-breaking $10.1 mn sale of Jane Birkin’s personal Hermès Birkin bag