The global market for luxury collectibles is showing signs of stabilisation after a turbulent correction phase, with investors increasingly gravitating towards rare, culturally significant assets with strong provenance, according to the latest edition of The Wealth Report 2026 by Knight Frank.The firm’s closely watched Knight Frank Luxury Investment Index (KFLII) recorded a marginal decline of 0.4% in 2025—a notable improvement after three consecutive years of sharper downturns. The data suggests that, while speculative exuberance has cooled, a more disciplined and selective collector base is now shaping the market.
A market finding its footing
The slight dip in the KFLII marks a turning point for the luxury investment landscape, which saw outsized gains during the pandemic years followed by a broad-based correction. Over a 10-year horizon, however, the index remains firmly positive, delivering a cumulative return of 38.6%, underlining the long-term appeal of passion assets.According to Liam Bailey, Global Head of Research at Knight Frank, the market is entering a more “rational and discerning phase”, driven by buyers prioritising quality over momentum.Art leads the recoveryArt emerged as the standout performer in 2025, particularly within the Impressionist segment, which surged 13.6% year-on-year. The rebound was fuelled by high-profile single-owner collections and trophy sales—most notably Portrait of Elisabeth Lederer by Gustav Klimt, which fetched $236.4 million, setting a new benchmark for modern art at auction.Other art categories also posted gains, with modern art rising 7.1% and post-war works up 5.2%, suggesting a broader revival across segments after years of price consolidation.Watches tick higher on brand strengthLuxury watches continued their upward trajectory, gaining 5.1% in 2025, driven by sustained demand for iconic models from leading brands. Pieces from Patek Philippe—particularly the Aquanaut and Nautilus lines—remained highly sought after, while Rolex maintained its reputation for resilience and liquidity in the secondary market.The segment has increasingly attracted younger investors, many of whom view timepieces as both wearable assets and stores of value.Cars and collectables: selective demand persistsThe classic car market saw an overall decline of 3.7%, reflecting softer demand across mid-tier vehicles. However, “halo” models—rare, historically significant cars—continued to command strong prices. Vehicles such as the Ferrari F50 drew intense bidding at major auctions in the US and Europe, underscoring the enduring appeal of top-tier automotive collectibles.Similarly, coloured diamonds held relatively steady, slipping just 1% over the year. Within this category, blue diamonds showed pockets of appreciation towards the end of 2025, indicating continued investor interest in rare gemstones.Wines and spirits lose momentumIn contrast, wines and spirits faced a tougher year, extending the correction that began after pandemic-era highs. Whisky was the worst-performing asset class, declining 10.9%, even as it remains one of the strongest long-term performers with a triple-digit 10-year return.Fine wine indices also weakened, with the Liv-ex 100 down 2.5% and Burgundy falling 4.8%. However, Italy’s premium segment—particularly Super Tuscans—proved relatively resilient, posting modest gains despite broader market softness.Champagne and Burgundy, which had surged during lockdown-driven demand, are now undergoing a more pronounced rebalancing as supply normalises and speculative buying fades.Luxury handbags: stories matter more than shineThe luxury handbag market remained broadly flat, with Birkin bags slipping just 0.2% over the year. Yet beneath the surface, a notable shift is underway: collectors are increasingly valuing provenance and narrative over pristine condition.This trend was exemplified by the record-breaking sale of a personal Birkin bag owned by Jane Birkin, which fetched $10.1 million at auction. The result highlights how personal history and cultural significance can dramatically enhance an asset’s value.Younger investors reshape ownership modelsOne of the most significant structural shifts in the luxury investment space is the rise of fractional ownership platforms, which have surged in popularity—particularly among investors under 40.These platforms allow buyers to own shares in high-value assets such as art, watches and classic cars, lowering the barrier to entry in what has traditionally been an exclusive market. The trend reflects a broader democratisation of luxury investing, enabled by digital technology and evolving attitudes towards ownership.From speculation to selectivityThe overarching theme of the 2025 data is a transition from speculative buying to curated, conviction-led investing. Rather than chasing rapid price appreciation, collectors are focusing on assets that offer enduring cultural value, rarity and strong provenance.This shift is also contributing to greater price stability across the market. While declines in certain categories persist, the narrowing of losses and the return of growth in key segments suggest that the correction phase may be nearing its end.Outlook: more mature marketLooking ahead, the luxury investment market appears poised for steadier, more sustainable growth. The days of rapid, broad-based gains may be over for now, but the renewed emphasis on quality and authenticity could ultimately strengthen the market’s foundations.As Bailey notes, the evolving preferences of younger collectors—combined with new ownership models—are likely to play a defining role in shaping the next phase of the market.For investors, the message is clear: in a world of moderated returns, rarity, provenance and cultural resonance are emerging as the primary drivers of value.
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