Banking on beauty: Why there's lots of money to me made on classic cars
Published 03/02/2016 | 02:30
WHEN recession hit the western world in 2008 the options for investors were few and far between.
But a small group of people found an alternative to banks, the stock market and property.
They invested in classic cars (here I use the term 'classic cars' to cover old cars of all ages).
There is a distinction to be made between the vintage hobbyist who has, say a Morris Minor, and the investor who can afford to buy a rare top-end Ferrari.
Big profits are the realm of the investor who can afford to buy a Ferrari at auction and after a few years spent watching its value climb, often doubling, sell it at a profit greater than any of the more conventional investment markets might have returned since 2008.
When he comes to realise the value of his investment, he has an international market with the biggest collectors coming from the USA, Europe - particularly the UK and Germany - Australia, Argentina and Japan.
The Knight Frank Luxury Investment Index reports that over the last decade Classic Cars have outpaced art and wine by almost 500pc.
Ten years ago they were looked upon as collectibles but now are recognised as an asset class.
The result has been an explosion in the number of cars purchased globally by investors rather than collectors.
The current record for a car sold at auction is $38m for a 1962 Ferrari 250 GTO sold by the Bonhams auction house in August 2014.
With the current rapid rise in values, particularly of Ferrari examples, this is a record likely to soon be broken.
So what of the future?
Well, having demonstrated growth of almost 20pc in each of the past five years it's unlikely that such levels of appreciation will continue in 2016.
On the other hand, with many pundits predicting a period of turmoil ahead for banks and stock markets, high-end classic cars are likely to continue to attract shrewd investors for the foreseeable future.
If, like me, such cars are way outside your budget, be sure to have a look at examples of them plus many more down-to-earth, but no less appealing, classic cars at the forthcoming AXA National Classic Car Show (www.classiccarshow.ie).
It is organised by this country's oldest motor club, the Royal Irish Automobile Club, and takes place at the RDS Simmonscourt on 5th and 6th March next.