By Daniel Shane
Regional investors hold fine art, classic cars, for emotional rather than financial reasons
The majority of luxury assets such as fine art, classic cars and antiques are kept by Gulf owners for emotional, rather than financial reasons, a new survey has found.
According to the latest ‘Wealth Insights’ report from lender Barclays, only 41 percent of these assets in the region are held for financial motivations, despite increased interest in such collectibles at auction houses.
On a global basis, this proportion was even lower, standing at 19 percent, while in US, Europe and Asia this figure stood at 9 percent, 11 percent and 34 percent respectively.
“There will always be both an emotional and a financial motivation in making a decision to buy a treasure asset and one motivation always takes precedence,” said Rory Gilbert, managing director and head of wealth and investment management, MEA.
“Given the difficulties associated with maintaining, securing and liquidating treasure assets, our study suggests that emotional motivations will always pay the greater return,” he added.
The report also found that interest in specific treasure assets varied on a geographical basis.
In the Middle East, precious jewelry was by far the most popular asset class, being held by 79 percent of respondents in the UAE, 85 percent in Saudi Arabia and 86 percent in Qatar.
In terms of selling on cashing in on treasure assets, the study said that Qatari investors demanded a 100 percent increase in the value of their asset before they would consider selling. Comparatively, UAE asset holders said they would consider a sale for 73 percent more than they initially paid, while Saudis wanted a 53 percent value increase.
The Barclays study reported that investors in the UAE and Saudi Arabia had on average just under a fifth (17 percent and 18 percent, respectively) of their wealth tied up in luxury assets, compared to 10 percent on a global basis.
The survey polled 2,000 high net worth individuals around the world. Overall, approximately one third claimed they held more treasure assets than they did compared to a year ago.