Invest in Luxury Assets
The luxury industry is an Eden for “luxuries” lovers and potential investors. Luxury items are catching public attention for their long-term use and significant value in the market, unlike fast fashion brands with disposable products sold at low cost that quickly become outdated.
The environmental damages of fast fashion which include pollution, waste, and carbon emissions are becoming a major problem as consumers are patronizing the brands for their economic and social choices. However, the luxury sector has been seen pushing forward the sustainable fashion that has gained the hearts of many consumers worldwide. To learn more about sustainability in the fashion and luxury industry, revisit a previous article here.
The potential of what luxury assets could offer is unveiled. With the rising awareness of consumers towards the environmental impacts of the fast fashion industry, the luxury brands stand tall with higher-quality materials, longer product lifespans and a vision of sustainability for consumers. Today, we discuss how luxury assets hold value well with time and how investing in luxury assets is worth looking closely at.
Luxury Assets as an Investment
Over the years, luxury brands built solid devotion and loyalty from consumers all over the world who have been wooed not only by the products themselves but also a perfectly crafted branding and communication plan. Most consumers see luxury goods as durable assets that last longer. Purchasing luxury assets could serve as a great investment as the value holds well or even increases with time. Today, luxury goods can be auctioned and resell at an extremely valuable price, depending on the market.
Assets grow in value or appreciate, or they can either lose their value, or depreciate over time. So, holding an asset that appreciates in value will lead you to your goal of success.
Appreciating assets are the ones which increase in value from the time you purchase them until the time that you own them. Some luxury assets can increase in value faster. It serves as an investment tool to gain investment returns with capital appreciation.
Different Industries with Luxury Items That Appreciate in Value
Luxury items that appreciate in value include jewelry made from metals or gems, high-end watches, designer handbags, fine art, vintage wine, classic automobiles and luxury real estate.
According to a Chrono24 report, there is an exponential increase in the price of an unworn Rolex white dial 116500LN. The retail price in 2016 is USD 13,252.02. The Rolex watch’s “climb to fame” didn’t end there, in 2018, the price increased again to USD 23,459.00 and then about USD 26,972.97. In January 2021, the Rolex Daytona prices increased in the past months by about 10K, which is 30% more than the initial release.
The graph below shows how the Hermès Birkin prices started from an average of USD 2,000 to USD 18,200 in 45 years, prices growing for about 5% per year. On the other hand, the Hermès Birkin sister bag, The Kelly, with a starting price of USD 200, raised its price by 7% on average per year over the past 57 years.
(Image retrieved from Berstein Analysis demonstrates the growth in price for Hermès bags over the years)
Major luxury brands including Gucci, Louis Vuitton and Moncler, Hermès, Dior or Cartier are expecting to increase their prices, with higher consumer demand and great organic growth. Those insights show the continuous flourishing growth of the luxury industry. However, it is essential to note that not all luxury goods are guaranteed to increase in value over time as they are impacted by multiple external factors such as the global economy or supply and demand.
About LuxFi
LuxFi is the world’s first asset-backed NFT marketplace for luxury assets, where people can buy, sell and invest in luxury assets using cryptocurrencies and traditional payments. We eliminate counterfeiting while minting an NFT on a multi-chain blockchain network, with a focus on luxury assets that hold value well and have a high resale value. Leveraging our big data intelligence system and unique algorithm for automated data collecting and data processing, the value of each NFT on our platform is backed by real-world data.
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