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Wealthy Investors Increase Jewelry Spending

Jun 22, 2010 2:38 PM   By Jeff Miller
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RAPAPORT... Jewelry, gems and watches became the second-largest "passion investment" category, overtaking art, for high-net-worth individuals in 2009, according to the 2010 World Wealth Report published by Capgemini and Merrill Lynch. The 2008 financial crisis increased demand for more tangible assets that were expected to hold their long-term value, the report's authors found.

Overall, high-net-worth individuals allocated 23 percent of their passion investment funds to the jewelry, gem and watch category in 2009, up from 22 percent in 2008 and 18 percent in 2006, with the latter described as the "pre-crisis" year by the report.  The other passion investment categories included luxury collectibles --such as boats, jets and luxury automobiles-- along with art and sports.

High-net-worth individuals from the  Middle East and Asia in particular were  the most heavily invested in the jewelry category, accounting for 35 percent and 31 percent  of their total investments, respectively. The Middle East's share in the passion investment category totaled only 29 percent in 2008.

Robust demand for jewelry and gems gained steam in late 2008 and increased as the financial crisis unfolded. The report found, though, that recovery at high-end retail was uneven during 2009. Jewelry sales have been slow to rebound after reflecting a 12 percent drop in 2009, when many consumers were buying less showy pieces and switching to silver from gold.

Demand for passion investments is likely to rise for the remainder of this year,  however, the authors noted. Auction houses, luxury goods makers and high-end service providers all expect wealthy consumers to spend more in 2010.

"Further recovery in passion investments, however, is likely to be slow as investors weigh a wide variety of market and investing variables before starting to indulge again broadly in their passions," the report noted.

The world's population of high-net-worth individuals grew by 17 percent in 2009 to 10 million and the group's wealth rose nearly 19 percent to $39 trillion. Asia-Pacific experienced significant wealth expansion in 2009, growing 31 percent  year on year to $9.7 trillion and surpassing European levels, with Hong Kong and India acting as the region's main drivers.

This wealthy population across North America rose 17 percent year on year after falling 19 percent in 2008 and the group's wealth increased by 17.8 percent to $10.7 trillion. 

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Tags: Consumers, Hong Kong, India, Jeff Miller, Jewelry
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I think the decrease in currency value is the true driver
Jun 24, 2010 11:22AM    By Shlomo M
and the fact there is controlled supply against demand A welcoming news always The market got beaten a bit , but continues right where it stopped in the last pick , and this time with lower stock and lower demand also , but steady demand
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