Are collectables worth the investment? MARANA BRAND finds that, with careful management, luxury items can add considerable value to an investment portfolio in more ways than one.
WHETHER IT’S A RARE Irma Stern painting, a sleek 1960 Ferrari 250 GT or a prestigious bottle of 1959 Château Lafite Rothschild, collectables have long been integral to wealth creation. Today, however, the reasons behind collecting have evolved.
“We see two main types of collectors: those interested in appreciation potential and future profits, and those who collect for personal pleasure, making it a cherished part of their wealth portfolio,” explains Sarette van den Heever, Wealth Director at Private Clients by Old Mutual Wealth.
Many collectors start from a young age, nurturing their passion over years and often dedicating themselves full-time after retirement. And although it may be passion that drives these collections, it certainly doesn’t mean they lack value. “In 2023, the global collectables market was worth more than $300 billion, excluding private transactions where sales aren’t always made public,” says Sarette.
TANGIBLE ASSETS THAT TRANSCEND TIME AND MONEY
In South Africa, the top collectable categories include art, wine, classic cars, rare whisky, stamps, watches, jewellery and luxury handbags. Collectors worldwide have seen meaningful returns, with some categories appreciating more than 300% in the past decade. “Although returns in this market are volatile, with market insight and knowledge of intrinsic value, investors can achieve sizeable returns,” says Sarette.
Another consideration is tax. In South Africa, most collectables are classified as personal-use assets, which means that they are exempt of income and capital gains tax upon resale. “This is a substantial benefit, especially when an item has appreciated significantly over time,” says Sarette. Estate duty still applies when collectables are passed on as inheritance, but with careful planning these assets can be transferred to the next generation efficiently.
For most collectors, the value extends beyond monetary gains. Collectors often envisage passing down their collections, sharing a legacy and a passion from one generation to the next. “These assets are tangible; you can see, touch and even experience them – like driving a classic car. This kind of investment connects deeply to memory and personal history,” Sarette adds.
SAFEGUARDING YOUR COLLECTION
Preserving collectables in pristine condition is vital. “It starts with a detailed registry, documenting each item’s history and photographing it well,” advises Sarette. Regular expert valuations and proper storage are also essential. Wine, for example, must be kept at the correct temperature, humidity and light to retain its value. To assess the value of a wine collection, experts consider various factors like the ownership trail and transportation history. For classic cars, controlled storage environments are essential to keep them in immaculate condition. Here, experts would check aspects of authenticity, such as whether the car still has most of its original parts.
Collectables can often be vulnerable to fraud, damage and overpayment. Counterfeits, especially in art, wine and whisky, can be challenging to identify. To reduce this risk, it is essential to work with reputable partners who can authenticate items. “If you buy privately, the risk of fraud increases, but auction houses, for example, not only verify the authenticity of items, but also check ownership history and storage conditions,” Sarette advises. Overpayment is another risk, as valuations can be tricky. Once again, Sarette advises partnering with trustworthy experts to ensure you’re paying a fair price for an authentic item.
HOW PRIVATE CLIENTS BY OLD MUTUAL WEALTH SUPPORTS COLLECTORS
The family office at Private Clients by Old Mutual Wealth supports clients in managing, valuing and preserving collectables across generations. They help create and maintain asset registries and connect clients with experts for collection management.
Partnering with trusted specialists, the family office can facilitate storage arrangements, logistics, payments and administration on behalf of clients, ensuring that these valuables are properly maintained.
“When it’s time to sell or buy, we can facilitate this, although most collectors enjoy the hands-on process as it’s very personal for them,” says Sarette.
Estate planning is a critical part of Private Clients by Old Mutual Wealth’s offering.
“A ‘letter of wishes’ can specify whether items should be handed down, sold or donated, avoiding lengthy estate processes and making it easier to manage collections after the owner’s passing,” Sarette explains.
Private Clients by Old Mutual Wealth facilitates conversations between clients and their heirs early on. “This way, if the next generation isn’t interested in taking over the collection, we can help clients craft a plan for selling or donating some of the pieces before they pass away.”
PRESERVING AND PROMOTING SOUTH AFRICAN COLLECTABLES
While Private Clients by Old Mutual Wealth helps high-net-worth individuals manage and grow their investment portfolios and collections, they also promote South African and African collectables on a global stage.
“Our clients may be global citizens, but they’re South Africans at heart, deeply passionate about our heritage. As citizens of South Africa, it is our responsibility to support the growth of these asset classes and highlight them globally.”
Their support spans diverse areas, from art and wine to classic cars and fine crafts. Their initiatives encompass support for the Stellenbosch Outdoor Sculpture Trust, which makes art accessible to the public, and a partnership with the Zeitz Museum of Contemporary Art Africa (MOCAA) to elevate African artists on the global stage.
They also collaborate with The Cape 1000, a classic car run that unites enthusiasts and celebrates automotive heritage, as well as Tim Atkin, Global Master of Wine, who provides clients with valuable insights while enhancing the international profile of South African wines.
Through these efforts, Private Clients by Old Mutual Wealth celebrates South Africa’s rich heritage and ensures its collectables gain the recognition they deserve.
“Our goal”, Sarette concludes, “is to build these industries and foster a global market for these treasured assets. In the world of collectables, passion can indeed pay off, transforming hobbies into heirlooms and investments into legacies.”
CONTACT
Contact Private Clients by Old Mutual Wealth at +27 (0) 524 4678 or privateclients@omweatlh.co.za or visit wealthprivateclients.co.za.
ABOUT
Private Clients by Old Mutual Wealth offers holistic, bespoke solutions for high‐net‐worth clients. We partner with you and various specialists, tapping into the required resources to provide an integrated plan for your holistic financial affairs, including investments, wealth structuring and transfer strategies, proactive
tax planning, and portfolio lifestyle and administration. Our level of individual attention and interaction is a defining standard in the personal service we provide. We boast a strong track record in wealth and investment management. As part of a brand that has been growing wealth for South Africans for nearly two centuries,
we believe that there is no substitute for experience that comes with managing wealth through various economic and market cycles. Our team, therefore, has several decades of success and experience in successfully working with individuals, families, trusts and entrepreneurs in managing their wealth.