What rich collectors are buying after luxury prices cooled

Dubai: Wealthy collectors are turning more selective in the luxury investment market, with rare art, high-demand watches and assets with strong provenance drawing attention after two years of correction across collectible categories, according to Knight Frank.

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The Knight Frank Luxury Investment Index fell by a marginal 0.4% in 2025, signalling a stabilisation after a broad reset in several luxury asset classes. The latest reading suggests the market is moving away from the pandemic-era surge in speculative buying, with collectors now placing greater weight on rarity, cultural value and ownership history.

The findings were published in Knight Frank’s Wealth Report 2026.

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Art and watches lead the rebound

Impressionist art was the strongest-performing category in 2025, rising 13.6% during the year. Knight Frank said the gain was driven by major single-owner sales and standout auction results, including Gustav Klimt’s Portrait of Elisabeth Lederer, which achieved $236.4 million, the highest-ever price for a modern artwork sold at auction.

Modern art rose 7.1%, postwar art gained 5.2%, and the top 100 artists category increased 3.6%. European Old Masters also posted a 1.7% gain, showing that buyers remained active in segments where scarcity and quality were clear.

Watches rose 5.1%, supported by strong demand for Patek Philippe’s Aquanaut and Nautilus models and continued resilience from Rolex. The category has become one of the most closely watched areas in luxury investing, with buyers focusing on recognisable models, condition and long-term collectability.

Liam Bailey, global head of research at Knight Frank, said: “After a cycle defined by extraordinary highs followed by rapid readjustment, the luxury investment market is now entering a more rational and more discerning phase. Collectors are increasingly prioritising rarity, provenance and cultural resonance - and younger generations are reshaping ownership models through digital and fractional platforms.”

Classic cars lose ground

Several luxury categories remained under pressure in 2025. Classic car values fell 3.7%, although Knight Frank said “halo” models such as the Ferrari F50 remained in strong demand, with major US and European auctions achieving notable results.

Provenance becomes the new premium

Luxury resale trends are also changing, with collectors showing greater interest in pieces with visible history, patina and cultural relevance.

Knight Frank pointed to the record-breaking $10.1 million sale of Jane Birkin’s personal Hermès Birkin bag as an example of how provenance is influencing buyer behaviour. The handbag category was broadly stable in 2025, with Birkin values slipping only 0.2%.

Fancy colour diamonds held their ground during the year, falling 1% overall, while blue diamonds appreciated in the fourth quarter.

Younger investors change access

Fractional ownership platforms also gained traction, driven largely by investors under 40 seeking access to rare assets across watches, art, cars and other luxury categories.

The shift suggests younger buyers are approaching luxury assets differently, with some choosing shared access to high-value collectibles instead of full ownership.