Collectibles Appeal to Younger Audiences, Those Looking to Diversify Investments

“A lot of billionaires don’t understand why they would want a US$100 million artwork on their walls but think it’s really cool to own a T. Rex.”

Mari-Claudia Jiménez

Head of global business development at Sotheby’s

T Rex, anyone? How about a Gorgosaurus? The world of luxury collectibles has a history of eye-catching oddities that sell alongside the market’s traditional assortment of high-end watches, wine, and sports memorabilia.

In fact, dinosaur skeletons have been among auctioned outliers with occasional sales for years, but since the beginning of 2022, at least seven either partial or full behemoth skeletons have been hammered at stunning prices.

Among them was an approximately nine-foot-tall skeleton of an 80-million-year-old Gorgosaurus, close kin of the Tyrannosaurus rex. It was snapped up in frenzied bidding at Sotheby’s for US$6.1 million. Soon after, the skull of a T. Rex sold at the auction house, also for US$6.1 million.

“A lot of billionaires don’t understand why they would want a US$100 million artwork on their walls but think it’s really cool to own a T. Rex,” says Mari-Claudia Jiménez, head of global business development at Sotheby’s.

The dynamic luxury-collectibles market has been on a tear in recent years, as challenging market conditions have fueled investor interest. Aside from status symbols or simply fun conversation pieces, high-end collectibles can be strong portfolio diversifiers alongside stocks, bonds, and more common alternative investments like private equity and real estate.

As inflation spiked over the past couple of years and the stock and bond markets lost value in 2022, many investors have been looking for assets likely to retain value and whose outlook for growth isn’t tied to the markets.

Collectibles are proving to be important portfolio diversifiers with strong return potential. Consider that in the 10-year period from 2013 through 2022, preowned collectible luxury watches—a US$22 billion market—appreciated by an average annual 7%, and by 27% between 2020 and 2022, according to Boston Consulting Group.

Meanwhile, auction houses have focused on broadening their categories and their services to appeal to a more diverse group. A major target has been a younger clientele. In APAC, Sotheby’s has expanded its footprint in Shanghai and Seoul with pop-up events and innovative retail strategies to attract a new demographic and generation of buyers. (Note: The Asia Pacific headquarters in Hong Kong is being relocated to the upscale, highly visible Hong Kong Land portfolio in Central District, set to open in 2024.)

Most headline news related to auction-house sales of collectibles is about high-end sales. Indeed, they are stunning. For example, it was news in 2022 when a handbag fetched the highest price ever for its category at a Sotheby’s auction: over US$450,000 for a diamond-studded Himalayan Birkin 30, constructed out of Niloticus crocodile skin dyed in white and gray, and with 18-karat white gold hardware.

While such bags and the dinosaur skeletons have rung up on the high end, there is considerable volume on the more affordable entry-level end of the spectrum, such as three skateboard decks painted by Takashi Murakami for US$2,250 recently posted for sale at Sotheby’s, or an announcement designed by Keith Haring for a dance event starring Yoko Ono in 1987, priced at US$575.

These items are among a diverse selection that continues to be available through Sotheby’s Buy Now platform, which was launched in 2020 as a marketplace of luxury collectibles available for sale directly on the auction house’s website.

Among the most popular sports collectibles through this platform has been its streetwear line of sneakers.

“This is one of the most extraordinary worlds we’ve entered—rare, one-of-a-kind sneakers,” Jiménez says. Sotheby’s collaborated with Nike and Louis Vuitton to sell a limited run that could be purchased only online through the auction house, for US$40,000 to US$50,000 each. The line is called “Air Force 1” by designer Virgil Abloh, Louis Vuitton’s former men’s artistic director, who died in 2021.

“Widening the number and types of bidders we appeal to is an important new development,” Jiménez says. “Buyers are finding we are appealing to a much younger clientele, and that is really exciting for us.”

Younger buyers began bidding in greater numbers during the peak of the Covid-19 pandemic, when auction houses expanded their online auction capabilities. “We had to focus more on digital presentations and online auctions, and that made us more accessible,” Jiménez says. “It was intimidating to walk into our premises. The fact that you can now register online and bid in your pajamas the way you would on eBay created a democratization in the art world.”

Diversifying Through Properties and Passion Assets

WSJ Intelligence’s Consumer Confidence & Economic Monitor Study, published in September 2023, which surveyed 733 Wall Street Journal readers, found them diversifying assets.

How, if at all, has the current economy impacted your investments in these categories? Below, the percentage of respondents that currently invest in varied asset classes: