Are watches, wines and whiskies good investments in Singapore?

In recent years, assets like watches, whisky and wine have moved from niche collector circles into mainstream investing conversations.

This is not just a trend; there is data behind it.

According to the Knight Frank Luxury Investment Index, which tracks 10 categories of collectibles:

• Luxury collectibles delivered +21.5% returns over five years
• Over the longer term, a US$1 million investment in luxury collectibles in 2005 would be worth US$5.4 million today, slightly outperforming the S&P 500

At the same time, these assets have recently entered a more difficult phase:

• The overall luxury index fell 3.3% in 2024, after already declining in 2023

This tells us something important: These assets can deliver strong long-term returns, but they are not stable or predictable.

Alternative assets are highly sensitive to:

• Liquidity conditions
• Wealth effects
• Investor sentiment

They tend to perform well when excess capital is available and weaken when financial conditions tighten.

What actually drives value in these assets

Before looking at individual categories, it is important to understand how these assets generate returns.

Unlike stocks or bonds, they do not produce income. Their value comes from four core drivers:

1. Scarcity

Supply is fixed or limited. For example:

• Discontinued watch models
• Aged whisky that cannot be replicated quickly
• Wine from a specific vintage

2. Demand and cultural relevance

Prices rise when demand increases due to:

• Brand prestige
• Social influence
• Geographic demand shifts, especially from Asia

3. Provenance and condition

Two identical items can have very different values depending on:

• Ownership history
• Storage conditions
• Documentation and authenticity

4. Market access

Prices depend on access to:

• Auction houses
• Dealer networks
• Private collectors

This means value is not just about the asset itself, but also about who you can sell it to.

Watches: concentrated winners in a cyclical market

Luxury watches are often the first alternative asset investors consider.

What the data shows

• Prices rose 52.7% over five years
• They still increased 1.7% in 2024 despite broader declines

What most people miss

Returns are concentrated in a very small group of watches.

These tend to be:

• Hard to obtain at retail
• Backed by strong global demand
• Actively traded in secondary markets

Most watches do not outperform inflation once transaction costs are considered.

Another important factor is the bid-ask spread. Buying at retail is often difficult, while secondary market purchases may already reflect a premium.

This creates a structural challenge. Many investors enter at elevated prices during peak demand cycles.

Whisky: long-term appreciation, short-term volatility

Whisky has delivered some of the strongest historical returns among collectibles.

What the data shows

• Prices rose between 190% and 280% over the past decade

But recent data shows a clear shift:

• Prices fell 9% in 2023
• The Rare Whisky Icon index declined 13% over the past year
• Auction volumes dropped 37%
• Total transaction value fell 52%

What this reveals

The whisky market is highly sensitive to liquidity and sentiment.

It performs well when:

• Wealth is rising
• Collectors are active
• Capital is abundant

It weakens when the opposite happens

Structural considerations

Whisky investing has two distinct segments:

• Bottled collectibles
• Cask investments

Cask investments introduce additional complexity:

• Storage and insurance costs
• Maturation risk
• Counterparty risk

Returns are also highly dependent on branding. A cask from a recognised distillery behaves very differently from one without market recognition.

Wine: slower, more structured, but still cyclical

Wine has traditionally been seen as one of the more structured alternative asset classes.

What the data shows

• Fine wine delivered about 146% returns over 10 years
  

Recent performance has softened:

• Prices declined around 9.1% in 2024
• Demand from key markets has moderated

What matters here

Wine investing depends heavily on:

• Storage quality
• Provenance
• Vintage ratings

Unlike watches, wine also has a natural time horizon.

It improves with age, but only up to a point. Beyond that, quality and value may decline.

A broader view of alternative assets

These three categories attract attention, but they are only part of a wider landscape.

Other categories provide useful context.

Art

• Sales fell from US$7.8 billion in 2022 to US$4.1 billion in 2024
• Prices declined 18.3% in 2024

Classic cars

• Prices rose 1.2% in 2024 after a weaker prior year

Handbags

• Increased 2.8% in 2024
• Delivered 34% growth over five years

What this shows

Performance varies widely across categories. There is no single “alternative asset class”. Each behaves differently and requires specific expertise.

The Singapore context: practical realities

For Singapore investors, these assets appeal for specific reasons:

• They are portable and globally recognised
• They provide exposure to international demand
• They align with lifestyle consumption

However, there are constraints that are often overlooked.

Storage and environment

Singapore’s climate creates challenges:

• High humidity affects watches, wine and whisky
• Proper storage may require additional cost

Market access

Liquidity often depends on:

• Overseas auction houses
• International buyer networks

Currency exposure

Most transactions are denominated in foreign currencies. This introduces an additional layer of risk or opportunity.

The risks most investors underestimate

Across all alternative assets, several structural risks persist:

1. Illiquidity: Transactions take time and depend on finding the right buyer.
2. Pricing inefficiency: Prices are not transparent or standardised.
3. Cyclicality: As seen in recent data, many categories declined after peaking in 2022.
4. Concentration risk: Returns are often driven by a small number of top-performing items.
5. No income generation: These assets do not produce cash flow. Returns are realised only when sold.

An often overlooked factor: protection

Another area that is frequently ignored is protection.

A collection can quickly accumulate meaningful value:

• Watches worth tens of thousands
• Wine or whisky collections built over time

But these assets are exposed to risks such as:

• Theft
• Accidental damage
• Fire or water damage
• Environmental conditions

Home insurance can play a role here.

In Singapore, policies can:

• Cover contents within the home
• Provide additional coverage for high-value items
• Extend protection under specific conditions

This is not just a protection issue. It is part of the investment decision.

An uninsured asset introduces a potential loss that can offset years of gains.

So, are they good investments?

They can be. But only in a specific role.

They can be effective when:

• You have knowledge or access to expertise
• You can hold through cycles
• They form a small part of a diversified portfolio

They are less suitable when:

• You require liquidity
• You expect stable returns
• They replace core financial planning

A practical allocation framework

A structured way to approach this is to separate your financial plan into two parts: core and satellite assets.

Core

• CPF
• Emergency savings
• Insurance protection
• Diversified investments

Satellite

• Watches
• Whisky
• Wine
• Other collectibles

According to some financial experts, alternative investments should typically be limited to between 5% to 10% of a well-diversified portfolio. This ensures that volatility does not materially affect overall financial security.

Final thought

Watches, whisky, wine and other collectibles are not purely financial instruments. They sit between investment and personal interest.

They can preserve value and deliver strong returns in certain periods. They can also decline when conditions change.

A practical approach is to treat them as:

• Assets you understand
• Assets you appreciate
• Assets you can afford to hold

Buy them because they matter to you. Let any financial return be secondary. If they increase in value, that is a benefit. If they do not, they should still hold personal value.

And as your collection grow, it may be worth speaking to a financial representative to understand how they fit into your broader financial plan, including whether they are adequately protected.

Written by: Great Eastern Lifepedia team