Luxury goods have outshone gold and prime London residential property over last 12 months, according to a report.

The Q2 2017 wealth report from the UK-based Knight Frank also revealed that gems and jewellery have delivered sparkling returns in the past decade, with values rising by 142 per cent over the period.

The report showed the Knight Frank Luxury Investment Index (KFLII), which tracks the price growth of 10 luxury investment sectors, rising in value by 5 per cent over the 12 months to the end of Q2 2017, outperforming other safe-haven asset classes like gold and prime London residential property. 

Classic cars, which have dominated the rankings for the past few years, have moved into sixth place with average prices rising by just 2 per cent to Q2 2017. 

Wine, up 25 per cent, was the top performer in the index thanks to strong growth in the key Bordeaux, Burgundy and northern Italian markets. No other asset class achieved double-digit growth across the past 12 months. 

The latest KFLII edition focuses on the performance of jewellery, which rose by 4 per cent over the last 12 months. Overall, jewellery has risen in value by 142 per cent over the past 10 years, it said.

While pearls are still the top performer (+282 per cent across the last decade), their growth is starting to level out and more modern jewellery, especially pieces from the Belle Époque/Art Deco era, are starting to set the pace (+93 per cent across the last decade), it revealed.

It has also been a stellar year for coloured gems, with the world record being set for price per carat for a green gem when the 18.04-carat ‘Rockefeller’ emerald sold for $5.5 million at auction, the report said.

Blue stones continue to set the price growth benchmark for diamonds, rising by 5.5 per cent over the past 12 months, compared with a slight drop in the value of pink diamonds, according to data from the Fancy Color Research Foundation (FCRF), the report noted.

The report features an interview with best-selling author Barbara Taylor Bradford on her passion for jewellery and Susan Abeles, Head of Jewellery, Bonhams US, on how to start a jewellery collection and what’s hot at the moment.

Andrew Shirley, who compiles the KFLII, said: “It has been an interesting year so far in the world of luxury investments, but one that is difficult to generalise about. While the most highly coveted objects of desire have performed strongly at auction, buyers remain circumspect when purchasing new assets for their collections.

“In terms of classic cars, for example, we have recently seen the most expensive Aston Martin ($22.5 million) and Mclaren F1 ($15.6 million) go under the hammer, but other auction sales with less stellar cars have disappointed.

Jewellery continues to capture the imagination of wealthy collectors and is a genuine investment of passion – offering not only great pleasure to its owner, but also, as novelist Barbara Taylor Braford points out in the report, acting as a highly mobile store of wealth.” 

Bonhams Global Chief Executive Matthew Girling commented: “The Knight Frank Luxury Index provides a fascinating insight into the top areas of collecting.  People will always seek out the best in class examples in their favourite collecting areas, and our own experience at Bonhams certainly bears out the report’s conclusions with wine, art, watches and jewellery all performing strongly over the past year.”