Wine as an Investment, where to start? 

Collectors vs Investors?  

We all enjoy a glass of fine wine, but what is the fundamental difference between a wine connoisseur and those of us who have a sophisticated wine cellar? In our Midas interview with Andrew Azzopardi, Founder of Vintage’82 Wines, we asked him how investing in wine is different from buying rare and expensive bottles for your collection? He explained, “The difference between collecting and investing in wine, is that you know what the intended outcome may be, you take more time and extra care in the process.”  

Investing in wine can be overwhelming for those new to the scene. A general rule of thumb is to learn the value of the specific vineyards and vintages. The next step is then to gain knowledge of the market. As Andrew explains “you need to know your peers/buyers/creditors.” Andrew makes it simple, “Collectors vs Investors is simply the selling on of the wine. Investors are investing to sell off the wine to make a profit.” 

 

Know your source 

Like with anything of value, there can be fakes, fine wines are no different. To ensure you have a good bottle you need to know the ‘pedigree’ of the wine.

“Knowing and trusting your source is crucial,” says Andrew. “Authentication is key, you need to make sure your suppliers are genuine!”

Because it’s difficult to ascertain the classification of wine before it’s opened, you need to rely on expert opinions. As a result, certain wine experts’ opinions can have a major influence on prices. Factors such as age, condition, and provenance all become crucial. Much like a work of art, each bottle comes with a history that needs to be certified. “In order to command the price, you must be able to prove the providence of the source,” Andrew tells Midas.

 

Its all about the storage!

In order for your wine to hold any value, you must have absolute proof that your delicate bottles have been stored correctly. Once you have purchased your wine, you must ensure and be able to evidence, that it has been held in a professional establishment. 

Andrew stresses “if your wine is not stored correctly, it has zero value. If you want to sell it, you need to go the extra mile with the storage.” This, he explains “is the humidity of 75% and a temperature of 13-17 degrees.”  

  • No heat 
  • No light 
  • No vibration 
  • No inconsistencies  

Andrew always offers his investors the option to preserve their wine safely in numerous locations including Holland, Malta, and France (Bordeaux). 

Once you have your wine stored correctly, the last step is to register it in your name and get it fully insured.  

 

What makes a good investment? 

The influential factors on the value of wine are its ability to age, the value on the secondary market, and the producers’ track record for producing outstanding wine. The quality of the vintage, provenance, and rarity all increase the value of the bottle. “The historical argument for investing in wine was largely based on a wine’s capacity to improve with age” confirms Andrew.

The limitation of the stock is also paramount. Scarcity drives the prices high, the number of bottles produced also influences the price. “The place of birth and year the wine is produced means that it cannot be replicated. Wine is, therefore ‘finite’. This is when a fixed number of something is made and it can no longer be produced. If it is from a vintage year, it can’t be made again (unless you have a time machine!)”

He continues “All the most valuable wines have a limitation, limited production. It is impossible, for example, for a château to produce more of its vintage, therefore, as the wine is consumed and becomes more scarcer, the price rises.” He continues to explain that “It boils down to there being a limited supply, making it a collectible item. It’s all about supply and demand, and that’s what makes wine so interesting….” he exclaims!

 

Who is the ideal investor?

In Andrew’s opinion, what makes him ‘tick’, is “someone who is enthused by the buying history, the religion and the culture of the wine.” Not just someone who wants to make a quick buck!

When rare Bordeaux wine is put up for sale and there is limited stock, an allocation list is sanctioned by the chateau, each dealer is given a set amount. The wine is passed to their preferred negotiants who, in turn, allocate it to their Client. Andrew makes sure that his top investors get access to the allocation of the best wines!

The top five ‘first Growth’ chateaus that are used for collectible wines are considered to be Chateau Lafite Rothschild, Chateau Latour, Chateau Margaux, Chateau Haut-Brion, and Chateau Mouton Rothschild. It may surprise you to know, that only a small amount of the Bordeaux sold for investment come from the aforementioned. Those created in these top chateaus are generally sold for vast consumption.

Another interesting fact is that, more recently, Burgundy (where the acreage is a quarter the size of Bordeaux) has had the top auction bids for bottles to be laid down for investment. Its top performers are Domaine de la Romanée Conti, Leroy and Armand Rousseau. (Source, Morgan Stanley How to Invest in Wine)

As a bonus for his best Clients, Andrew can arrange for them to visit one of the beautiful chateaus estates. Once there, they can have exclusive visitation to the vineyards, lunch with the winemakers, and even attend a gala dinner.

 

What are the risks?

As the bottles are delicate “physical damage to the bottles is the first risk.” Then Andrew goes a little deeper. He explains to Midas that “more complex issues, such as Sociological and Political issues” can also affect the value of a bottle. One such event was the “2008 financial crisis, which affected the demand for wine in Asia.” Overall though, the investment in wine is widely positive. In 2021 wine investment “outperformed the S&P 500 and was one of the safest areas to invest capably of providing a higher return than gold and diamonds” He explained.  

Andrew clearly loves what he does! He enthrallingly tells Midas that his favorite kind of investors is those “who want to have fun with their hobby! Drink the wine and make some money too!” He encourages clients to enjoy the wine more than the financial outcome. The financial outcome is just the cherry on the cake” he says, “so enjoy the journey!”  

If our article has intrigued you, we at Midas, are on hand to advise you as you take your first steps into the exciting world of wine investment. We can organise an exclusive consultation with Andrew, all you need to do is email us at hello@midas.mt or phone +356 99 380 982.

Quotes are taken from Midas Interview with Andrew Azzopardi, Founder of Vintage’82 Wine, February 2022  

 

Diamonds Are Forever!

Diamonds, the most popular gemstone, have connotations of high class and sophistication. They are associated with power, success, glamour and, of course, the symbol of devoted and ever-lasting LOVE.

1477 was the first time that diamonds were documented as the material symbolism of love when Archduke Maximillian of Austria proposed to Mary of Burgund using a diamond ring. This is the oldest record of these precious gemstones being used as part of a marriage proposal.

This suggestion is optimised in the cleverly crafted 1947, De Beers advertising campaign, which used the tag line ’Diamonds Are Forever’. Diamonds are indeed indestructible, they will never wear down, scratch, or be destroyed. The symbolism behind being gifted a diamond indicating that a persons love will last forever and never fade. Diamonds in a ring indicate a lifelong commitment. They will last forever and can be passed down through generations to come as a precious family heirloom.

In the 1950s Marilyn Monroe reaffirmed that ‘Diamonds are a Girls Best Friend’ in the hit movie    ’Gentlemen Prefer Blondes’. This increased their popularity furthermore. But what are the other reasons why they are known to be our ‘best friend’? 

  • They are a good investment, they can be traded at any point too.
  • They are seemingly ‘crisis-proof’ and hold value. 
  • The fact that they are highly quality controlled also makes them an even more attractive investment/purchase.

We all enjoy these glistening stones of beauty, but what do we really know about them? Let me explain a little more about these objects of desire and how they came to be! And what better place to begin than at the VERY beginning….

Formation

150-200 km below the surface of the earth, molten lamproite, and kimberlite magma combines, but the conditions have to be just right for diamonds to form. The pressure needs to be 45-60 kilobars and the heat 900-1300 degrees celsius to ensure the carbon atoms crystallise. 

The word “Diamond” comes from the Greek word “Adamas” which means “unconquerable and indestructible”. Diamonds are actually the hardest natural substance found on the Earth.

The oldest diamonds are believed to have been created around 3.3 Billion years ago, and were first discovered in India and shortly after in Brazil. South Africa, Angola, Botswana, Namibia and Congo; however today, diamonds also found and mined inGuinea, Lesotho, Siera Leone, China, Tanzania, Ivory Coast, Guyana, Central African Republic, Canada, and Australia. 

The top three diamonds mines in the world are: Botswana (24 million carats), Russia (17.8 million carats) and Canada (10.9 million carats).

Shapes

As we now know, diamonds are billions of years old, but it is only in the last centenary that the uncut diamonds have been transomed (cut), releasing their utmost beauty and light to become the beautiful items that we all treasure.

A facet is a ‘one side of something, many-sided, especially of a cut-gem.’ (Oxford English Dictionary)

With 57 facets, the most popular diamond cut and shape is the Round Brilliant (about three-quarters of all diamonds sold are round). Also popular is the Princess Cut, a square shaped formed from a crystal shape rough diamond. We also have the Cushion Cut that has become more popular recently as new technology has emerged to enable the diamond cutters to create even more facets.

For those who like the more contemporary style, there are the Emerald and Square Emerald cuts. The shape of the diamond refers to the outlines and the cut refers to facets/shape.

As in all fields of expertise, naturally, things evolve over time with the introduction of newer technology. Diamond cutters have thus found new ways to enhance the light. Great for those who love all things shiny as new shapes have now been introduced, The Pear, Marquise, and Heart shapes are some of these. But the newest one to hit the market is the highly sought-after My Girl Diamond. This beauty is deemed to be the only diamond in the world that has the perfect balance of fire and brilliance. 

How to choose an interior designer and the benefits of finding the right one

Bespoke Interior Design

As with many professions there are thousands of interior designers to choose from however, making the right choice for your project can make all the difference.

Designing a home is an incredibly personal experience and the process can take many months if not years to complete depending on the size of the project.  For this reason, the chemistry and relationship between clients and the interior designer is so important. 

Your interior designer must be able to relate to how you want to live and understand the personal requirements of your particular project.  A designer needs to be able to adapt from project to project whether that is by changing styles or by functionality or how much communication clients want to receive.  Certain clients like to be heavily involved in every aspect of the project however others take a more “hands off” approach.  A good interior designer should be able to understand their clients and know which approach will work best.  Likewise, with the design, the interiors of an apartment for a bachelor in central London is going to have very different requirements than a family home in the country.    

Excellent service is such a crucial part of any interior design business.  Any form of construction or change to your home has the potential to be stressful so having a fantastic, responsive, and understanding interior designer by your side is essential.   Many of our clients end up becoming our friends due to the personal nature of the business and the trust that is built up through the process.

Ideally choose an interior design company who has been recognised within the industry by their own peers and industry judges.  Design studios who have won awards and have received international recognition have done so for a reason.

Turnkey projects are becoming more and more popular with clients wanting us to oversee the project from concept through to completion.  This includes the final furnishings, artwork and finishing touches.  When choosing an interior designer it is important to understand the services they offer, is it mainly architectural or are they more inclined towards just light decoration and furnishing?  At Jenny Allan Design we offer the complete solution for our clients, our services range from full interior design of a large new build or refurbishment, incl. kitchens, bathrooms, bespoke joinery and space planning to a furnishing/ dressing service where a client just requires furniture, curtains and/or minor redecoration for a new property.

An excellent interior designer should be able to add value to a home, so when the client does eventually want to sell, the property with the best interiors will outshine the competition.  With a background in property development, Jenny Allan really understands how to add value to properties, in order to future proof them while also creating beautiful, practical family homes for the client to live in.  We design homes that flow, are comfortable as well as stylish and have a calming, balanced vibe.  When a new buyer walks into a property they often talk about the “feel” of the home, and they can’t always put their finger on why a home “feels” right or not, however that is the skill of a great interior designer, to turn what is just a property into a home. 

Written by Jenny Allan

Founder of Jenny Allan Design

Jenny Allan Design is a high end, award winning London based interior design studio.  Named in the World’s Leading Design Names for the last two consecutive years, Jenny Allan and her team create beautiful interiors for private client homes throughout London, the UK and Europe and can adapt to any style or specific requirements.  As a boutique design studio the personal service that they offer to clients is of the highest level whilst also having the in-house capacity to take on the larger projects.   

 

Private Membership Clubs: yesterday, today, tomorrow….

How did these Clubs come about?

In the middle of the 17th century, the fashion for coffee came from France to England, and English gentlemen got into the habit of meeting and discussing important political and economic news over a cup of coffee. Places for such appointments began to be called closed Private Clubs. Later cigars and stronger drinks were added to the options.

In 1762, the first Club appeared, which was funded by its Members. The first such institution was the Club or Bar Boodle’s, in which its founder – Mr. Boodle first starts a register its Members, obliging them to pay a fee and observe certain rules of conduct.

The familiar to us decor of Sherlock Holmes films appeared later on. Carpets, fireplaces, and upholstered chairs were needed to give an atmosphere of comfort and coziness.

A closed private Club as a cultural phenomenon arises for a fairly simple reason – the local aristocrats wanted to have a place where people of “their circle”would spend their leisure time.

The mansion of the London Club White’s, which was established in 1693, has no sign, but only an inconspicuous door and a mysterious staircase and to keep its authenticity White’s still doesn’t have an Internet website. The Club is surprisingly elegant inside and just as past times has gentlemen reading newspapers in high back leather chairs, with a tiny bar that even offers sausages from a silver platter, and a Bartender who is willing to regale visitors with stories about the members of the Club.

It is actually the Bartender who performs the most important role – to connect Members. One Member of the Club turns to him when he wants to meet another Member with whom he has not yet had the honor of being personally acquainted, and the Bartender finds the right time to arrange this meeting unobtrusively and elegantly. 

Clubs Emerged founded by representatives of the intellectual elite: The Royal Society (its backbone was Engineers) and in 1824 – the Athenaeum (Scientists and Artists), which from the very beginning could boast the best library in the city. Humphrey Davy and Michael Faraday were its first Chairman and Secretary, fifty-one Nobel Laureates have been Members thus far! 

The famous Brook’s club, which was opened in 1778. Its first 27 founders were very young at the time – rich and extravagant London Dandies, the average age of which did not exceed 25 years!

Becoming a Member of Brook’s became paramount for the status of any socially aware gentlemen. Being a Member of this Club meant belonging to a respected closed private Club that promoted its values and cared about the reputation of its Members. The very intention of joining the Club helped many young and hot-headed people to significantly change their behavior, because the stakes were high. Membership was an official recognition into high society for any young man.

In the first English Clubs, white and black balls were used when voting for a Candidate for membership. Members of the Club could agree with the Candidate (white ball) or refuse (black ball). The term “blackballed” (a Candidate who received a black ball) meant a lot: often, in addition to the refusal of admission to the Club, this person would also, unfortunately, lose a number of business partners, sometimes status and influence, and as a result – also his fortune! 

Closed Private Clubs: current trends

In the 1980s, in the UK, the emancipation revolution brought a new wave to the Club culture. In 1985, as an” antidote “to the traditional (male) closed private Clubs in the Soho area, the” electrifying ” club The Groucho, named after Groucho Marx, appeared.

During the Club’s heyday, its Members “openly snorted cocaine,” and some liked to talk about nowadays, the exotic behavior that made the Club so spectacular disappeared. Today, membership in Groucho is a privilege of the art and media elite. The Club’s admission committee receives thousands of applications every month.

Closed private Clubs are not always similar to each other, otherwise, they would lose their exclusivity. But most support the same idea – they are difficult to get into, and . For example, the modern closed private Club  protects the privacy of its Members so much that the Club does not even give an approximate indication of the cost of its membership. 

For this privacy, the Club is valued by George and Amal Clooney, Mick Jagger, Leonardo DiCaprio, Prince William, and Princess Eugenie Victoria Elena of York.

To join the already mentioned and well-known London club White’s, you will need a recommendation from 35 Club Members!

People want to plunge into the atmosphere of relaxation and intellectual freedom, leaving for a while” overboard ” all the charms of the world of the era of digital social networks.

A closed private Club for its Members is not only a place closed from casual visitors, but also a place where it is difficult to get too, where the best friends and people of their circle are invited.

How has Covid effected the Luxury Real Estate Market?

The year 2020. Who could have predicted the upheaval? Covid-19 struck and effected each and every person on our planet. Every element of lives has been disrupted. Each business and industry has had to take a step back and reassess their survival and livelihood.

According to JP Morgan, before Social distancing made real estate viewings more difficult, the countries with increased high end buyers activity were the South of France, Belgium, Switzerland and Germany. Luxury Lifestyle Magazine stated in October 2019 that the best luxury overseas property were in Spain, Portugal and Dubai.

But how have things changed in post Covid time? 

Andrew Amoils, author of a New Report from New World Health, states that High Net Worth Individuals (HNWI) globally were 14% worse off in the first part of 2020 compared to last year. He confirms that this is predominately due to the decline in real estate value.

Knight Frank’s Prime City Index, compiled in July 2020, gives some data to support this. The index, which looked at data for 3 months in 45 of the best high-end real estate concluded that the luxury housing market had had its lowest annual growth rate in just under a decade. Luxury Real Estate prices only moved up 0.9% in the year. The slowest reported growth since 2009. 

Which countries in particular have been effected the most? 

Knight Frank again studied 45 countries to forecast how Covid-19 is likely to effect global prime real estate markets. They identified that 9 were in Europe, 7 in Asia, 2 in Australia, 1 in the Middle East and 1 in Africa. 20 countries saw a decline in the Q2 of 2020 were then categorised into four price bands. A breakdown of these listings can be seen in the diagram below. It concluded that none are expected to grow more than 5%.

Source: www.theceomagazine.com/business/finance/knight-frank-covid19-property-impact/

According to the November 2020 Forbes report, which also included data from Knight Frank, the top 5% of luxury homes in the most desirable cities in the world have dropped, these included London, New York and Dublin. 

London’s luxury real estate prices fell by 3.7%. Although, not all blame can put on Covid, in this case, Brexit has had its part to play and pushed the central London workers straight into the neighbouring arms of Paris for example. 

Further a field, Bangkok had a dramatic fall of 5.8% and Singapore has seen the biggest decline in price in the luxury real estate with a drop of 6.1% in the last year. Leonard Tay head of research from Knight Frank claims that this is largely due to travel restrictions during Covid, which has slightly reduced the number of foreign buyers during the period. Dubai, had a 3.7% fall in high end property sales. The government attempted to impose new measures to counteract the leaving of expats by relaxing their residential laws, although these results are still yet to be correlated.

Where is real estate increasing?

On the flip-side, some places, are actually becoming more desirable in luxury real estate. During Covid, affluent buyers are shifting their tastes and essentially looking for outdoor space and an abundance of fresh air.  After lockdown, people are running from the confinements of their prison cities and looking for property by water, near lakes and the ocean. Countries with Iush green countryside or an inviting coastline are favoured. One example of this is Auckland, New Zealand, where with its idyllic countryside lifestyle, according to Knight Frank, luxury real estate has risen by 12% (October 2019 to October 2020). This theory can be evidenced again with the 3.7% increase in Cape Town, and Vancouvers’ 3.2%.This also explains why European cities with lot of parks and green spaces are becoming increasing popular. Worldwide, Sydney, Miami, San Fransisco and Los Angeles were the most resilient in the second quarter of the year. Plus Tokyo had a rise of 8.6% and Stockholm 4.4%.  

Surprisingly, the most significant incline was actually in Manila, the capital of the The Philippines, it saw the largest growth of 14%! More specifically in a new spacious development in the Batangas area, south of Manila. Its new properties have an ocean view and have increased by 20-46% (according to Leechiu Property Consultants).

But where for the future? 

According to Savills Global Prime Index, compiled in July 2020, Amsterdam, Lisbon, Seoul and Moscow will see the strongest increase in price during 2020. And over the next 5 years, Lisbon and Amsterdam are expected to remain the top performers joined by Berlin, Paris, Miami and San Francisco. And surprisingly, despite Brexit, London prices expected to gain 20% (JP Morgan).

Will the housing market crash?

It is good news, investments seems strong, but will Covid-19 cause the housing market to crash in 2021? Some in the real estate industry are nervous that there will be a repeat of the housing market crash in 2008.

Sophie Chick head of Department at Savills World research states “Looking forward, we have to remember that this in not like the 2008 financial crisis, and we are not expecting the same falls that were during this period”. 

Greg McBride, Senior Vice President and Chief Financial Analyst at Bankrate also agrees “Due to the increased standards of underwriting and capitalisation, I don’t believe the pandemic will cause the same housing market crash and liquidity crisis banks experienced in 2008. Banks and institutional investors have been predicting and getting ready for a decline in real estate prices for the last few years. Although no one anticipated COVID-19 would come along to do the dirty work, most analysts anticipated a large price drop as real estate hit record high levels year-over-year”.

The National Association of Retailers (NAR) reported that in America the demand for housing has increased by 9.4% in September, a 21% increase over the year and prices have continued to rise.

Experts believe it all depends on the balance of supply and demand. With mortgage rates at an all time low, buyers are back in the market and demand is higher than supply.  In order for the housing market to crash, supply needs to increase whilst demand drops.  

“There will be particular markets that experience price softness as people move out of the high-cost, high-tax city centres for more budget friendly and spacious confinement’s elsewhere. But most markets will continue to be hampered by lack of supply to meet the housing demand”. McBride

To draw a conclusion, the general consensus from those in the field, is that whilst Covid 19 has impacted luxury real estate, no housing crash will occur and that Luxury Real Estate will in prominent countries continue to thrive as it always has.