2025 trends commentary: The future of luxury asset investing

How the luxury asset investing space has developed this year and looking ahead to 2025 by Eran Peer, Co-Founder and CEO of Konvi:

Market volatility and diversification

“Volatility returned with a bang to financial markets in 2024, largely driven by geopolitics. With conflicts increasing worldwide, the growing potential of global trade wars and a record year for elections being set, geopolitical tension has inevitably affected investment markets, causing volatility across a variety of regions.

“This volatility has created a particularly treacherous environment for retail investors due to uncertainty. As a result, we’ve seen an influx of new investors into alternative assets seeking more secure, solid and longer-term returns on their investments.

“Luxury assets provide a strong alternative to traditional investing routes, particularly in times of high volatility. Unlike more popular assets, such as stocks or bonds, luxury and alternative assets, like fine wines, whiskies, watches and even fossils, are more detached from the global financial markets. This means they’re generally affected by the swings and dips of a volatile stock market, often seeing more steady growth.

“With geopolitical tension showing no signs of easing, we expect market volatility to continue into 2025. As a result, we expect to see continued growth in the interest in luxury asset investing we’ve witnessed this year, as investors diversify their portfolios away from traditional investing routes.”

Blockchain

“Having past the peak of its hype over the past few years, blockchain is re-emerging as a key technology for a range of use cases. In the luxury assets space, we have seen it become an important means for boosting liquidity, security and transparency – key issues within the space.

“Decentralised ledger systems are becoming increasingly recognised as a way to provide investors with verifiable ownership records for high-value assets and enable instant transfer of ownership. Tokenising assets tackles the age-old issue of transferring ownership of assets that are often fragile, precious or difficult to relocate physically, bolstering liquidity in luxury markets. Tokenising illiquid assets could create a global market worth up to $16 trillion by 2030 and is already being explored in areas such as real estate.

“DLT also offers high levels of security, mitigating the risk of fraud, and will also ease the implementation of fractional ownership models, helping to democratise the asset class.

“Looking ahead to 2025, we expect to see an expansion of blockchain’s role within the luxury assets investing space. The adoption of tokenisation and smart contracts could significantly streamline the trading process for luxury assets, in addition to reducing transfer costs and eliminating inefficient market intermediaries.”

Gen Z and Millennial investors

“One of the key trends we’ve noticed in 2024 has been the uptick in Gen Z and Millennials’ engagement in the luxury asset investing space. Gen Z and millennials are living under a unique financial environment that is much harsher than previous generations.

“If you started investing in the last five years, your investments will have had to weather the pandemic, inflation, geopolitical tension and market various crashes all in a very short time span.

“Naturally, this causes young people to lose faith in the more traditional investment routes, such as stocks and bonds, encouraging them to diversify outside of these areas and move towards asset classes that are less directly influenced by market and policy shifts.

“Luxury collectable assets offer young people an alternative diversification method and are proving extremely popular, with 94% of wealthy Gen Z individualsinterested in luxury collectables.

“As technology continues to democratise the luxury asset investing space, the market entry cost to continue to drop. This will make luxury assets more accessible to young people at the beginning of their financial journeys. As a result, in 2025 we expect to see more engagement with luxury assets driven by Gen Z and Millennial investors.”

Fractional investing

“Thanks to improvements in fractional investing technology, this year, we’ve witnessed a significant and much-needed expansion in accessibility to previously unattainable luxury asset classes. 2024 has been a record-breaking year for our sector, with global investments in fractional ownership increasing by over 35%, surpassing a total of $1.2 billion. Technology is driving this surge, enabling individuals to diversify their portfolios with luxury asset investments that were previously reserved for only the wealthiest of individuals.

“This growth highlights the shift we’re seeing in the investment landscape over the year, as more individuals are looking to alternative assets that can offer resilience against market volatility and inflation. Fractional investing has lowered the entry cost for luxury investments, democratising the space and empowering a broader demographic of retail investors with access to these opportunities.

“Looking to the year ahead, we expect to see further innovation and participation in the fractional luxury asset investment space, with advancements in blockchain technology, enhanced asset authentication and expanding asset categories leading the charge. Luxury asset investing is becoming more accessible and inclusive than ever before, and we’re looking forward to helping pave the way to increased participation in 2025.”