Coveted for their beauty and rarity, fancy color diamonds remain the hottest category in the diamond market. At gem and jewelry shows during the first half of 2017, including Baselworld in late March, fancy color diamonds were among the leading trends cited.
“Color diamonds offer incredible opportunity to profit over the long-term as the supply-demand balance is more acute than in the colorless diamond market,” explains Oz Mashiah, partner in Novel Collection in Ramat Gan, Israel. “Supply is exceedingly tight and likely to get tighter, as very little new product enters the market each year. At the same time, demand is outstripping supply.”
A Solid Investment
Prices have risen over the last 10 years, says Mashiah, who notes that color diamonds offer tremendous gains for the astute buyer.“Investors are looking for unique and important items by color and clarity. Record-breaking auction results, greater use by top jewelry houses and innovative designers, and more celebrities wearing color diamonds have generated excitement and interest in the category.”
“The demand for yellow, pink, blue, and red [diamonds] has grown to higher levels from prior years.”
— Bruno Scarselli, Scarselli Diamonds
A Wall Street Journal article published in January noted that prices for color diamonds have climbed as investors join the ranks of wealthy collectors. It cited color diamonds as part of a “boom in niche over-the-counter luxury markets” that were once the preserve of wealthy collectors, noting that trillions of
dollars of stimulus from central banks and ultra-low interest rates helped push returns on many government bonds below zero, leading investors to more “esoteric assets.”
According to the annual Wealth Report published by the London-based property broker Knight Frank, prices in the last decade for assets such as high-end vintage cars increased some460 percent, classic wines 240 percent, and color diamonds 122percent. In fact, research from the Fancy Color Research Foundation in Tel Aviv cites the price of pink diamonds up nearly180 percent (a record high), and blue and yellow diamonds up some 70 and 90 percent, respectively, from 2009 to 2016.
“Both collectors and diamond buyers recognize the value of color diamonds, and the demand for yellow, pink, blue, and red has grown to higher levels from prior years and in a variety of sizes,” says Bruno Scarselli, partner in Scarselli Diamonds in New York City. “The wholesale and retail arenas have increased their budgets to buy color diamonds.” He notes that color diamonds are not known to follow the trends of financial markets or commercial commodities, and for the past 15 years have outperformed markets in every category.
Record auction prices highlight the soaring demand for color diamonds in recent years. In May 2016, a 14.62-carat blue diamond sold for $57.5 million at Christie’s Geneva auction, making the gem the most expensive jewel ever sold at auction. And at a Sotheby’s Geneva auction in November 2015, the 12.03-caratBlue Moon sold for nearly $50 million, becoming the only diamond to sell for more than $4 million per carat.
“Blue is still the most rare and sought-after color diamond on the market for the past few years, especially at auction; the prices have hit record highs,” says Elie Abi Jaoude, owner of the New York City–based Elie Brilliant. “I’ve been investing a lot more in blues over the past year, and I see increasing demand in markets across the globe. People are looking for something really special and rare. I’m very optimistic about the market.”
Scarselli notes that other colors are piquing interest, particularly green, citing the company’s sale of a 5.03-carat fancy vivid green at Christie’s May 2016 Hong Kong auction for$3.3 million per carat. While he had hoped the per-carat price would be higher, like blues and pinks have achieved, he has a positive outlook for market acceptance of a wider range of colors.
“To buy and sell smart, learn as much as you can about fancy color diamonds to understand their real value,” advises Eden Rachminov, managing partner in Rachminov Diamonds 1891in Ramat Gan, Isarel. Author of “The Pricing Architecture, ”which outlines key attributes in evaluating fancy color diamonds,
Rachminov cites the Fancy Color Research Foundation a great resource for training and sales tools. He says his company invests heavily in educating and training jewelers about fancy color diamonds to enhance their own sales process.
While pinks and blues are evergreen, demand is also increasing for other unusual, rare, and awe-inspiring hues such as vibrant violets, purples, and greens, says Adhip Sacheti, sales manager of Galaxy USA in New York City. He also notes that in the past year, there has been more demand for shades of gray, especially among designers. In addition to greater demand for fancy yellows, pinks, blues, and greens, Ashu Malpani, partner in Dynamic International in Hong Kong, says his company does exceptionally well with rough diamonds and faceted diamond slices in all colors that have become designer favorites because of their organic, natural look.
Scarselli adds that there is a trend for multi-color diamond jewelry, which he views as a positive outlook for broader market acceptance of small, great looking color in a large variety of shades. He attributes the trend to increased use of color by big brands, on the red carpet, and discussed in financial media as opening the segment to a broader audience.
Scott West, vice president of L.J. West Diamonds in New York City, reports that pink and blue combinations are very popular, and that the use of color diamonds in Art Deco, nature-inspired, and contemporary classic motifs is important. In the world of luxury products, he likens natural color diamonds to art, hidden treasures, and rare books. “They speak the language of exclusivity, desirability, and collectability.”