The Year in Alts

Collectibles: Record after record was set as high-end collectibles continued to show their worth. Some notable examples were the most expensive: Ferrari ever sold ($51.7 million), book ever sold at auction ($38.1 million), ruby sold at auction ($34.8 million), watch sold at auction ($5.8 million), Star Wars prop ($3.13 million), bottle of scotch whiskey ($2.7 million), pair of sneakers ($2.2 million), individual U.S. stamp ($2 million), baseball bat ($1.85 million), piece of hip-hop memorabilia ($1 million), and motorcycle sold at auction ($935,000).

Real Estate: High mortgage rates and low inventory led to a standstill in the market. The highest mortgage rates in 23 years combined with rising home prices led to record-high mortgage payments and the lowest sales pace in 14 years. By year end, mortgage rates declined, starting a long-awaited thaw in the market, with 2024 looking more promising, particularly for the residential side. On the commercial side, the office vacancy rate reached a record-high and worries abound about how much property values have dropped. Meanwhile, industrial real estate had a strong year, and farmland values stayed steady, with every sector looking to benefit if interest rates continue to fall.

Crypto: After a rocky start and the downfall of major figures, crypto rallied late in the year. The fraud trial and conviction of FTX co-founder Sam Bankman-Fried cast a shadow over crypto for much of 2023, as did legal troubles for Binance founder CZ Zhao, Tron founder Justin Sun, Terra’s Do Kwon and Celsius’ Alex Mashinsky. Despite this, Bitcoin rose over 150% this year and other coins, such as Solana, saw huge gains late in the year as the market surged in the final few months of the year. The initial driver of the rally was the news of impending Bitcoin exchange-traded funds (ETFs), which could open the market up ever further to the mainstream.

Venture Capital: A slowdown in funding and a lack of IPOs and exits marked the year in venture as AI bucked the trends. Global venture funding fell 16% year-over-year and venture capital fundraising was on pace to drop by an eye-popping 67% this year, with the smallest number of raises in 10 years. Web3 was hit particularly hard, with a 76% drop in funding, but AI startups were a rare bright spot, with OpenAI, Anthropic and InflectionAI raising 4 of the top 5 funding rounds of the year. While the number of IPOs increased compared to 2022, it was still a relatively quiet year as many companies pushed their anticipated IPOs to the future.

Art: A couple of $100 million-plus paintings couldn’t mask a disappointing year for auction houses. Pablo Picasso’s “Femme à la montre” was the year’s highest art sale, bringing in $139.4 million at Sotheby’s Emily Fisher Landau auction. The other nine-figure-sale of the year was Gustav Klimt’s “Lady with a Fan”, which set a new European auction record when it sold for over $108 million. Despite these, and other flashy sales, the major auction houses’ reliance on big single-owner sales brought in largely disappointing results overall as the high-end market showed signs of softening.

Private Credit: The market expanded as major banks entered the fray. With interest rates up, leading to attractive returns for lenders, many major players expanded their private credit footprint, including Blackrock, which launched a retail fund, and banks like Deutschebank, Citigroup, Barclays, JP Morgan, Wells Fargo, Morgan Stanley and Societe Generale. With the added competition, though, spreads tightened and good deals became harder to come by, while the outlook for 2024 is less bullish, particularly if the Fed cuts rates.