This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on June 21 - June 27, 2016.
The prices of vintage guitars took a hit during the global financial crisis, but they have been recovering since 2013. What’s in store for Malaysia’s burgeoning vintage guitar market?
The value of passion investments such as vintage guitars took a hit in 2008. But with the global financial crisis well behind us, these alternative assets are seeing a rebound.
According to a 2014 article on The Financialist, an online magazine by Credit Suisse, the 42-Guitar Index jumped 82% in the two years leading up to the financial crisis. However, the index — a price-weighted indicator based on the sales of 42 Fender, Gibson and Martin models made in the 1960s or earlier — fell 10% in 2009 and 24% in 2010. It kept falling until 2013, when prices started to improve.
Ahmad Tajuddin Mohd Said — a civil servant, guitar collector and president of the unofficial Gibson Fans Malaysia club — can attest to this. He says the prices of vintage guitars have gone up significantly since he started collecting them four years ago.
“Four years ago on eBay, a 1959 Gibson Les Paul went for US$500,000. Now, it is worth almost US$1 million. The 1959 Gibson Les Paul previously owned by Peter Green and Gary Moore went from a few hundred dollars in the 1960s to between US$2 million and US$3 million, while the Fender Stratocaster owned by Eric Clapton, nicknamed “Blackie”, was sold for US$1.7 million. Such guitars are like art — you can keep them and sell them later at a higher price,” says Ahmad Tajuddin.
According to the five members of the Gibson Fans Malaysia club who spoke with Personal Wealth, the vintage and rare guitar market in the country is a burgeoning one. And while there is no standard definition for what is considered a vintage guitar, they describe such guitars as those released more than 20 years ago.
Mohd Ariff Majmi Zaaba — a lecturer, entrepreneur and guitar enthusiast — says the market here is growing as there is now easier access to these guitars. “Previously, the only way to purchase a second-hand or vintage guitar was through friends, and only a few shops in Kuala Lumpur sold such guitars. Now, we have the internet, social media, blogs and forums that expose us to much more information on these guitars and their prices,” he adds.
Poven Goh, a former musician and managing director of Mega Music World, a music instrument outlet, agrees that the Malaysian market is growing quickly. He adds that unlike in the US, the local vintage guitar market is not volatile.
“[Guitar prices here] keep on increasing and they have been stable for the past 20 years. For example, if you bought a guitar 20 years ago for RM1,000, it would cost RM3,000 to RM4,000 today. That is because the wood [that was used] is becoming rarer and, thus, more expensive. The more expensive the wood, the higher the value of the guitar,” says Goh.
“Currently, the most expensive wood is the Brazilian Rosewood. In fact, some countries that produce this type of wood require special licensing or certification of their products, a special export permit or have banned exports entirely.”
Brazilian Rosewood is usually used in acoustic guitars. A guitar made with this wood can easily fetch RM15,000 to RM20,000. And if 70% of the guitar is made of the wood, it can fetch close to RM100,000.
According to Tee Lian Yee, managing director of Manuetto Music and a guitar trader for the past 20 years, Malaysians tend to buy guitars irrespective of the economic environment. “The music [instrument] industry here is growing and [looks] positive because even when the economy is not very good, people still buy guitars,” he says.
“When it comes to vintage guitars, such as Gibsons or Fenders, some models are very collectible — very good quality, material, craftsmanship; everything is perfect, just like wine [where the year of release is important].”
Goh says his first trade was a 1988 40th anniversary Fender Telecaster, which he purchased in 1994. “I bought it brand new for RM2,900 and in less than a year, I sold it for RM3,300. So, selling guitars can give you returns.”
The highest trade made by a member of the club was for a Gibson Les Paul Custom Shop Gold Top, signed by Les Paul himself on his 90th birthday. “It was a limited edition — only 90 were released worldwide,” says Tee.
“I bought one for RM20,000. It was a special price for dealers. I kept the guitar at my shop for two years. When Les Paul passed away in 2010, the price shot up and a customer bought it from me for RM70,000. That was the biggest trade I ever made. Now, my customer can sell it for more than RM100,000 or even double what he paid.”
He adds that one of the best returns on investment for a vintage guitar is for a 1959 Gibson Les Paul. “This guitar is valuable because only 1,000 were made. When it was released, it was priced at US$200. Now, it is worth almost US$1 million.”
Tee warns that prices very much depend on “willing buyer, willing seller”. “There was a young man who came to my shop with a 1996 Gibson Les Paul Blueshawk. He told me it belonged to his father, who had just passed away. His father was a musician, hence the guitar was played often, was seasoned and had a good tone. The only thing was it did not look so good and there were a lot of scratches,” he says.
“He told me his father had bought the guitar for RM6,000. So, I bought it from him at that price and sold it to a customer, who had been looking for that model for a long time, for RM12,000.”
The five members of the Gibson Fans Malaysia club say they have included their vintage guitars in their estate. “I don’t usually tell my wife the price of a vintage guitar — only the value. And in the event of my death, she is not to sell it for lower than that,” says Mohd Ariff.
Ahmad Tajuddin nods. “I have included the guitars in my will for my two sons. I have not told my wife how much I bought them for, but in my will, [it is stated that] they are to be sold at the prevailing market price,” he says.
Mohd Fikri Mohd Nadzari, a teacher, independent guitar trader and vintage guitar collector, says he has done the same. “I have also put them in my will, just in case. It is a rainy day investment [for my family].”
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.