The fancy colour diamond market has been experiencing an upsurge in popularity, with adiscerning and well-heeled consumers aspiring for these rare stones, and not minding paying a premium for them. It has rapidly transformed from a risky and speculative business into an attractive and lucrative niche, thanks to a steady growth in demand, diminished supply and increased prices.

PRICES ON THE UP AND UP

With demand accelerating, prices of fancy colour diamonds have also seen a steady rise. According to the Fancy Color Research Foundation (FCRF), a non-profit that promotes transparency and fair trade in the market, “The average price of all colours and sizes of fancy colour diamonds climbed by 3.9% in 2022, led by a 4.6% increase in all Yellows, and followed by a 3.9% rise in Pinks, and 1.8% in Blues. This climb was in contrast to the annual decline in white diamonds and other major financial markets.” The prices reported by the FCRF are based on its own Fancy Colour Diamond Index, which is built on tracked data for yellow, pink, and blue fancy colour diamonds’ performance in major global trading centres such as Hong Kong, New York, Geneva and Tel Aviv. Sharing his insights, Jamie Clark, Head of Global Operations, De Beers Institute of Diamonds, says, “Fancy colour diamonds have become more well known, increasingly on-trend and aspirational, so their prices have risen considerably in recent years. There are published figures for the past 10 years of nearly an 80% increase, with 2022 alone seeing a 4% increase on average. Fancy colour diamonds can be so rare that they have proved to be just as good an investment as original artworks, or vintage sportscars.” While consumer interest in fancy colour diamonds is increasing, seeing the rising trend in prices and demand, investors are also closing in on them. “There’s a big difference in prices now,” says Denish Shah of Mumbaibased D Diam. “For example, a 1ct fancy red (Argyle) we used to get for $ 2 million, and now it is hard to find for even $ 5 million. The price of Yellows, especially the intense and vivid variety, has more than doubled,” he adds. The onslaught of COVID-19 too has had a say in the prices of fancy diamonds. According to Harsh Maheshwari, Kunming Diamonds, Hong Kong, “The prices of fancy colour diamonds have undergone a significant increase in the past five years. This is due to the growing demand for these diamonds, as well as the limited supply of high-quality fancy colour diamonds. In addition, the pandemic has also contributed to the increase in prices, as people are looking for alternative investment options.” Talking about his experience, Ankit Shah of Ankit Gems, Mumbai, says, “The prices of fancy coloured diamonds have only increased over the past five years. Prices for pink, blue and purple coloured diamonds are leading, and those for yellow diamonds have also risen significantly.” It is not just that the prices of fancy colour diamonds are increasing – diamond dealers feel the trend is not temporary, but will continue in the foreseeable future. “Prices have gone up, prices are going up, and prices will continue to go up,” says Darshit Hirani, P Hirani Exports, Mumbai, adding, “See, the supply is limited. And COVID has played a part in disrupting supply and kicking up prices. But even otherwise, prices have remained strong. They dropped a bit in between, but bounced back very strongly. The Russia-Ukraine conflict too is responsible for the disruption in supply, and the resultant price jump. As of now, there is a marked scarcity of pink diamonds.”

The limited supply of fancy colour diamonds means that not all segments of consumers are either able to own them, or are in the know about how special they are. In fact, people may not even be aware of their existence. Pointing this out, Clark says, “Many people may not be aware of some colours of diamonds due to their exceptional rarity. For example, when I mention or green diamonds, I’ve often been challenged to clarify that I mean rubies, sapphires, and emeralds. My answer is always, ‘No, I mean diamonds!’. These gemstones can come in a variety of colours, and not just the primary colours we traditionally associate with them. You can get all the colours of the rainbow, and they are truly amazing.” Of late, the fancy colours have been flaunted by celebrities and Hollywood stars, giving them greater visibility, and making them an asset class worthy of investing in, and owning with pride. They are gaining recognition as a worthy investment due to their stability and rarity. “These diamonds are extremely rare and unique because of their colour, which is caused by the presence of trace elements, or structural defects during the diamond's formation process. Therefore, they are highly sought after by collectors and connoisseurs who value the rarity and exclusivity of these diamonds. They’ve also proven to appreciate in value over time, which is why some collect them from an investment point of view,” explains Maheshwari.

In this age of Lab-Grown Diamonds, mined diamonds are anyway considered rare items, and are seen as status symbols. Fancy coloured diamonds are all that, and more. High-end consumers are increasingly looking to own one-of-a-kind piece that they can flaunt, and also treat as an asset that enables wealth preservation. “They are exceptionally rare, representing less than .01% of globally mined diamonds,” says Shah (Ankit). “Such rarity makes them a category in itself, for elite consumers to aspire for. Such diamonds are highly coveted for their unique, intense colours, and high-end consumers are willing to pay a premium for them,” he adds.

Yellow coloured diamonds are relatively rare, with only a small percentage of all diamonds mined possessing a natural yellow colour. They are more affordable than pink or blue diamonds of similar quality and size, making them an attractive option for buyers who want a fancy colour diamond without paying a higher premium. ANKIT SHAH Ankit Gems, MumbaiMAIN MARKETS FOR FANCY COLOUREDS
Though there is no particular geographic demarcation when it comes to the demand for fancy colour diamonds, they tend to be more popular in the major diamond consumer markets of the US, China, Japan and the Middle East. According to Shah (Denish), “The main investment markets are the UK and Switzerland. They are also doing well in the Asian market, especially China and India.” These countries have a large and growing middle class, with a strong appetite for luxury goods and investments, so it’s not surprising that the demand for these rare diamonds is high in these regions. Says Hirani, “Fancy colour diamonds don’t go much by region. Demand comes from those who are exposed to the world of colour diamonds, and they could be from anywhere. But yes, America, Europe, and China are major markets. New pockets are emerging in India, but it is a slower market, and awareness about fancy coloureds is limited. But still, it is a growing market.”

THE POPULARITY SCALE OF FANCY COLOURED DIAMONDS
When it comes to popularity, yellow diamonds tend to steal the show because of their availability and affordability. “Yellow is more popular because it is affordable for all. For investment purposes, Pinks, Reds and Blues are selling more, but not much in the Indian market -- mostly in China, USA and the European countries. Also, there is the straight orange, which is popular for both wearing and investment, because it is very rare,” Shah (Denish) explains. Yellow diamonds tend to be more easily available, explains Clark, saying, “There are more yellow diamonds than blue diamonds. Yellow is caused by nitrogen in the atomic structure, which is more commonplace. The more nitrogen, the more yellow the diamond can be. Blue, however, is caused by boron in the atomic structure. Boron is more unusual, and blue diamonds are incredibly rare. But there is also the of colour throughout the diamond – known as saturation and tone. How much colour is exhibited, does it have a light or dark appearance, and finally, is it evenly distributed. Only the rarest of rare fancy colour diamonds are perfect in this way.”

Mumbai The supply is limited. COVID has played a part in disrupting supply and kicking up prices. But even otherwise, prices have remained strong. They dropped a bit in between, but bounced back very strongly. The Russia-Ukraine conflict too is responsible for the disruption in supply, and the resultant price jump.DARSHIT HIRANI P Hirani Exports,Historically, yellow diamonds have been the most sought-after. “Yellow coloured diamonds are relatively rare, with only a small percentage of all diamonds mined possessing a natural yellow colour. They are more affordable than pink or blue diamonds of similar quality and size, making them an attractive option for buyers who want a fancy colour diamond without paying a higher premium. They are also the most versatile diamonds, complementing a variety of skin tones and outfits,” says Shah (Ankit). Hirani also agrees that yellow is the most popular fancy coloured diamond. “Volume-wise, you are able to sell it well. Its price suits people,” he explains.

Maheshwari has a somewhat different take on the matter. “Pink and blue fancy colour diamonds are currently the most popular, with yellow diamonds following closely behind,” he says. “The popularity of each colour depends on factors such as rarity, availability, and fashion trends. For example, pink diamonds are highly sought-after due to their rarity and the popularity of pink in fashion and design. Large jewellery houses are seen to be promoting yellow diamonds too,” he adds. Looking ahead, the demand for fancy colour diamonds is expected to continue to grow, especially with high jewellery houses using these diamonds in their creations. As more high-end brands showcase jewellery with fancy colour diamonds, they are set to attract more attention from collectors, investors and topend buyers, which will not only fuel more demand, but also lead to a surge in prices. As natural resources deplete, the craze for fancy coloured diamonds will only grow more and more.