© James T. Murray

• Contemporary Chinese Jewelry
• Giorgio Armani’s Jewelry

By Alison Burwell
May/Jun-2011

Departures uncovers the secret to why colored diamonds are dominating today’s jewelry auctions.

The Graff Pink isn’t the only colored diamond shattering auction house records lately. Prices have skyrocketed over the past two years. In 2009, a five-carat pink sold at Christie’s in Hong Kong for $10.8 million, achieving a world record price per carat of $2.1 million. Last October, the Bulgari Blue, a ring with a triangular-cut, 10.95-carat blue diamond, sold at Christie’s New York for $15.7 million, setting a new record price per carat for a blue diamond. And last November, a 14.23-carat pink diamond fetched $23.1 million at Christie’s Hong Kong, the highest price ever paid for a jewel at auction in Asia.

“This isn’t a once-in-a-lifetime anomaly,” says Rahul Kadakia, head of Christie’s New York’s jewelry department. Last year, Christie’s worldwide jewelry sales totaled $426.4 million, an all-time high that led the house to declare 2010 the year of colored diamonds. “This is where the market is,” Kadakia says. “It keeps progressing, and people continue to realize how rare these stones are in special colors and important sizes.”

Of the millions of diamonds mined each year, the gem industry estimates that one in every 10,000 carats will possess color. Only a handful of those achieve the deeper, more valuable hues described in the industry as “fancy intense” and “fancy vivid.” Of those, an even smaller percentage surpass one carat, let alone five or ten.

According to Naval Bhandari of Sotheby’s Diamonds, since record-keeping began in the 1970s, colored diamonds have appreciated at about 10 to 15 percent per year. “Yellow diamonds have doubled in value every seven years,” he says. “Reds, blues and greens have seen the greatest appreciation, having quadrupled within the last decade.”

Robert May, executive director of the Natural Color Diamond Association, cites the growing affluence in emerging markets, like Russia, India, South America and China, as a major factor. “There’s a whole new body of consumers,” he says. “Asia really likes colored diamonds, and they have significantly driven up the price.”

Sotheby’s Asia’s deputy chairman and head of jewelry, Chin Yeow Quek, sums up the buying habits of the Asian connoisseur: “If a buyer from Hong Kong has millions to spend, he’d rather buy a wonderful colored diamond than a 20-carat white diamond. You can wear it in the daytime without being conspicuous, yet it’s $8 million or $10 million on your hand: a powerful but subtle message.”

It wasn’t so long ago that consumers considered colored diamonds to be less than desirable. “People would push these stones away,” says James de Givenchy, the designer for Taffin and Sotheby’s Diamonds. “White was all they looked for.” Nicolas Luchsinger, vice president of sales at Van Cleef & Arpels, recalls a story from his years as a specialist at Christie’s: A Midwestern client brought in what he thought was a peridot ring from his mother’s estate. None of his siblings thought much of the semiprecious stone when dividing her collection. “Christie’s said, ‘Sir, what you have here is a green diamond.’ And we went on to sell it for a record price,” says Luchsinger. (That Belle Epoque ring, featuring a 1.73-carat stone, sold for $886,000 at Christie’s New York in 2000.)

Experts say a watershed moment in the public’s awareness of colored diamonds occurred in 1987, when a .95-carat red diamond fetched $880,000 at Christie’s New York, making headlines around the world. Reportedly purchased for $13,500 in 1956 by Montana gem collector Warren Hancock, the Hancock Red set a new record of nearly $1 million per carat, a benchmark that held until 2007. (Rumor has it the diamond landed in the collection of the sultan of Brunei, who still wears it as a ring.)