Designer handbags, such as this Hermès Kelly Bag in red, have evolved into the most lucrative investment in the fashion industry.
Although purchasing designer handbags may not seem to be the most apparent method to diversify your assets in a landscape that includes equities, bonds, property, and other asset classes, it is in your best interest to investigate the possibility of doing so.
Art Market Research (AMR) shows that the future return on investment for these items is currently greater than that of art, antique vehicles, and rare whiskies. Some handbags, like those manufactured by Hermès, Chanel, and Louis Vuitton, have even seen their value increase by an average of 83 per cent over the course of the last 10 years.
To put that into perspective, the value of coins has climbed by 21%, the value of first edition books has increased by 42%, and watches, which are often considered the king of smart investments, have increased by merely 72%.
According to the study, over 3,500 high-end designer handbags were put up for auction in 2019, resulting in a staggering revenue of £26.4 million ($32.9 million).
The one that everyone wants? Of course, we’re talking about the crocodile-skin Himalayan Birkin made by Hermès, which has been widely regarded as the most collectable handbag worldwide. The previous benchmark was set in 2016 when a white gold and diamond hardware-decorated Birkin sold for 2.8 million Hong Kong Dollars, equivalent to around £372,600.
All 10 of the most expensive Hermès purses that have ever been sold at auction have been Birkins made of crocodile leather.
The bag’s worth has increased by 93% over the last decade, which is lower than the increase in Hermès Kelly’s value, which has increased by 129% over the past decade. The Hermès Kelly is famous for being titled in honour of Grace Kelly. Similarly, the price of Chanel flap bags has increased by 132%.
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People invest for various reasons, but those with a lot of disposable income and collateral generally purchase luxury handbags because they provide a relatively quick return on investment. The more difficult it is to get a bag, whether part of a limited release or because it is just more costly than its trademarked contemporaries, the greater the level of desire for the bag.
Collectors are typically willing to pay two to three times more than a bag’s retail price as soon as it hits the resale market. This is because the production of Hermès bags is extremely limited, and there are waiting lists that can last for years (I mean, we all remember that Sex and the City episode, don’t we?).
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There is, of course, also a sizeable population consumed with ardent enthusiasm for their handbag collections, the value of which may quickly soar into the millions of dollars, and who are adamantly opposed to parting with their collections after they have acquired them.
To put it another way, those who trade in designer handbags will have supply and demand working in their favour for the foreseeable future.
Even though the auction house was under lockdown, its most recent sale of luxury handbags was a complete success, bringing in £1.34 million ($1.67 million).
Unsurprisingly, it included a crocodile Himalayan Birkin that was able to get more than double its estimate when it went under the hammer at £125,000 ($156,000).