How handbags became a bona fide investment
Once, people would have sniggered at the thought of buying a handbag as an ‘investment’. Now, the laugh is on those who did: some designer handbags now outperform art, classic cars and rare whisky in terms of investment potential, according to a new report.
Art Market Research(AMR) tracked sales of designer handbags at auctions around the world and found that certain bags by Herms, Chanel and Louis Vuitton have soared in value by an average of 83% over the last decade a 6% year on year compound growth. In comparison, coins have grown by 21%, modern first edition books by 42% and watches by 72%. Old Masters have seen just 4% growth.
In 2019, more than 3,500 designer handbags sold for a total of 26.4 million at auction and that’s not taking into account the thousands more sold via online luxury resellers.
“Handbags are no longer bought simply for adornment, but for their ability to hold and even grow their value,” says Sebastian Duthy, director of AMR. “Auction houses are actively trying to engage with affluent millennials and younger collectors who might not have the money for headline grabbing art, but are willing to spend on different things.”
Driving the meteoric growth are rare, exotic pieces such as the crocodile skin Himalayan Birkin by Herms, considered the most collectible handbag in the world. The top 10 most expensive Herms handbags ever auctioned are all crocodile skin Birkins including the record breaking crocodile Himalayan Birkin with white gold and diamond hardware which fetched 298,800 at Poly Auction in Hong Kong in 2016.
The production of Herms bags is strictly limited, and lengthy waiting lists mean collectors are willing to pay through the nose to get their hands on a mint condition piece at auction. Some newly purchased bags can sell for two and a half times their retail price on the resale market a practice also often seen in the watch world, known as flipping.
According to the AMR report, Herms Birkins have increased in value by 93% since 2010, while Kelly bags, having been more affordable at the start of last decade, have soared by 129%.
But the investment handbag market isn’t limited to Herms. Chanel flap bags have risen in value by 132% over the last 10 years, while Louis Vuitton’s Alma 30, Speedy 30, Grand and Petit No and Monogrammed Neverfull MM have, between them, seen an increase of 11%.
Rachel Koffsky, head of Christie’s handbag department, was interviewed as part of AMR’s Luxury Handbag Report 2020, and commented that those buying at auction range from “younger women in their 20s who are looking for their first Chanel bag to very serious collectors who have been collecting for 20 years plus and every year sell two to buy three.”
She adds that “the majority of our collectors are private collectors, mostly female in their 40s and 50s. They feel very comfortable buying for themselves, whether it is to celebrate a promotion or a new baby.”
“People invest for different reasons,” says AMR’s Sebastian Duthy. “There are speculators who see an opportunity in the fact that as soon as they walk out of the Herms store, the value of certain bags go up. But there’s also a large proportion of people who are deeply passionate about these bags. They are incredibly difficult to source, so when they get hold of one they don’t want to sell it.”
Antoinette Hunter started her business Lilac Blue in 2007, selling rare and limited edition Herms handbags. Of the clientele, she says, “initially it was A list celebrities and royalty. Then it became captains of industry and now it’s ladies who lunch.
“Most of our bags sold to our clients across the Far East and the Middle East will be bought by men for their wives or sisters or mothers, but more and more women are buying these themselves.”
The market for collectible handbags has evolved alongside e commerce and social media. “Herms has a very discreet manner about its sales, but the key is to get the information [about desirability] out there,” says Duthy.
“Information about bags is exchanged on WhatsApp groups there might be a sudden scramble to find a bag that was produced in a small edition in a certain colour in 2014. It excites collectors, like finding a rare baseball card.”
Social media also plays a huge role. “A tweet or Instagram post from an influencer can quickly focus attention on certain bags, or bring attention to the fact that a bag was limited edition. That generates interest and suddenly it’s a collectible bag.”
Duthy cites the Birkin So Black as an example: designed by Jean Paul Gaultier hermes belts for men replica
before he left Herms in 2010 and retired after just three seasons, it is carried by Kim Kardashian which has increased its cult status. In 2019, one sold at Christie’s for 50,000.
Christie’s hosts seven dedicated handbag auctions every year, and coronavirus has done little to quell demand. Its most recent sale, Handbags Online: The London Edition, was a white glove sale: every lot sold, raising a total of 1.34 million. It included a crocodile Himalayan Birkin which sold for 125,000 against an estimate of 60,000 80,000.
Experts believe that the coronavirus crisis might lead to an uptick in sales, mirroring what happened following the global financial crisis in 2008.
“In 2008, women began to think of their handbags as something they were spending a lot of money on and they had to be really thoughtful about. So, it was really an interesting moment for the handbag market because although consumer spending was down, the value of Birkins and Kellys was still very stable,” says Koffsky.
But, warns Duthy, “These large rises on certain bags come from serious collectors who know what they are doing. It doesn’t necessarily mean that the bag at the back of your wardrobe will have gone up that much.
“When people hear the word ‘secondhand’ they think about something that is a bit beaten up, but these collectors expect pristine quality when they’re buying at auction,” he continues. “If it’s not in nearly new condition, it might sell but it certainly won’t fly out of the door for the same amount.”
So what should would be collectors look out for? Experts advise that a successful collection includes the classics that will always be in demand, as well as limited edition specials that are likely to be coveted by niche handbag enthusiasts.
Antoinette Hunter of Lilac Blue says; “We always recommend a bag that you like but that will also hang around for a long time and maintain its value when you come to sell it. For that you want something that’s really classic. Or you can take a gamble and buy something that’s slightly kooky or odd and it may go up in price.”
Julia Kovaljova, an Estonian fashion photographer who has a collection of over 100 Herms bags, advises; “buy any Kelly or Birkin bag that will be offered to you at a Herms store which is an achievement on its own! After that, you will need to carefully build your history with Herms by buying everything you have been offered. After some time, you will be in a position to choose and order what you like.
“Pay special attention to the limited editions Herms produces every year as they are more likely to appreciate in future,” she adds. “And follow not only major auction houses, but smaller ones as well. Sometimes you can find a real jewel there.”
Amanda Zhao, handbag specialist at Poly Auction in Hong Kong, says; “the Chanel Flap is really popular and you can sell it very quickly. Also the Herms Birkin, Kelly and Constance. The material is important too, so rare skins like crocodile, ostrich and lizard hold their value and if the condition is very good you can sell the bag easily.”
“Chanel’s limited Mtiers d’Art clutch series is becoming highly collectible because of its playful design and limited quantity,” she adds.
Alice Lger, who manages the Herms Vintage handbag department at Artcurial, adds that “green always sells very well, especially on exotic skins, because the colour stands out beautifully on crocodile skin. Pink and blue are also very popular. The same principle always applies though: the more complicated it is to acquire a certain colour, the better it will sell.”.