Today’s topic of discussion is on investing in the designer handbag industry. We will be taking an in-depth look at whether or not it is better to invest in certain designer handbags vs Art Vs the stock market.

ACCORDING TO MARKET RESEARCH.COM

Luxury handbags were considered an expensive gift until a series of crocodile skinned Hermès handbags started to break auction records around ten years ago. The report can be found here

Today, the market attracts collectors, resellers, dealers and the ultra wealthy in an ever increasingly popular collecting category.

Handbag investing is evolving in parallel with the growth of e-commerce and social media, this has created a secondary market for handbags within the concept of a  modern marketplace. Evolution of tastes in handbags have  found to have changed according to region and  the growing number of auction sales transacting online which is now providing an incentive for new players that are keen to join the marketplace.

The report goes on to state ” that although it was once considered a frivolous purchase alongside more traditional areas of collecting, the market continues to grow in importance for its ability to attract a new and younger group of collectors to auction. With many passing freely between luxury and fine art departments at major auction houses such as Christie’s, Poly Auction, Sotheby’s and Artcurial, luxury handbags are the tip of the iceberg of a secondary market for luxury which threatens to redefine the auction landscape.“

The report contained ten years’ worth of data including total sales, individual prices and indexes on three key brands as well as information on the online platforms that were used. With Q&As from the leading industry experts and a background on the evolution of the auction market. The website stated that this  report was  ideally made   for auction houses and collectors as well as wealth managers and anyone wanting a comprehensive overview of this new and  exciting marketplace.

In this report ART MARKET RESEART.COM  speaks to  three leading experts at Christie’s, Poly Auction & Artcurial as well as collectors to understand what has been and continues to drive the market.

These insights are supported by case studies of five handbags with raw sales data as well as lists of auction records for Hermès and Chanel’s Metier’s d’Art clutches.

FINDINGS OF THE REPORT: 2020  

The findings of the Art Market Research mentioned in a Forbes article in 2020 titled “Designer Handbags Are Now A Better Investment Than Art” The article stated that In a landscape of stocks, bonds, property and more, designer handbags may not seem like the most obvious way to diversify your investments, but they’re certainly worth taking a look at”. 

IT FURTHER EXPLAINED:

According to Art Market Research (AMR), they now outperform art, classic cars and rare whiskies in terms of investment potential. Some bags, from the likes of Hermès, Chanel and Louis Vuitton, have even experienced a valuation spike of an average of 83% in the last ten years.

To put that into context, coins have increased by 21%, first-edition books by 42% and watches — the assumed king of fashionable investments — by just 72%. 

The article stated that according to the Art Market Research report

According to the report, more than 3,500 designer handbags were sold at auction in 2019, raking in a whopping £26.4 million ($32.9 million).

Once again : The most valuable handbag known to be increasing dramatically in value is the

Crocodile skin Himalayan Birkin by Hermès which is considered the most collectible handbag in the world. The record-breaker, a white gold and diamond hardware-d Birkin, actually fetched 2.8 million Hong Kong Dollars (roughly $372,600) back in 2016.

In fact, the ten most expensive Hermès handbags ever auctioned have all been crocodile-skin Birkins.

With that said, the bag’s value boost (93% over the decade) falls short of the Hermès Kelly’s (famed for being renamed in honor of Grace Kelly), which has soared by 129% in the last ten years. Similarly, Chanel flap bags have risen by 132%.

And yes, we all purchase handbags for a variety of different reasons. The article goes on further to explain that While people invest for different reasons, those with collateral to burn often buy designer handbags for a fairly fast return of investment.

This means the more difficult it becomes to get a hold of an investment the more expensive it will become, as stated in most of my videos this is due to the “limited number of these models “that are available worldwide. A number of factors affect the price _ usually the limited pieces that are available, celebrity also are known to drive up prices or patented peers. The more coveted this piece becomes in the handbag collectors & investors community. 

As the production of Hermès bags are incredibly limited, with years-long waiting lists (I mean, we all remember that Sex and The City episode, no?), collectors are often willing to pay two-to-three times over a bag’s retail price as soon as it hits the resale market.

Of course, there are also a large proportion of people who are deeply passionate about their handbag collections, which can easily amass into the millions, and refuse to sell them once they’re in their possession.

In layman’s terms—designer handbag flippers have supply and demand on their side for the foreseeable future.

Even in lockdown, famed auction house Christie’s last designer handbag sale sold out, raising £1.34 million ($1.67 million). 

Naturally, it included a crocodile Himalayan Birkin which sold for over twice its estimation at £125,000 ($156,000).

The report found that designer handbags outperform art — classic cars and rare whiskeys too! — in investment potential, with Hermès, Chanel and Louis Vuitton pieces having experienced a valuation increase of an average of 83 per cent in the last 10 years.

it showed that a  Chanel flap bag had an increase in value of 132 per cent and Hermès has recorded a value boost of 93 per cent over the past decade. ( Provided it is kept in a pristine condition ) Owning some nice designer handbags could be a clever way to diversify your investment portfolio.

It was reported by CNBC that in 2019, handbags were the number one collectable beating stamps, rare whisky among other categories. This report was carried out by a wealth researcher by the name of Knight Frank who had said quote “ while the handbag market – which has exploded at auction and online sales – is being driven by a variety of brands, the Hermes Birkin dominates the high-end of the market. This report also stated that after handbags the second best selling collectable investments n 2019 was stamps which saw a rise by 6%.

CNBC REPORTED :

Now we’ve all heard of one of the most expensive handbags ever sold in 2017 by Christies for $379,261 which is the Himalaya Crocodile diamond Birkin handbag in an auction. This handbags was considered as the “holy grail “ of handbags because it is crafted by the Nile crocodile hide and is also treated with a special dye process that turns it a special white that fades to a smoky grey. There is very limited number of Himalayan bags that have been produced according to handbag experts. Now according to Bernstein research, it stated that there are around 12,000 Birkin bags made in a year in total. However, sales are only made to Hermes top clients. The report produced by Knight Franck was the first of it’s kind to include the handbag prices in it’s ranking of collectable investments this is because online sales of designer handbags have reached a “mass critical level which enabled tracking their value over time” Research data showed that there was an increase in the 10 year time period of over 108%. ( CNBC Article )

THE REPORT SHOWED THAT :

“After handbags, the second-best performing collectible investment in 2019 was stamps, at 6%. Rare whisky clocked in a 5% gain, matching the gains for art. While the art market clocked in jaw-dropping prices in 2016 and 2017 – including $110 million for a painting by Basquiat in 2017 – the market has continued to slow for the second straight year on a weaker supply of great works offered for sale and more lackluster bidding from foreign buyers.  

Watches notched up a 2% gain in 2019, while wine notched up a 1% gain.

The worst performing collectible asset-class last year were classic cars and jewelry, which were both down 7%.”

DESIGNER BAGS VS GOLD VS S&P 500

In 2016, it was reported by the  online marketplace for rare and exclusive designer handbags Baghunter that a study results on its past research comparing the investment potential of Hermès Birkin bags, the S&P 500 and gold over a 35 year period between 1980 and 2015 (note: 1980 was when the first Birkin handbag was produced) found that unlike the S&P 500 and gold markets the iconic Birkin steadily increased in value year on year — it was found to have NEVER  fluctuated downwards since its introduction in 1980 — WITH an average annual increase in value of 14.2 per cent, and a value increase of over 500 per cent (yep, 500 per cent!) in the 35-year period analyzed.

HERMES BIRKIN BAG AND THE PANDEMIC

The Birkin bag was found to have held it’s value better than gold during the pandemic while the value of pieces such as Rolex watches have seen to have decreased . The Pandemic saw an over supply of luxury handbags on the resale market however the value of some of these models did not decrease as expected at times of economic crisis and oversupply. A financial publication in Hong Kong called the Nikkei reported a 30% increase in transaction in Hermes Birkin in the last two months ( reported by China Post ). The increase in purchases are in line with the rise of affluent millennials and successful professional females who are showing more interest in purchasing the Birkin handbag as well as male buyers who are perceived .

WHAT DO YOU THINK ?