Once considered merely frivolous accessories, luxury handbags have gained a reputation as a lucrative alternative investment and are taking auction houses all over the world by storm. Flavia Galeotti explores the rising trend of investing in luxury handbags and explains how you can cash in on the craze.
With stock and gold prices dramatically fluctuating over the last 10 years, many investors have started taking a hard look at alternative investments – such as watches, diamonds, wine, cars, and art – as a means of diversifying their investment portfolios. Historically, these alternative assets have a low correlation to stocks and bonds and are much less volatile, and they can also potentially deliver higher returns.
One relatively new and perhaps surprising addition to this alternative investments family is the luxury handbag. Typically seen swinging in the crook of a well-to-do lady’s arm, these status symbols – like luxury watches before them – have become a viable investment option. An increasing number of collectors are taking risks and reaping rewards in the niche market of luxury handbag investing.
Here are some tips to help you start building your luxury handbag collection:
Buying: It’s all about the brand
Luxury handbag collectors typically invest in the so-called “holy trinity” of handbag brands: Chanel, Louis Vuitton, and Hermès. These are the three brands that are the most sought after, and generally yield the highest returns.
Hermès Birkins regularly make headlines by repeatedly smashing auction records – most recently, in May of 2017, a white Himalaya Niloticus Crocodile Birkin adorned with 240 diamonds on 18-karat gold hardware fetched a world record-breaking price of US$380,000 at Christie’s in Hong Kong. The previous two world record holders were also Birkins, which, according to BagHunter, have actually proven to be a safer investment than the stock market over the past 35 years, delivering 14.2% average annual returns during that period.
Another star performer is the Chanel Medium Classic Flap bag, which has seen its value skyrocket by 70% since 2010, outperforming US housing prices, the S&P 500, and inflation.
If you are considering investing in one of these “holy trinity” handbags, it’s perhaps safest to stick to their respective classic styles – the Chanel 2.55, Hermès Birkin, and Louis Vuitton Neverfull – as these have stood the test of time and are consistently in demand.
Beyond these three fail-safe brands, others worth considering are Céline, Dior, Goyard, Givenchy, Mansur Gavriel, and Gucci; or if you prefer more specialist brands, you may want to look at Judith Leiber and Mouawad, which are collector’s items in their own right.
Aside from brand, other factors to bear in mind when buying a luxury handbag are the rarity of the piece (keep your eye out for limited edition designs or special collaborations) and whether it features exotic skins (for example, crocodile, python, lizard, or ostrich) – as both of these factors can increase the bag’s resale value. Other things like special materials used on buckles or clasps, diamond or gemstone embellishments, and even embroidery can help drive up the handbag’s price as well.
Maintaining value: safe storage
To ensure your luxury handbag retains its lustre and value over the years, you need to treat it with care.
Ideally – from an investment perspective – you would be able to keep the bag in a temperature-controlled environment away from sunlight, stuffed with tissues, treated with leather milk, and protected with a dust cover to maintain its fresh-out-of-the-boutique appearance until you’re ready to resell.
But, of course, you may want to actually get some use out of the handbag, in which case you should tote it around using extreme care, as any scuff or blemish will make a dent in its value. As with most things, the better the condition of the bag at the time of sale, the greater return it will realise.
Remember to keep the extras that the bag came with – such as the dust bag, box, tags, and receipt – as these may also help to increase its price in future when you decide to resell.
Selling: Auction or consignment
Patience is a virtue when you are investing in luxury handbags, as the typical waiting period between purchasing and reselling is a few years – at least. Like most investments, it’s about biding your time and reading the market – in this case, keeping an eye on the market price of the bag in question. The Collectory explains that, when trying to determine the right time to sell, there’s a careful balance of time and price that should be considered, “The key is to know the market price of the item so you can price accordingly, to be patient enough to get a few offers, and to be flexible when you receive an offer close to your asking price.”
If the auction block of Christie’s or Sotheby’s or another a major auction house is not an option, secondary markets offer a viable sales channel. There are plenty of well-established and trusted fashion resale sites – known as “re-commerce” sites – to choose from. Many of these companies do all the legwork for you in terms of photographing, pricing, and conducting the sale. They will, of course, retain a fee from the sale (as this is on a consignment basis), and this fee varies from site to site.