An article in the London Sunday Times on February 28th, 2021, was an interesting one.
It quoted Hermes handbags, made by the French company, Hermes International SA, went up by 17 per cent in price while the FTSE 100 index fell by 14.3 per cent. Aside from being a highly desirable fashion accessories, luxury handbags are becoming an investment class of their own rights.
It was the second year in a row that bags outstripped other luxury goods in an index including classic cars, coloured diamonds, watches, jewellery and wine.
In 2019 handbags increased 13 per cent and over ten years they went up by 108 per cent in value, according to the estate agency, Knight Frank.
Hermes bags start at £1,418, and the label’s Birkin bag range usually begins at £6,370. A rare Hermes Himalaya Kelly bag made of crocodile hide became the most expensive handbag sold at an auction when it was bought at a Christie’s sale in Hong Kong for US$437,330 (£309,561) in November 2020.
According to the website, cnaluxury.channelnewsasia.com, it is possible to create an index on handbags now because of the frequency which many iconic pieces are coming to auction today. Although bags made by other luxury brands like Chanel and Louis Vuitton are also highly collectible, it is those made by Hermes that attract the highest prices and are considered the most desirable. Chanel is the second most popular handmade for collection.
The rise in value of handbags is also a result of brands increasing their prices every year, culminating in an increase in value in the pre-loved market. Hermes bags are the most difficult to get hold of, so they are the most coveted of all.
According to Knight Frank luxury investment index, fine wine went up 13 per cent last year and 127 per cent over a decade, bolstered by older Tuscan wines which increased by 8 per cent and champagne, which went up 14 per cent.
Art values fell 11 per cent on average because of the collapse in public auctions, and coloured diamonds fell 1 per cent because of the difficulty of transporting diamonds in the pandemic.
The conclusion of the article is obvious: Investing in a Hermes bag, especially a Birkin, will give a good return. Most important, it will also please your wife enormously. The caveat is that whether you can afford it.