Your designer handbag could fetch you better returns than your property
Aside from being highly desirable fashion accessories, luxury handbags are fast emerging as an investment class in their own right. But which designer labels are the most valuable, and what should you look out for?
On the surface, splashing out thousands of dollars on a designer handbag seems like a frivolous purchase. But discerning bag collectors will know that a well-chosen piece can potentially last for years when looked after properly, even becoming heirlooms that are passed down from one generation to another.
Beyond sentimental value, it has also emerged that a good choice of bag can lead to excellent returns in the long run. According to the Knight Frank Luxury Index, collectable handbags rose in value by 13 per cent over the 12 months to end-2019, outperforming other alternative investment categories including art, watches, rare whisky, jewellery and cars.
Even real estate can't quite hold a candle. By comparison, Singapore private property prices rose 2.7 per cent in 2019, according to data from the Urban Redevelopment Authority of Singapore (URA).
This was the first year that collectable handbags was included in the Knight Frank Luxury Index. Data was provided by London-based Art Market Research (AMR), and focused specifically on collectable handbags made by Hermes. The index revealed that prices have more than doubled in value over a 10-year period, growing by 108 per cent.
“It’s only been possible to create an index on handbags now because of the frequency with which many iconic pieces are coming to auction today. Although bags made by other luxury brands like Chanel and Louis Vuitton are also highly collectable, it is those made by Hermes that attract the highest prices and are considered the most desirable,” said Sebastian Duthy, Director of Art Market Research.
According to British auction house Christie’s, the luxury handbag industry has remained robust despite global economic headwinds in recent years, experiencing continued growth with demand at an all-time high.
“This is more apparent for rare and one-of-a-kind pieces as buyers are now seeing certain luxury handbags as long-term collectables with sentimental value, rather than everyday accessories or exclusive social status ‘arm candy’,” said Winsy Tsang, Head of Sale, Handbags & Accessories, at Christie’s Asia Pacific.
The rise in value is also a result of brands increasing their prices every year, culminating in an increase in value in the pre-loved market.
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“Hermes increased the prices of some of their handbags by 11 per cent from 2018 to 2019, and Chanel has increased the price of their classic flap bags by more than 50 per cent in the past 10 years,” revealed Meg Randall, Head of the Designer Handbag and Fashion Department at Bonhams, a privately-owned British auction house.
THE MOST VALUABLE LABELS
So which handbags are really worth the investment? Across the three auction houses that CNA Luxury spoke to – Christie’s, Sotheby’s and Bonhams – it was unanimously agreed that Hermes handbags are the most valuable.
“The idea of value comes from a basic concept: The rarer, the more valuable. Hermes bags are the most difficult to get hold of, so they are the most coveted of all,” shared Sara Miconi, Specialist at Sotheby’s.
“Top quality handbags with excellent craftsmanship, one-of-a-kind, custom-made, rare and exceptional, limited pieces are all considered collectables with great value. However, hands-down, Hermes continues to be the brand that reigns supreme. To collectors, the heritage, exquisite craftsmanship and quality assurance associated with the name is the ultimate investment hook,” said Tsang.
Bonhams named three bags that hold their value best – the Hermes Kelly (launched in the early 20th century), the Hermes Birkin (launched in 1984) and the Chanel Classic 2.55 Flap bag (launched in 1955). “These bags have been popular for generations, meaning that they have never gone out of fashion. These are also the bags that enjoy the biggest price hikes in the primary market, meaning that they keep their value the best,” said Randall.
“The idea of value comes from a basic concept: The rarer, the more valuable. Hermes bags are the most difficult to get hold of, so they are the most coveted of all." – Sara Miconi
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But it’s the Hermes Himalaya collection that has been smashing auction records. Whether it’s a Birkin or Kelly, Hermes Himalaya handbags are considered the holy grail of luxury bags. Extremely rare and produced only in limited numbers, the Hermes Himalaya got its name from its unique colouration. The handbags are made of Niloticus crocodile skin, and the material undergoes a painstaking process to turn its grey shade to a pearly white colour, akin to the snow-capped mountains of the Himalayas.
At a Christie’s auction in 2017, a matte white Himalaya Birkin with diamond hardware sold for HK$2.98 million (S$544,378), almost doubling its low estimate of HK$1.5 million. The bag currently holds the world record for most expensive bag ever sold at an auction.
More recently, at a Christie’s auction in May 2019, a matte white Himalaya Birkin with white gold and diamond hardware sold for HK$2 million, doubling its original estimate of HK$1 million. In November 2019, a matte white Himalaya Kelly with palladium hardware sold for HK$1.875 million, tripling its low estimate of HK$600,000. This was a new auction record for a non-diamond Hermes Himalaya handbag.
With designer handbags commanding extraordinary prices at auctions, what should you keep in mind when looking for investment-grade arm candy?
“For entry-level buyers, sticking to the classics is a safe choice. The classic black Chanel flap bag and Hermes Birkin or Kelly are timeless examples. Classic bags with a functional yet iconic design have always been a favourite in the primary and secondary market,” shared Tsang.
“For more seasoned collectors, go for masterpieces or limited editions. These bags are hard to procure on the primary market and will only become more valuable over time. Look for one of a kind pieces – whether custom made or with exotic finishes and bold colouring – as these special items have historically garnered record-breaking prices.”
“For entry-level buyers, sticking to the classics is a safe choice. The classic black Chanel flap bag and Hermes Birkin or Kelly are timeless examples. Classic bags with a functional yet iconic design have always been a favourite in the primary and secondary market." – Winsy Tsang
“Do also consider building a collection tailored to your own personal lifestyle,” Miconi advised. “Start with the classics that you will need daily, and that match your lifestyle and colour preferences. At a later stage, start adding more particular bags, such as evening bags, and then more unique pieces that will be the cherry on top of the collection.”
And if trends are anything to go by, micro bags could also possibly fetch higher prices at auctions, according to Bonhams. “The current micro bag trend – think Hermes Kelly 15s, Birkin 25s, Jacquemus Le Chiquito bags – means that smaller bags are fetching big prices at auctions, and often sell for far more than standard size bags such as the Birkin 35 and Kelly 32. That said, fashion often goes in swings and roundabouts, so larger bags such as the Birkin 40 and Birkin HAC travel bags could soon be the most popular at auction,” said Randall.