Among investment markets, luxury has accounted for a large percentage of the most profitable in recent decades, with investment items such as artwork, classic cars and exclusive whisky, but over time, the luxury handbags of big fashion houses made us work online and get paid and has become the most profitable when it comes to investing in luxury.
During the 2020 COVID-19 pandemic, investment in these items increased considerably after a Birkin Himalaya bag from the French Hermès atelier was auctioned for $437,000 at Christie’s Hong Kong. Since then, the already growing investment market has become more significant, with more and more people acquiring and reselling these exclusive accessories in the second-hand market and auctions.
In the last 10 years, luxury bags were among the 7 luxury investments included in the Knight Frank Index, with an investment rate of 108% over this decade. However, in 2020, the bags led the investment in luxury, reaching an investment of 17% in just one year.
In 2021, the investment in luxury bags increased by 4% more and remains in an upward line. Experts estimate that, taking into account the last decade and the increase in 2020, the investment in luxury accessories will continue to scale and report greater profitability. This growing brand in recent years is attributed to the change in the social behavior of consumers.
Anne Tan, Chief Operating Officer of HuntStreet, says the stigma of buying second-hand hand bags in Asia is being left behind, and that consumers are now more aware of the value and how they can profit from their investments in the future.
But, why do handbags become such fruitful investment objects? Sebastian Duthy, CEO of Art Market Research explains that it is due to two determining factors, firstly, to its exclusivity, especially if it is exceptional bags, related to the history of the brands or important events, and secondly to the condition in which the accessory is found, that’s key.
Anne Tan also mentions that the increase in investment in luxury bags is related to pop culture and the different trends observed in social media such as Tik Tok and Instagram, and in the particular case of Asia there has been a lot of influence of the K-Pop culture for the desire of consumers to acquire luxury brand bags, and this consequently increases the demand and prices of the stores.
The reason why the second-hand market for luxury bags has become more important, is related to the high demand for accessories created by their exclusivity and at the same time by the rules of certain fashion houses for the sale of their bags, especially the French atelier Hermès, which according to Andrew Shirley, editor of Wealth Report Knight Frank, implements waiting lists for the purchase of their exclusive bags, so not any customer can easily acquire them, this makes the interest turn to the resale market.
This has prompted customers to view their purchases as a major investment, which they can then leverage and resell in the future for a price higher than the one they obtained. Anne Tan explains that the price of bags in stores increases every year, which means that if a bag is purchased and kept in good condition for a few years, it will retain its value or can double it if it is resold in the second-hand market.
Sebastian Duthy explains that not every luxury handbag can retain its value and double it in a resale market, but those who are able to do so, such as the Hermès and Chanel handbags, must be kept in a pristine condition to qualify for value increase. Anne Tan adds that handbags sold in second-hand markets usually come in their original box and with purchase receipts that prove not only their intact state, but also their authenticity.
Finally, the head of operations of HuntStreet ensures that not all luxury investments will result in a positive return on resale, and that’s why it is important that when buying you do not have the purpose of speculation, but that you get enough information and advice to really know how much you can get from a luxury resale.
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