The Times
20th February 2018
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“A Classic Hermès is the place to stash cash”
Hermes bags such as the Himalaya have offered better returns than some hedge funds. (Mario Anzuoni/Reuters)
Grace Kelly’s namesake Hermès bag and the Chanel classic flap bag may have engendered long waiting lists, but handbags are probably not most people’s idea of a good investment.
However, one investment bank says they are among the best places to put your money. A booming market for luxury bags means that some owners could be sitting on annual returns of more than 30 per cent, according to Jefferies, the Wall Street bank. Some handbags outperform even the most successful hedge fund.
The market for used luxury handbags has grown from £5 million seven years ago to more than £26 million last year and is expected to keep on growing. Some designs bought new less than a decade ago sell today for more than five times their original price.
Recounting a meeting this month with Rachel Koffsky, a Christie’s specialist on handbags, Jefferies said that the luxury handbag industry was going through a “structural shift”.
“A strong aftermarket legitimises a product’s price on the primary market”, the analysts said. “Hence brands have been willing to co-operate and share expertise.”
A Hermès Himalaya that was originally sold for €29,600 in 2010 was auctioned by Christie’s six years later for €157,500.
Christie’s data shows that while most bags from Chanel, Louis Vuitton and Gucci will lose value, Hermès products often rise. However, this is expected to change.
“Luxury brands have increasingly been able to raise the prices of their handbags and use more premium materials, so the top of the market is likely to become less dominated by Hermès,” the analysts write.
Christie’s controls the supply of up to half of the auctioned bags. About a third of the market is in the United States but Asia is by far the biggest market, making up 46 per cent of Christie’s handbag business in 2017.
Harry Wilson (The Times, February 2018)
