Traditionally, the most popular investments have been stocks or real estate. However, over the last several years, the volatile markets have made alternative investment options increasingly popular. Alternative investments are traditional assets that are not in the conventional equity, income or cash categories — such as fine art, luxury watches, cars, wine, or designer handbags.
Luxury handbags are examples of alternative investments, and a great way to diversify one’s investment portfolio. Many ultra-luxury handbags, like classic Chanel flaps and Hermès Birkin handbags, have proven to appreciate significantly over time. Hermès Birkin and Kelly bags are particularly good investment pieces.
Last year, a Credit Suisse report found that handbag sales were up 60 percent, outperforming the art market, and handbag sales were up 92 percent over the past decade. The report also predicted that handbags would be the best collectible over the next year, as they are the least volatile of any asset class and have proven to be good hedges against inflation.
In fact, according to Art Market Research (AMR), handbags now outperform art, classic cars and rare whiskies in terms of investment potential. Some bags, from the likes of Hermès, Chanel and Louis Vuitton, have even experienced a valuation spike of an average of 83 percent in the last ten years.
The appreciation in the value of handbags is a result of demand for these pieces significantly greater than availability. The global market for designer handbags was valued at $72 billion in 2022, and is predicted to reach $100 billion by 2027. The Business of Fashion also published a study in July 2022 that said 40 percent of American consumers had purchased or planned to buy a designer handbag. Many of these consumers want to buy the ultra-luxury pieces from a few brands such as Hermes, Chanel, Louis Vuitton, Prada and Goyard.
The most valuable of these are the Hermes “holy grail” bags – Birkins, Kellys and Constances and the Chanel classic flap bags. These bags are placed on quotas and often carry other purchase requirements. Hermes typically expects a client to buy at least 100 percent of the value of the bag in other non-leather goods. The 1:1 ratio increases based on the desirability of the bag.
About a decade ago, the luxury auction houses began auctioning off designer bags as collectibles. This strengthened the reality that these ultra luxury bags are assets that appreciate over time. Christie’s, Sotheby’s and other auction houses hold handbag auctions two or three times a year in different parts of the world, and much of the appreciation data is derived from them. However, auction houses sell only what their clients consign and it is not always investment grade.
With luxury handbags regarded as “collectibles,” the secondary market exploded. However, the super fakes became an issue. Websites like Ebay, Vestiaire and The Real Real claim to authenticate, but most of these large sites have come under fire for selling fake luxury items.
As with any collectible or asset, it is best to work with a dealer specializing in that asset. They tend to have the best merchandise selection due to their vast network and their ability to purchase outright, as well as consign. Since they only deal in a specific category, they have a level of expertise unparalleled by the large websites and auction houses. They know what is authentic and what is counterfeit. And, given that they are buying and selling every day, they know what are the most in demand pieces and what are fair market prices. This is true for dealers in most collectible categories – watches, wines, cars and designer handbags.
To choose the right bag that is likely to retain or increase in value, it is important to work with a team that has built a strong reputation of advising clients on handbag selection. The team at New York City-based retailer Madison Avenue Couture are considered by their clients as the most outstanding advisors in selecting bags they can wear today and realize value tomorrow.
Madison Avenue Couture is the United States’ most trusted online dealer and reseller for authentic new collectible and rare Hermès and Chanel items in the secondary market. Their client base includes A-list celebrities, socialites, stylists and more. In addition to rare and collectible Hermes and Chanel pieces, Madison carries vintage Hermès and Chanel handbags, Goyard bags, and Hermès and Chanel jewelry and accessories.
In addition to its website that features its vast array of merchandise, all in stock, Madison Avenue Couture has a by-appointment showroom in which bags can be viewed and advice can be given. To learn more about the top dealer of holy grail Hermes and Chanel, visit the website here.
Written by: Darby Jones