Asset or accessory? Luxury handbags spark growing interest

Three years ago, a London-based finance co-ordinator who works for a corporate company bought her first Hermès handbag. She now owns four. Having spent a little under £100,000, she plans to keep the handbags for at least five years and expects between a 40 and 50 per cent return on investment once she sells them.

“Coming from a finance background you can on your own see how profitable the market is and the returns you can get,” she tells the Financial Times. “It wasn’t really something that I had in mind, it was something that I was introduced to and I got to know slowly. Eventually I studied the market and saw that it is actually a good way to invest.”

The term “investment piece” is commonly used in fashion to describe pieces that are worth splurging on because of their timelessness. For a growing number of wealthy individuals, the expression has taken a much more literal connotation when referring to handbags.

Interest in handbags as collectibles has grown hand in hand with prices in the primary market, which have skyrocketed

“This asset class is becoming more prevalent for our clients,” says Hari Hundle, managing partner at Mayfair’s boutique wealth advisory firm Hundle, which manages about $1bn of assets from London. “We are seeing a huge growth in special unique assets. Their value is de-correlated to the market, and the market has been quite volatile, so this is a useful investment class. It started as a point of passion and luxury, but it has evolved.”

It’s a trend that has also been picked up by luxury research group Agility, which compiles studies on the spending habits of the wealthy. “A lot of high net worth individuals have passion investments, which would consist of a couple of things, such as watches and jewellery,” says managing director and co-founder Amrita Banta. “The handbags category has definitely started playing a part in that.”

Hundle says it is women and younger clients who tend to have an interest in the luxury handbag category, but only about 10 to 20 per cent take that interest to an investment level. Those clients, however, typically still invest more in established categories such as art or classic cars. 

“If you were to put all luxury acquisitions and investments in an asset class, art and cars would be 80 per cent of what they are buying,” Hundle says. “The art market and the car market are more liquid, there are more buyers and there is more variety of supply. For us, the handbag market has three suppliers: Hermès, Chanel and Louis Vuitton.”

Interest in handbags as collectibles has grown hand in hand with prices in the primary market, which have skyrocketed. In the past 10 years, a medium Chanel classic flap bag has more than doubled in price to $10,200. HSBC research shows that prices of the hero products of the 21 luxury brands they track increased by an average of 3 per cent in the three months between October 2022 and January 2023. A 2022 report from Credit Suisse says Chanel handbags, as well as traditional Chinese works of art and wristwatches, offer the best inflation protection. Investors are drawn to the handbag category for these reasons, as well as the opportunity to invest in objects that they actually enjoy.

“Since 2012, we have continued to see an incredible growing interest in the category, as well as increasing sales,” Rachel Koffsky, international head of handbags and accessories at Christie’s, writes via email. “Today, most of our clients are balancing passion and love for the object with making sound financial decisions when it comes to making their acquisitions. Some clients make six-figure acquisitions in order to wear their bag every day, some to wear once a year, and some to display in a custom case as a wearable work of art.”

At the auction house, global sales of handbags totalled $32.8mn in 2022, the highest value ever achieved by the department since it launched standalone handbag sales in 2012. Christie’s Asia-Pacific division is at present offering an in-person Collecting Handbags as an Alternative Asset course for HK$3,800 (£390).

Clients will wear them, maybe for one night, but always knowing that they are wearing a financial asset

The London-based finance co-ordinator who spoke to the FT was advised in her purchases by BagsbyAppointment, a company founded in 2019 by Farida Patel, who after working in private banking for more than 10 years started to source and trade luxury handbags for private clients. About 100 of its clients, or a fifth of the total, have built handbag portfolios so far, bringing to the service an average of £500,000 to £1mn, although some clients start with smaller sums. “We advise on what to buy, when to buy it and how long they should keep the items for,” says head of strategy and growth Serena Piazzolla. (Patel declined to speak to the FT, citing a wish to keep a low profile.)

Much like the art market, the collectible handbag market is dependent on experts’ advice on what to buy. Sebastian Duthy, director of Art Market Research, a London-based research company that focuses on investments in fine art and luxury collectibles, warns that not all handbags, even from the Hermès, Chanel and Louis Vuitton triad, increase in value over time.

“You got to do your homework and you got to be connected with the information circle,” says Duthy. “Something very rare, and as long as it is in pristine conditions, will go up in value.” To preserve conditions, companies such as BagsbyAppointment offer a storage service. “Keeping the bags in pristine conditions is the number one priority when you make an investment,” says Piazzolla. “Occasionally [clients] will wear them, maybe for one night, but always knowing that what they are wearing is a financial asset.” Limited editions are considered the safer bet. The Hermès Kelly Cut So Black with feathers, released in 2010 as part of then creative director Jean Paul Gaultier’s So Black collection, retailed for about £10,000. One was recently sold by Christie’s for €277,200.

“What we want to explain to wealth managers and family offices is that those collectibles can represent an important portion of the wealth of their clients and need to be managed properly,” says Adriano Picinati di Torcello, director at Deloitte Luxembourg, who also warns that “there is no guarantee” for capital gains.

“When we look at the component of ‘investment’ we need to be very careful about the fashion trends and taste, which as we know can evolve over time,” he says. “Condition is extremely important and also provenance. Let’s be very selective, very prudent about conditions and provenance and [authenticity] documentation.”

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