Hermes Birkin bag sells for $US298,000

Is an Hermès Birkin a handbag or an investment? A rare fire-engine-red Birkin has sold for a record $389,000.

A rare Hermès Birkin handbag with diamonds on its hardware has sold for $US298,000 ($389,000), breaking the previous record for a resold handbag of $222,000.

The bag features 18K white gold and diamond hardware. Never used, the crocodile bag, in a fire-engine colour that Hermès calls “braise,” had been kept in store-bought condition by two former owners, each of whom bought it with profit in mind.

This raises an interesting question. Is the Birkin a handbag or an investment? Most handbags are like cars: They devalue rapidly once purchased. Birkins, and some other Hermès bags, like the Kelly, can be the rare exception if they’re well-maintained; the previous record-breaking bag was also a Birkin.

The bag was an investment for Jeffrey Berk, the founder of Boca Raton, Florida-based reseller Privé Porter. He sold it via a personal representative of the buyer and says he doesn’t know who the buyer is. “Will it go into that warehouse full of crates like in Indiana Jones? I don’t know,” says Mr. Berk.

In 2008, the bag was sold for $US160,000 at an Hermès boutique in New York City, according to the original sales receipt. The dealer declines to say how much he paid for the bag, arguing that Christie’s didn’t divulge the profit of the previous record-breaker.

A reseller specialising in Hermès handbags, Privé Porter is on track to sell $24 million of the purses this year, Mr Berk says. About 90 per cent of his inventory is sold via Instagram, and 60 per cent goes to Asian and Middle Eastern customers.

There is a reason he deals almost exclusively in Hermès. It is the brand most likely to command investment-worthy obsessions. In his experience, “no one is kicking down the door for Chanel,” Mr Berk says.

Road to a record

1. A rare Hermès 35cm Birkin shiny porosus crocodile bag in a fire-engine red called ‘braise’ is manufactured in France in 2008. Its hardware features 10.08 carats of round brilliant-cut diamonds in 171 grams of 18K white gold.

2. The bag is sold at a Hermès store in New York City in 2008 to a private American collector for $US160,000.

3. Jeffrey Berk acquires the never-carried bag in May 2015 from that customer in ‘store fresh’ condition. He sets the sale price at $US360,000.

4. In September 2015, the bag is shown by appointment aboard a yacht during the Fort Lauderdale International Boat Show.

5. After two earlier deals fall through, the bag sells in March 2016 for $US298,000, beating the former record of $US222,000, set at a Christie’s auction in June 2015. (The Christie’s price also included commissions to the auction house.)

6. A few days later, the Birkin is delivered by Brinks armoured air transport to a Los Angeles buyer’s representative, who describes his client as an American billionaire.