Hermes, Chanel handbags are stylish investments

Luxury handbags from Hermes and other brands are among the best places to put your money.

A Hermes Matte White Himalaya Niloticus Crocodile Diamond Birkin with 18K gold and diamond hardware — one of the most valuable handbags in the world.

Grace Kelly’s namesake Hermes 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 £26m last year, and it is expected to keep 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 says the luxury handbag industry is going through a “structural shift”.

“A strong aftermarket legitimises a product’s price on the primary market,” the ­analysts say. “Hence brands have been willing to co-operate and share ­expertise.”

A Hermes Himalaya bag that originally was 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, Hermes 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 Hermes,” the analysts write.

Christie’s controls the supply of up to half of auctioned bags. About a third of the market is in the US but Asia is by far the ­biggest market, making up 46 per cent of Christie’s handbag business last year.

The Times