With handbags commanding exceptional prices at auction, designer pieces are becoming sound financial investments. Christie’s specialist Caitlin Donovan explains what to keep in mind when looking for investment-grade arm candy
In May 2017, a matte white Himalaya Niloticus crocodile diamond Birkin 30 sold for HK$2,940,000 — equivalent to around $375,000, and well over its pre-sale estimate — at Christie’s in Hong Kong, making it the most expensive bag ever sold at auction. That sale underscored (in case anyone was still wondering) the strength of the secondary market for luxury handbags, particularly those made by powerhouses like Hermès.
The high prices also reflect a growing consideration of luxury handbags as smart investment pieces. According to a recent study, average annual returns for a Birkin have outpaced both the S&P 500 and gold over the past 35 years. But as specialist Caitlin Donovan explains, not all bags are created equal, and having a collecting strategy is key.
Tell us about the increasing appreciation of bags as good investments. When did this start to catch on?
Caitlin Donovan: ‘I think people started looking at their handbags as investment pieces around the time of the recession, so 2008 to 2009. In the United States, we noticed that clients who were buying these luxury items wanted to know that the pieces they were buying were going to hold their value over time. It wasn’t frivolous spending; they were really thinking about every purchase they made. That’s when we started seeing the rise of handbags on the secondary market.’
Who are the primary buyers in this category?
CD: ‘I think it’s quite significant that handbags are really the only female collecting category in the auction world. Men have been collecting cars and wine and watches and all of these other luxury categories for years, but women have never had a category of their own. Even with jewellery, while women wear the pieces, men are often the ones who buy them. But here we had people being a little bit smarter about their luxury investing and women coming into their own and taking on a collecting category for the first time. I think that combination really led to the boom in the secondary market for handbags.’
What are the brands to go for?
CD: ‘Go for top performers. We’ve consistently had success with Hermès and Chanel — they are coveted and collectible on the primary market, which leads to bags that are valuable on the secondary market. If you look at brands whose bags are hard to procure on the primary market, those will be the most valuable over time.’
What other factors should a collector keep in mind?
CD: ‘Keep quality top of the list. Whatever the brand, a key factor to consider is impeccable craftsmanship. It might sound obvious, but a well-made piece will stand the test of time, while one that is less well made will fall apart and be worth less on the secondary market years later.’
Should you stick to the classics?
CD: ‘There will always be a market for a classic bag, because entry-level buyers in particular are looking for an iconic piece. Not to mention that a classic bag is timeless and can be worn year-round. At Chanel, go for the classic flap bag, which will always be valuable on the primary and secondary market. With Hermès, the Birkin, Kelly and Constance will always do well when reselling.
‘At Louis Vuitton, there is a clear delineation between the classic collection and the seasonal, limited pieces. In terms of long-term investment, its classic pieces —particularly those with the Vuitton monogram and from its iconic travel collection — have held their value for decades, and will continue to do so well into the future. Its bags are also very safe investments because the quality is at a very high level, and the pieces are functional.
‘At Fendi, the Peekaboo — its most famous style today — can be a very safe investment. For Dior, the go-to piece would be the Lady Dior. It’s the type of bag that in a classic colour and material will hold its value for a lifetime, and which will be equally loved when passed to the next generation.’
Is there value in taking a risk?
CD: ‘It’s true that a particularly bold colour will make a bag more seasonal, or indicate when the bag was produced. That said, I also always advise clients to look for the one-of-a-kind pieces. It’s often the really special pieces, the limited-edition runs, which end up making the astronomical, record-breaking prices. Those are the pieces that everyone goes to the secondary market for.
‘With Chanel, for example, it’s the runway pieces that often end up doing very well at auction because they are produced in limited runs to each store. They are iconic and coveted, and clients gravitate towards them on the secondary market because they can’t get them in stores.
‘The Hermès Ghillies Birkin that we sold in June 2017 for $81,250 was a special limited-edition piece. It had the iconic Ghillies brocade; two types of skin finishes; and came in a beautiful blue colvert. All of those factors made the bag incredibly collectible, and resulted in it selling at a far higher price than it would probably have retailed for on the primary market. That’s an example of a limited edition adding value.
‘Generally, if you’re looking to invest in something that could see its value increase over time, go for the exotic, limited-edition version of classic models such as the Lady Dior or the Peekaboo.’
If you could advise a client to invest in only one bag, what would it be?
CD: ‘I would say go for a classic style, which we know will hold its value. Right now I would tell a client to go for a black Hermès Kelly. It’s tried and true, has stood the test of time, and only continues to rise on the primary and secondary markets.’