Hermès Bags as an Investment: A Beginner's Guide
So, you’ve seen a few articles lately about how handbags are breaking records on the auction block, the market is going up, and some even say Birkin's are a better investment than gold, and in recent years have beaten the average of the S&P 500. But how can you get in on this? Is it really a safe assumption that you can take a chunk of cash, buy a few bags, and resell them a few years later for a healthy profit? In some cases yes, but not all Birkins are created equal. In this regard, the Handbag market is closer to the stock market; trends change, and while the Birkin and Kelly are timeless, different sizes and colors fluctuate in popularity as tastes evolve. Until five years ago, 35cm Birkins dominated the secondary market, now the 20cm Kelly is the most in demand. With all of this to consider, entering the Handbag market purely with the purpose of maximizing your investment may seem daunting, a gamble even, and it is. Huge amounts of money can be made and lost by accident, and the preferences of buyers can change on a whim. The most fulfilling way to participate is simply to buy what you love, Handbags of this caliber will always be a collectible over an asset; two people’s emotions in an auction room can set previously unthinkable records and move the market by leaps and bounds. But if you have extra ten, or fifty, or a hundred thousand dollars laying around and you’re looking to put it into handbags, here are my tips for investing that cash as safely as possible:
$10,000 Range
With $10,000, your best bet is to find a Birkin or Kelly that is vintage, in good condition with no major issues. You’re going to want to look for something in an unusual material, or with unusual hardware. These bags that have something slightly different about them are poised to go up in value much faster than an otherwise unremarkable leather bag. Good variations to watch for in this price range are bags with Guilloche hardware, canvas bags with interesting patterns (I would avoid the solid Toile, Officer canvas, and Crinoline, these are generally less popular and less valuable). Options you’re likely find are Mosaic, Potamos, and Jumping patterned canvases. If you see a Doblis Suede bag at this price, buy it, but only if it is all suede, avoid Grizzly bags which have leather detailing at the top, and avoid Ghillies bags with suede panels, as they are not very attractive or popular.
Another smart purchase you may be able to find for ten grand is a vintage 20cm Kelly, but be sure to find one with the round top-handle, rather than just the attached shoulder strap. Most of these are done in black calf box leather with gold hardware, so anything besides that is very unusual and worth grabbing. Calf Box leather is one of the easiest to refurbish, so don’t worry too much about scuffs or rubbing.
The best thing you could potentially get offered these days at Hermes for under $10K would be one of the new 20cm Mini Kelly II’s, which retail for about $7,000 USD, but as of this summer average at auction over $17,000 USD. These are extremely difficult to find in the stores and word is production has been further limited, so don’t hold your breath. If you do manage to find one within this budget on the market, though, that's still a good price to buy.
$50,000 Range
With $50,000 to invest, you have a few options: you can go all in on one great rare piece, you could go for two rare vintage pieces in the $20K range that have strong followings and already started climbing in value, you could seek out five of the bags from my previous recommendation, or you could pick up three or four regular pristine bags from the store and just sit on them for a few years and hope the market standard annual 10% hold strong.
I suggest splitting your pot and finding two bags that are legitimate rarities with a strong desirability factor. The two materials I’d strongly consider placing at the top of your wishlist are Doblis Suede and Lizard. These days you can still sometimes find 25cm Lizard Birkins and Kellys selling in the $20,000-$30,000 range, though the top of the market for these pieces has recently breached the $100,000 mark. All of the top results are achieved by Ombre Lizard bags which you’re very unlikely to find for under $50K, but examples in other colors have recently been poking above fifty thousand.
The rest of your budget I would put toward a Doblis Suede bag, but again, make sure it is all suede, handles and everything. These bags were born to wear, and the suede develops a serious patina with use. Suede Birkins and Kellys are so rare, any color is a good choice, so if you see one for under $25,000, I suggest giving it careful consideration.
$100,000 Range
If you’re looking to put something closer to a hundred grand into the bag market, basically you have the buying potential to buy any bag you might want (except for a diamond Hima). The bags that live around the entrance to the size figure club these days are growing in number. Solid color diamond Birkins and Kellys have steadily sold in this range on the auction market for nearly a decade, and don’t show any signs of climbing, so while a diamond Birkin may be a very flashy way to spend $100,000 (and the only type of Birkin or Kelly you can always find for well under retail on the market - the current in store price is hard to pin down but certainly over a quarter million for any size), a diamond bag will serve more as a lock box for you money, and is unlikely to make you any substantial profits.
Your safest bet with $100K would be to try and find a nice white Himalayan Birkin or Kelly, any size will do as long as the condition is good your money will be well spent. You may even be able to find the White Hima’s rarer cousin the Gris Cendre Hima at this price. Auction results over the last decade have shown us all Himalayan Birkins and Kellys are steady climbers, and with more and more leaving the auction block with prices topping $150,000, and sometime $200,000, its unlikely you’ll be able to find these bags around that six figure entrance for much longer.
Of course, if you’re uncomfortable putting all of your money into one handbag, you can cobble together a very smart investment worthy collection, a portfolio if you will, with any combination of the bags suggested here. Be sure you’re only buying from a trusted seller, and know that if you’re considering a rare bag, a few minutes searching for auction results of similar examples is time well spent. Most dealers have a little room to negotiate prices, but don't be insulting with a low offer, everyone knows this market is moving up, so things will work out best when everyone profits. Strong relationships with connected dealers can yield incredible rarities, but if you’re buying as an investment rather than for pure joy, take the time to know what you’re buying and understand it’s history in the market. The smartest investors in this market can multiply their investments many times over, but it takes a well honed eye to spot the hidden gems that will move the fastest. Everything I’ve suggested here should be easily found with a maximum few weeks of searching.
This article is for informational purposes only and is not intended for personal financial advice. There is an inherent risk involved with financial decisions, and we are not liable for personal investment or financial decisions.
Why Hermes Bags Might Be a Good Investment
Hermes bags, particularly the Birkin and Kelly models, have consistently proven excellent investments. Several factors contribute to their reputation as sound financial assets:
Craftsmanship and Quality
Hermes bags are renowned for their impeccable craftsmanship. Each bag is handmade by a single artisan using the traditional saddle stitching technique, ensuring durability and precision.
The materials used, such as Togo, Epsom, and Clemence leathers, as well as exotic skins like crocodile, ostrich, and lizard, are of the highest quality. This meticulous attention to detail and the use of premium materials result in a product that looks exquisite and lasts generations, making it a worthy investment.
Rarity and Exclusivity
One key factor driving the investment value of Hermes bags is their scarcity. Hermes employs a strict quota system, limiting the number of bags produced yearly.
Customers often face long waiting lists and must build a significant purchase history with the brand before acquiring a Birkin or Kelly bag. This controlled distribution creates an aura of exclusivity and drives demand, ensuring that these bags remain highly coveted.
Consistent Appreciation of Value
Historically, Hermes bags have shown a steady increase in value. For instance, the Birkin bag has seen an average annual increase in price, often outperforming traditional investments such as stocks and real estate.
Even during economic downturns, the value of Hermes bags has remained resilient. The consistent price appreciation is driven by the brand's strategic pricing policies and the enduring appeal of these luxury items.
Status Symbol and Cultural Significance
Owning a Hermes bag is a symbol of status and prestige. The bags are often associated with wealth, sophistication, and exclusivity. This cultural significance enhances their desirability and contributes to their investment value. Celebrities, socialites, and fashion influencers frequently showcase their Hermes bags, further elevating the brand's status and driving demand.
Diversification of Investment Portfolio
In times of market volatility, tangible assets like luxury handbags can provide a hedge against traditional investments. Hermes bags, with their proven track record of value retention and appreciation, offer a unique opportunity for investors to diversify their portfolios. Unlike stocks or bonds, luxury handbags are less susceptible to market fluctuations, providing a stable and profitable investment option.
Secondary Market Dynamics
The secondary market for Hermes bags is robust, with many collectors and fashion enthusiasts willing to pay a premium for pre-owned items. Auction houses regularly feature Hermes bags, often fetching prices well above their original retail value. The strong demand in the secondary market ensures that investors can liquidate their assets if needed, often at a significant profit.
Longevity and Timelessness
Hermes bags are designed to be timeless. Their classic styles, such as the Birkin and Kelly, have remained fashionable for decades, transcending fleeting fashion trends. This timeless appeal ensures that the bags retain value over the long term, making them reliable investment pieces.
Factors Affecting the Value of Hermes Bags
Several key factors influence the value of Hermes bags, particularly the coveted Birkin and Kelly models. Understanding these factors can help investors and collectors make informed decisions when purchasing these luxury items.
Materials and Craftsmanship
The quality of materials and craftsmanship is paramount in determining the value of Hermes bags. Hermes uses only the finest leathers and exotic skins, such as Togo, Epsom, Clemence, crocodile, ostrich, and lizard.
The meticulous hand-stitching technique, known as saddle stitching, is performed by skilled artisans and contributes significantly to the bag’s durability and overall value. Using gold or palladium hardware further enhances the bag's luxury appeal.
Colors and Finishes
The color and finish of a Hermes bag play a crucial role in its market value. Neutral colors like black, gold, and etoupe are highly sought for their timeless appeal and versatility, often commanding higher prices.
On the other hand, seasonal and limited-edition colors can also be valuable, particularly if they become rare over time. The finish of the leather, such as matte or shiny, and the type of hardware, whether gold or palladium, also affect the bag’s desirability and value.
Condition and Provenance
The condition of a Hermes bag is a critical factor in determining its resale value. Well-maintained bags with minimal signs of wear and those that come with their original packaging and authenticity documents fetch higher prices in the secondary market.
Provenance, or the bag’s ownership history, can also influence its value. Bags previously owned by celebrities or notable personalities often carry a premium.
Market Demand and Trends
Market demand and prevailing trends significantly impact the value of Hermes bags. The Birkin and Kelly models remain in high demand due to their iconic status and limited availability. However, market trends can influence the popularity of specific sizes and styles.
For example, the Mini Kelly 20 and Birkin 25 have become more popular in recent years. Understanding these trends helps investors anticipate which models are likely to appreciate in value.
Rarity and Limited Editions
The rarity of a Hermes bag is a substantial factor in its investment potential. Limited edition and discontinued models and bags made from exotic skins are often more valuable due to their scarcity. Hermes’s strict production quotas and controlled distribution enhance the exclusivity and desirability of these bags, driving up their market value.
Economic Factors
Broader economic factors also affect the value of Hermes bags. During economic downturns, luxury goods, including Hermes bags, can act as stable investment assets, often outperforming traditional investments. Conversely, during economic prosperity, the demand for luxury items can increase, further boosting their value.
Secondary Market Dynamics
The dynamics of the secondary market, including auction results and resale platforms, influence the value of Hermes bags. Bags that achieve high prices at auctions or on reputable resale sites can set benchmarks for future transactions.
The liquidity of the secondary market, where collectors can quickly buy or sell Hermes bags, also supports their status as valuable investment pieces.
Risks and Considerations
Investing in Hermes bags, while often lucrative, is not without its risks and considerations. Potential investors should be aware of several factors that could impact the value and liquidity of their investments.
Market Fluctuations
While Hermes bags have a history of appreciating in value, market conditions can fluctuate. Economic downturns or changes in consumer preferences can temporarily affect the demand and resale value of luxury handbags. Investors should consider the broader economic context and be prepared for potential short-term volatility.
Counterfeit Products
Hermes bags' high value and desirability make them a prime target for counterfeiters. The market is flooded with fake bags that closely mimic the originals, making it challenging to distinguish genuine items.
Investors should ensure they purchase from reputable sources and seek expert authentication to avoid falling victim to counterfeit products, which hold no investment value.
Condition and Maintenance
The condition of a Hermes bag significantly impacts its resale value. Bags showing wear, damage, or improper storage will fetch lower prices.
Proper maintenance, including storing the bag in its original dust cover and avoiding excessive use, is essential to preserve its value. Investors should also consider the costs associated with professional cleaning and repairs.
Changing Trends
Fashion trends can be fickle, and what is highly coveted today might lose its appeal tomorrow. While classic models like the Birkin and Kelly have shown enduring popularity, other styles may not fare as well. Investors should focus on timeless designs and be cautious of purchasing bags based solely on current trends.
Limited Liquidity
Unlike stocks or bonds, luxury handbags are not as liquid and cannot always be quickly sold for cash. Finding a buyer willing to pay a premium can take time, especially for high-value items. Investors should be prepared for potential delays in selling their bags and factor this into their investment strategy.
Authenticity Verification
Verifying the authenticity of an Hermes bag requires expertise and experience. Investors should consider using third-party authentication services, which can add to the overall cost. Additionally, maintaining original receipts, authenticity cards, and packaging is crucial for proving authenticity in the resale market.
Storage and Insurance
Proper storage is essential to maintain the condition and value of Hermes bags. This might require climate-controlled environments to prevent damage from humidity or temperature fluctuations. Additionally, insuring valuable bags against theft, loss, or damage is advisable but adds to the investment cost.
Market Saturation
While Hermes limits the production of its bags, a sudden increase in supply or a large number of bags entering the secondary market could saturate it, leading to a temporary decrease in prices. Investors should monitor market trends and be cautious of potential oversupply.
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