Curating a Collection: Investments at Hand

Written by Amelia Jeffers

In late 2020, while stock market pundits and hedge fund gurus focused on meme stocks, a savvy segment of investors eyed an opportunity in the relatively obscure but emerging market in luxury handbags at Christie's Hong Kong. Just shy of 200 handbags and accessories crossed the block in a few short hours, with the small but mighty offering smashing presale estimates to gross nearly $6,000,000. Hermès led the day, with a circa 2019 Himalayan Kelly bag raking in almost $500,000 and its sister, a circa 2019 Himalayan Birkin selling for $388,738—many times more than their original retail prices, begging the question: have handbags really moved beyond accessory status and into an asset class?

If you look at the data, it seems they have. According to a report released by real estate research firm Knight Frank, the price of Hermès bags rose by 17% last year, outperforming art, wine, and collectible cars, all niche collecting categories that have become widely accepted as investments. With megacelebrities stamping their seal of approval via social media and shrewd designers limiting production, the interest in top brands and styles has outpaced supply, driving up resale prices on the secondary market. Combined with the pent-up demand created by a buying audience stuck at home during a global pandemic, these circumstances have created a perfect storm on which international auction firms have capitalized.

Connie Leal Ballenger has owned and operated Leal, one of the midwest's most exclusive women's clothing boutiques, for nearly three decades. Last summer, as COVID closures impacted retail businesses worldwide, Ballenger sought to boost sales by adding a curated selection of vintage Chanel handbags and accessories to the lineup. Her clients have responded with enthusiasm by snatching up inventory before it even hits the store, utilizing her private consultation services to shop by phone and email. Ballenger attributes the interest in vintage products to a renewed understanding of quality, as vintage Chanel bags were made with higher caliber materials than those produced today. Whatever the reason, there is no denying that designer handbags deserve a second look for anyone interested in alternative assets: over the past ten years, they have more than doubled in value - handily trouncing gold's relatively stagnant return in the same period.

While six-figure auction purchases may seem daunting for some, there are opportunities at more accessible ends of the spectrum for the luddite. The key to maximizing return is not unlike the factors that influence other investment decisions: buy proven brands in impeccable condition and (hopefully) at a bargain price. Hermès certainly tops the list in terms of investment performance, but Chanel is a close second. Beyond those, buyers should focus on bags with timeless style and appeal from well-known and recognized designers like Fendi, Louis Vuitton, Gucci, and Christian Dior. Lesser brands can also be a great buy when the bag represents an iconic look.

Resale sites like The Real Real offer a convenient and safe way to find and buy authentic bags but expect to pay higher prices than at auction, which is always "buyer beware" and does come with some risk. Only bid with reputable auction companies who guarantee their descriptions and provide detailed condition reports when buying at auction. Some of my favorites are Selkirk in St. Louis, Hindman in Chicago, Bonham's in San Francisco, and (of course) Christie's and Sotheby's in New York, London, and Hong Kong. Local estate sales can be an amazing source of bargain deals, especially when the rest of the sale validates the bag's age. I found an exquisite Emilio Pucci velvet clutch in perfect condition several years ago at a local estate sale for pennies. It is one of my most treasured accessories. As you wade into the waters of luxe investing, remember to enjoy the hunt as much as you treasure the return.