LUXURY BAGS AS ASSETS

Hermes' Birkin and Kelly bags give returns almost similar to S&P 500

- Alyssa Woo

Your wife or partner and other collectors have not been gaslighting you - luxury handbags can be a worthy asset in your investment portfolio.

And it is not just luxury goods resellers who are saying this. Analysts who spoke to The Sunday Times are singing the same tune.

The Knight Frank Wealth Report 2024 found that luxury handbag prices increased by 67 per cent over a period of 10 years to 2023.

The caveat - only certain brands and models age well, in value and quality.

The Birkin bag, in particular, by French luxury house Hermes, is the gold standard when it comes to luxury bags as investment assets (Forbes has even called the bag a better investment than gold).

The Himalayan Birkin Diamond 30, made from Nile crocodile leather and studded with about 250 diamonds, sold for US$450,000 (S$595,700) at a private Sotheby's auction in 2022. Its retail price was said to have been more than US$100,000 in 2021. (The numbers in the bag models indicate their size in centimetres across the top.)

Even the less flashy and more common style in calfskin leather, which costs about $15,100 in stores for the Birkin 25, will get you a profit of at least $9,900 on the resale market.

The returns on the Hermes Birkin are almost comparable with investing in the S&P 500, according to ST's calculations.

Assuming you invested $13,030 in 2019 - the cost of a Hermes Birkin 25 that year - you would have an estimated return of about $30,000 in 2024 (assuming that all dividends were automatically reinvested). You can sell that same bag today for at least $25,000.

In 2023, luxury handbag expert Claudia Ricco was reported as saying the Hermes Birkin saw an average return of 38 per cent in 2020, the highest in the luxury market.