Luxury Investments are in The Bag

When Princess of Monaco Grace Kelly became pregnant in 1956, she used her Hermès handbag to shield her burgeoning belly from the paparazzi, who were always photographing her.

At the time, her handbag was known as the Sac à Dépêches, but because it was thrust into the spotlight with the former actress, customers kept asking the company for the “Kelly bag,” which it was officially renamed. Not only is the iconic Kelly still a top “it” bag for its craftsmanship and design, but it’s also eagerly sought by collectors for its investment payoff.

Accessories and Assets

Since the pandemic, luxury handbags by Chanel, Hermès, Louis Vuitton and other brands have been one of the fastest-growing assets among collectors.

Though not many bat an eye anymore when collectors spend millions for a baseball card, coin, or comic book, buying a luxury handbag can seem like a frivolous purchase when inflation climbs and households struggle with increasing living costs. But for savvy collectors, some purses are more than accessories and are viewed as investments just as lucrative as real estate and stocks—and that’s not wrong, it’s smart!

According to global market research firm Data Bridge, the luxury handbag market is growing and is projected to reach $42 billion by 2029. In a 2022 report by Credit Suisse, the global financial consulting company named handbags one of the best collectible investments for 2023, beating out art and jewelry in resale value. Analysts found that the average value of designer purses has increased by 92 percent in the last decade, whereas art increased by 84 percent and jewelry by 53 percent.

Luxury labels are also increasingly catering to collectors by releasing their most prized handbags in minimal numbers. These one-of-a-kind purses can fetch hundreds of thousands at auction.

While you might think economic uncertainty would dampen the trend, experts say this is not true. A report by management consultancy Bain & Co. forecasted increased resilience to recession in the worldwide luxury goods market after robust growth in 2022—and investing in luxury handbags is expected to keep growing.

The Rise of the Pandemic Purse

While collecting and investing in designer handbags is not new, the soaring popularity stems from a bigger boom in luxury goods that began during the pandemic. Luxury spending in the United States was 47 percent higher in 2021 than it was in 2019, according to Bank of America. Confined to their homes, Americans splurged on designer items, including Hermès Birkin and Kelly bags that have set auction records in the last few years.

The collector pool is also diverse, ranging from serious buyers collecting for 20 or more years to younger women looking for their first Chanel purse. The increased popularity of luxury handbags is thanks, in part, to these younger collectors taking note.

In 2022, Generation Z (people between ages 10 and 25) and millennials (between ages 26 and 42) accounted for 72 percent of the luxury goods market. Due to skyrocketing luxury prices, it has, in fact, now become a lucrative new hobby for these two generations to flip designer handbags.

Of course, collectors need to be smart about the handbags they buy, as not all are guaranteed to have increased value. Deep pockets are also required. The most coveted investment-quality handbags with the highest prices and appreciation values are the big three power purses: Hermès’ Birkin and Kelly bags and Chanel’s Flap Bag.

The Birkin Bag

When French-English actress and singer Jane Birkin and Hermès chief executive Jean-Louis Dumas sat next to each other on a flight in 1981, they brainstormed the ideal weekend bag. When the actress’ namesake Birkin bag was released in 1984, it was everything it remains today: handcrafted of the finest leathers, limited availability, and designed for an exclusive clientele. It wasn’t until the “it bag” trend in the 1990s that the Birkin became a cultural icon.

Though the elegant and timeless trapezoid-shaped Birkin is available in various sizes and materials, the most coveted and collectible handbag today is the crocodile skin Himalaya Birkin. It’s a purse, investment, and piece of art rolled into one. These Birkin bags can fetch anywhere from $100,000 to $500,000 on the resale market.

The Hermès Himalaya’s delicate white-to-gray ombré mimics the snow-capped summits of its namesake mountain range. Highly sought after and rare, Himalayans continue to be the holy grail in any serious collection, and with demand far exceeding supply, it’s not surprising that these bags command top dollar at auction. In 2020, one of these Birkins brought approximately $382,295 in a Christie’s auction, setting a world record. In 2022, that record was broken after a diamond-embellished version went for a whopping $450,000 in a private sale at Sotheby’s.

The Kelly, Named After Grace Kelly

Hermès’ original top-handled bag was created in 1892 to carry boots and a harness. In 1923, it was redesigned for the wife of automobile magnate Ettore Bugatti to fit into a car’s side pocket. It was modified again in 1935 by Robert Dumas-Hermès, who made it smaller, added a belt, and named it Sac à dépêches.

The bag’s popularity skyrocketed after Grace Kelly was seen carrying it everywhere in the 1950s, and soon after, it was christened the Kelly bag. Like its namesake, the Kelly bag also wears the crown as the most expensive handbag sold at auction. In 2021, a rare matte white Himalaya Niloticus Retourné Kelly 28 with palladium hardware sold for a then-record $355,000 at Christie’s in Hong Kong, and later that year, that world record was shattered after Christie’s sold a matte white Himalaya Niloticus Kelly 28 with 18k white gold and diamond hardware for $513,000.

Coco Chanel’s Flap Bag

Coco Chanel left behind a legacy of inventions we still utilize today. Her significant contribution to handbags came in 1955 when she created the rectangular Chanel 2.55 Flap Bag, named for the month and year it was made. The innovation came from having a shoulder straps—until 1955, women only had top-handle totes and pocketbooks or clutches. Women immediately became fans of its practicality, including the adjustable chain strap and accessible back slip pocket.

However, the Chanel purse that became synonymous with the brand was created in 1983: the Chanel Classic Double Flap. After Karl Lagerfeld became creative director, he reinterpreted the 2.55 with two new features—a Double C turn-lock closure and a leather woven chain. Lagerfeld’s Classic Double Flap was a big hit. The simplicity and universal wearability of the Double Flap make it one of the most sought-after pieces ever crafted.

Analysts at Credit Suisse noted that specifically Chanel handbags “offered the best inflation protection.”

There are numerous other luxury handbags by other brands that collectors and investors actively watch in the new and resale markets. Many buyers are also shifting to trendier and more affordable styles by brands like Bottega Veneta and Fendi instead of ultra-luxury classics.

Whatever their price tag, luxury bags are pieces of wearable art made with the finest craftsmanship and materials. It’s essential to properly care for and insure your prized pieces to keep them safe and maintain their value.

Despite the hefty values some handbags carry, above all else, the ones worth collecting and investing in are the ones you will enjoy for years to come.

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