As I drove to the Chanel store on Rodeo Drive in 2019, I was unaware of the surprising fact that my desire to be glamorous would result in an excellent investment decision.
According to a report from Credit Suisse and Deloitte, luxury handbags are low risk alternative investments that stand out as stores of value. They typically generate mid-single-digit annual returns, but Chanel bags were up 11.8% in 2020 and 24.5% in 2021.
Along with supply constraints due to the pandemic, Chanel and other luxury brands have sought to limit the supply of handbags in recent years. Chanel recently instituted a quota of two classic-flap handbags per year per customer. They also raised their prices significantly during the pandemic.
At the same time, there are a few factors driving the demand for luxury handbags. Disposable incomes are rising throughout the world, second-hand markets like the RealReal are growing in popularity, and social media has made status symbols more alluring to the consumer.
A 2016 report from Baghunter, a resale company, revealed that iconic Hermès Birkin bags outperformed gold and the S&P 500 over a 35 year period. See, you weren’t wasting money on an elaborate carrying device, you were an investor!
But the luxury handbag market is no joke. As a Beverly Hills realtor, I love to demonstrate style and professionalism by carrying an artistic accessory my clients will be curious about. It’s important to share a bit of my taste and personality with the people I work with.
The global market for collectibles continues to grow. If you can resist the urge to use these items, instead storing or displaying them in mint condition, you might have discovered a way to profit from your artistic taste.
