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Are luxury handbags a better investment than art, wine, jewellery or cars?

In 2020, prices of Hermes handbags rose by 17 per cent, according to the Knight Frank Luxury Investment Index (KFLI). A separate report by Art Market Research (AMR) found that the average values of Chanel flap bags over 10 years have risen higher than the Birkin or Kelly.

Are luxury handbags a better investment than art, wine, jewellery or cars?

(Photo: Stan Honda/AFP)

Splurging on a designer handbag might seem like a misguided indulgence at first glance, but according to the Knight Frank Luxury Investment Index (KFLII), it could be a wise way to diversify your investments.  

For the second year in a row, Hermes handbags have topped the index, with prices rising by 17 per cent in 2020, according to data supplied by Art Market Research (AMR). In 2019, prices of Hermes handbags increased by 13 per cent. 

AMR is a research firm that analyses the art, antiques and collectibles market. 

An established online auction presence, and the appetite for relatively affordable luxury pick-me-ups during the pandemic, particularly in Asia where many bag collectors are based, helped the asset class retain pole position, Knight Frank said in a press release.

A new 3-in-1 Birkin bag from Hermes' Autumn/Winter 2021 collection. (Photo: Hermes)

By comparison, prices of fine wine, which came in second place in the KFLII, rose by 13 per cent. Classic cars came in third place, with prices rising by six per cent. Ferraris performed particularly strongly, Knight Frank said.

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“The market for luxury collectables, which relies on the auction market for much of its profile, is clearly badly affected by the COVID-19 pandemic. But some sectors like handbags are weathering the storm better than higher-value assets like the top end of the art market where no painting sold for over US$100 million (S$134.4 million) for the first time in a number of years,” said Andrew Shirley, editor of The Wealth Report at Knight Frank.

Here’s a glance at how all passion investments fared in 2020:

  • Handbags: +17 per cent
  • Wine: +13 per cent
  • Cars: +6 per cent
  • Watches: +5 per cent
  • Furniture: +4 per cent
  • Coins: -1 per cent
  • Coloured diamonds: -1 per cent
  • Jewellery: -1 per cent
  • Rare whisky: -4 per cent
  • Art: -11 per cent

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And while Hermes handbags have been a popular choice for collectors for a long time, the market has widened to include collectable pieces from other brands, AMR said in its Luxury Handbag Report 2020. 

While Hermes bags are coveted for their craftsmanship, other brands such as Chanel and Louis Vuitton are more popular for the brand recognition, the report said.

AMR’s index of Chanel flap bags show average values have risen 132 per cent over 10 years to 2019, which is more than both the Hermes Birkin and Kelly indexes over the same period. 

The average values of Chanel flap bags have risen 132 per cent over 10 years to 2019. (Photo: Frederick M Brown/AFP) READ> What does US$1m buy you in Singapore? 36 sq m of prime property
Source: CNA/st(ds)