“Luxury bags were considered an expensive gift until a series of crocodile-skin Hermès bags began breaking auction records about ten years ago,” ARM analysts revealed.

However, when shoppers start talking about luxury Designer Handbags as wardrobe investments or “investment bags,” they often don't weigh the risks and benefits of traditional investments.

-Andrew Bailey

The bags, from the likes of Hermès, Chanel and Louis Vuitton, have seen their valuations rise by an average of 80 percent over the past ten years, according to the report. To put that in context, coins have risen in value by 20 percent, first edition books by 40 percent, and watches by 72 percent.

According to the report, more than 3,500 designer bags were auctioned in a single year, raising 26.4 million pounds (115.9 million dirhams) and was the highest sale recorded in the last decade.

“Today, the market attracts collectors, resellers, dealers and the ultra-rich in an increasingly popular collectibles category,” ARM analysts further noted. “Luxury handbags are the tip of the iceberg of a luxury resale market that threatens to redefine the auction landscape.”

While buying a luxury bag can be expensive at first, retail experts agree that it generally saves money in the long run, noting that since designer bags like Valentino Garavani, Dior, or other high-quality brands They often hold their value and are therefore a good investment.

“When shoppers start talking about luxury designer handbags as wardrobe investments or ‘investment bags,' they often don't weigh the risks and returns with traditional investments,” wrote Andrew Bailey, a luxury retail analyst based in in the United Kingdom. “It's definitely high risk-high return.

“These designer bags can have a good return on investment, especially if the item is rare or unavailable. But this is not always the case, as it is not easy to guarantee if these bags will be in demand in the future when you buy them, given the number of options available on the market.”

As with any fashion investment, the chances of designer handbags ever approaching their original value are slim. In addition, the designer bag that you bought directly from the brand store cannot be sold back to the brand, which puts the investment at a disadvantage.

“While there are brands, such as Hermes, Chanel, Goyard and Louis Vuitton, and classic bag styles that may hold their value, who's to say that particular classic bag style or size will still be as coveted a decade from now? ”. Bailey added.

“The reason these bags hold value comes down to taking a chance on exclusivity and convenience. Also, you need to keep your bag in near mint condition if you want to sell it to earn a good amount of money in the future and get a return on your investment.”

While there are brands, like Hermes, Chanel, Goyard and Louis Vuitton, and classic bag styles that may hold their value, who's to say that particular classic bag style or size will still be as coveted a decade from now?

-Andrew Bailey

Selling designer handbags is a hard sell, specifically due to the authenticity of the bag, among other factors. While many online consignment stores will authenticate your bag for you, this service is usually included in the price they will offer to purchase the bag from you.

“The condition of your bag largely determines what designer consignment stores, resellers or individuals will pay,” explained Layla Fatima, head of sales at a United Arab Emirates-based marketplace app for buying and selling. Second hand designer fashion.

“That's why it's so hard to make money on your investment bags if they get used a lot or aren't stored properly. Unless you don't wear them, they are most likely showing signs of wear. You will have to prove the authenticity of your bag by keeping all your documents and receipts intact.”

If you go to an online luxury goods store to have your designer bag sold on your behalf, you will probably pay high commissions on the sale price.

Worldwide, consignment services charge you anywhere from 15 to 40 percent of the sale price of your bag. As a result, at the end of the day, you'll make less money from your sale, making this yet another example where stock exchanges aren't the best way to invest your money.

For designer bags that carry a significant price tag, it may also make sense to insure your bags, Fatima noted. “However, the cost of insurance can add up over time and can be quite a significant expense. And this insurance cost is an indirect loss in the value of your bag,” she added.

Often times, designer handbags are seen primarily as a passion product. If it goes up in value, consider it a bonus, but if it goes down in value, you still have something to love.

-Laila Fatima

Interest in designer bags as an investment was renewed after Hong Kong billionaire Joseph Lau recently sold 76 Hermes bags and one Chanel bag for HK$25.2 million (Dh11.79 million). Lau has reportedly bought more than 1,500 Hermès bags as gifts over the years.

It was sold at auction by Sotheby's, one of the world's largest brokers of fine and decorative art, jewelry and collectibles, and the event was the largest single-owner bag sale in Asia's auction market. This worldwide drew attention to the viabilities of turning it into a potential investment.

Luxury bag collections like Lau's could be a smart investment, as their volatility is low and returns could hit the mid-single digits, according to a 2022 Credit Suisse study, but there are risks to consider, whether it's securing the future demand, verifying authenticity. , high reseller fees and insurance costs.

Despite the risks mentioned above, investing in designer handbags such as Chanel, Louis Vuitton, and Hermès bags may still be a prudent decision, as they hold their value well on the resale market. The Birkin bag, for example, is expected to double in value in the next decade, new research shows.

“A lot of times, designer handbags are seen primarily as a passion product. If it goes up in value, consider it a bonus, but if it goes down, you still have something you love,” added Fátima.

“So if you're buying a luxury bag as a true investment piece, it's worth doing your research and investing in a used one that will hold its value or have provenance. This will ensure that your bag at least maintains its value and, if you're lucky, becomes more valuable over time.”