Hermes Investment Guide

Why Hermès Bags Are a Safe Investment

They’re stunning. They’re expertly crafted. They’re coveted among the rich and famous. They are the iconic Hermès Birkin and Kelly handbags. Ever since Grace Kelly was photographed hiding her pregnant belly with a Kelly bag in 1956 and a chance meeting between Jane Birkin and Jean-Louis Dumas in 1981 resulted in the Birkin bag, these two have been the pinnacle of luxury handbags.

The difference between the two bags is slight. The Kelly has one handle and a shoulder strap compared to the Birkin’s two handles. The Kelly is slighter smaller in depth and the Birkin is a more casual, supple, and relaxed. But, both bags carry equal iconic status.

The sight of these bags on shows such as Sex and the City and in the hands of celebrities such as Victoria Beckham, Kim Kardashian, and NeNe Leakes, among others, has made them a status symbol among the mega rich and famous. However, Kelly and Birkin bags are so much more.

In this guide we will explain how both bags have become a safe, worthy, and savvy investment for anyone who can get their hands on one and why investing in a Kelly or Birkin is likely to provide better returns than other, more traditional, investments.

Hermès handbag pricing factors

The first thing to understand is what makes these bags so expensive in the first place. Back in the 1950s, before Grace Kelly was pictured with the bag that would later bear her name, a new Kelly bag from Hermès would have cost under $1,000. In fact, at the turn of the century when a Birkin bag became the star of the show on Sex in the City, it was possible to purchase a Birkin for around $4,000.

Today, however, the most basic Kelly bag would set you back something in the region of $10,000 (10 times as much as it cost in the 1950s) and the same Birkin that featured on that Sex in the City episode retails close to the $12,000 mark (triple the value in only 15 years!). Of course, these are only entry level prices, before you add on exotic skins, custom hardware, and other personal touches which can bring the price upwards of $100,000.

Kelly and Birkin bags reach these astronomical prices for several reasons. The first is the price changes which occur year on year at the discretion of Hermès. They know they have a valuable product and generally increase the prices by between 5% and 10% annually for a new bag.

Another reason is the craftsmanship and quality in every single bag created by Hermès. Each bag is created by one professional craftsman (although artist is probably a better term to describe them!), who is responsible for the bag’s creation from start to finish. This can take anywhere from 15 to 24-plus hours to complete.

Each bag is also repairable for life, meaning it can be passed down from mother to daughter, gaining value with every passing year. They are built to stand the test of time with each piece of leather created for longevity. There are also spa treatments and reconditioning services available to maintain Kelly and Birkin bags, helping them look like new 15, 20, even 50 years down the line.

Investment opportunities

The combination of an extremely long lifespan and being the two most desired handbags in the world mean that Kellys and Birkins maintain their value as collectable items. Due to the slow and precise crafting of the bags along with materials and leathers that are difficult to source, only a handful of bags are actually made by Hermès each year. This limits the ability to purchase new bags directly from Hermès, hence the infamous years-long waiting list.

This has created a valuable and profitable resale market for Kelly and Birkin handbags. A bag in good to very good condition can fetch up to or more than 80% of what the previous owner invested, a bag in excellent condition up to or more than 100% of what the previous owner invested, and a bag in pristine condition up to or more than 120% of the previous owner invested.

There are obviously other considerations beyond the condition of the bag which affect its resale value. Rare and exotic skin Kelly and Birkin bags are more valuable on the resale market due to the difficulty Hermès has in obtaining them. Crocodile, for example, is one of the most expensive leathers because Hermès to obey strict ethical standards to obtain it. The skin also takes decades to reach maturity, making it rare on Hermès bags.

When making an investment in a Hermès bag consider the length of the investment also. If you are planning to hold on to the bag over a long period of time, seek neutral colors such as gold, black, and etoupe as these classic colors will never go out of style and the bag will maintain its value. However, new or seasonal colors which are the must have in the immediate market can fetch a healthy profit for short term investments.

Comparison with other investments

The unique thing about purchasing a Hermès bag as an investment is that it is one of the only luxury items on the market that appreciates in value. Unlike, for instance, designer clothes or a new Ferrari, which lose value the second you ear or drive them, Hermès bags actually increase in value from the moment you purchase them. When you own a Hermès bag, you have something there is a huge demand and limited supply for.

However, it isn’t just this that makes Hermès bags such a unique investment. They even stand up against traditional investments such as diamonds, gold, silver, stock markets, and real estate. The value of all these investments can both appreciate and depreciate. However, over the last 35 years, Hermès bags have only risen in value.

Let’s look at the figures – a standard Kelly bag could have been purchased in 1950 for $900. By 1960 the same bag cost $1,300, by 1970 it was $2,450, 1980 saw it sell for $4,000, 1990 for $5,100, and at the turn of the century it cost $7,400. Today, that exact bag is has increased in value to $9,250! The same increase is seen with Birkin bags with a standard Birkin setting customers back $2,000 in 1980, $2,750 in 1990, $4,000 at the turn of the century, and today sells for between $10,000 and $12,000!

These amazing figures cannot be replicated by any traditional investment and far exceed the annualized returns of stock markets such as the FTSE All-Share Index. It is also very likely that the value of Hermès bags will continue to rise for the foreseeable future with demand increasing daily and even the most conservative estimates predict a rise in value of 8-10 times today’s market value in the next 50 years.

How to buy a Hermès bag

Purchasing a Hermès Kelly or Birkin isn’t as simple as wandering into a Hermès boutique, picking up a bag, paying with, and then walking away. Only a handful of very lucky ladies receive their Kelly or Birkin directly from Hermès each year. Others sit on waiting lists, expecting a phone call for years. Some are even told the waiting list is closed, slamming the door on any chance of buying a handbag directly from Hermès.

The simple fact is that Hermès don’t sell these bags to just anyone. Celebrities and the super-rich receive priority. Next in line is people who have built up brand loyalty by investing in purchases from Hermès over a long period of time. But, even these people have no guarantee of Hermès crafting a coveted Kelly or Birkin just for them.

For 99% of women and investors, the secondary market is the only way to get your hands on one of these bags. However, it is essential to be extra careful when using the secondary market. The popularity and price tag of these bags has led to a thriving counterfeit market which we will look at briefly below. The best way to ensure authenticity is to use a reputable consignment company, such as Baghunter.

At Baghunter, we implement a unique process to ensure both quality and authenticity in every bag we consign. Each bag is thoroughly inspected by a team of professional and experienced authenticators who both guarantee it is the genuine article and place it into one of five condition categories: Fair, Good, Very Good, Excellent, or Pristine. These categories clearly show investors what the condition of the bag is and whether they affect the resale value of the bag.

More than this, Baghunter also offer a unique “Bag Concierge” service. An excellent opportunity for investors who have done their homework and know exactly what type of bag they wish to invest in, this service utilizes Baghunter’s trusted resellers’ knowledge database to find rare and one-of-a-kind Kellys and Birkins. Simply enter the type of bag, color, size, material, and budget, and Baghunter will do its upmost to find that valuable investment for you.

Be aware of fake Hermès bags

We briefly mentioned this above, but it is worth reiterating – be cautious of fake Hermès Kelly and Birkin bags. A brief glance at the bags listed on our site will show you that they often cost as much as new bags, if not more. This price reflects today’s market value and is a genuine valuation for a genuine product. If you find a Hermès bag with a price that seems too good to be true, it more than likely is.

There are numerous fake Hermès bags on the market, with some estimates showing 90% of all Hermès bags sold online are fake. The best way to avoid a major disappointment is to steer clear of auction sites and reseller sites that don’t carry a strong reputation. Many sites will publish pictures of real Kelly and Birkin bags but actually send you a fake. Do research on the business before parting with any money.

Another way to stay a step ahead is to do your homework on the bags themselves. There are many features and small details on Kelly and Birkin bags which help identify them as genuine or fake. You can read a detailed guide to spotting a fake Hermès bag here.

Tips for investing in a Hermès bag

  • Kelly and Birkin bags are timeless, but know your colors when investing
  • Long term investors should look at neutral colors such as gold, black, and etoupe
  • Short term investors can look at new and seasonal colors
  • Kelly and Birkin bags have been steadily increasing in value since the 1950s and 1980s respectively and are predicted by experts to continue this trend for the foreseeable future
  • Exotic skin and rare bags will increase in value at a faster rate than regular bags
  • The condition of the bag will affect its resale value
  • The secondary market is the easiest and most sensible way to purchase a Hermès bag
  • Be extremely careful of fraudulent bags on the secondary market
  • Deal only with trusted resellers and study the small details that show a bag as genuine or fake