Andrew Davies looks at how the humble handbag has in recent years become a feverish area for collecting.

Last year a recent but rare Himalaya Birkin by Hermes, (illustrated below), in matte white sold for £279,000 at auction. It was fashioned from Nilo crocodile hide adorned with 18-carat white gold and diamond encrusted details. That’s right; as Lady Bracknell exclaimed, “A Handbag!” – for the price of a house.

In the 1990s Marc Jacobs at Louis Vuitton (est. 1854), and Tom Ford at Gucci helped to usher in the era of the “It Bag”. Since then, virtually every major fashion brand has entered the handbag / luxury goods market. Goyard (est. 1792) holds the title of the oldest leather goods manufacturer still in existence. It is probably also the quietest in terms of marketing, yet its iconic St. Louis Tote with its three-dimensional decoration is extraordinarily sought-after and copied. But it is Hermes (est. 1837 as a harness workshop) that is the predominant handbag brand.

The Hermes Kelly bag, which was originally designed in the 1930s as a ‘sac a courroie pour dames’ (bag with strap for ladies), was later renamed after Princess Grace of Monaco (née Kelly), after she used a bag to hide a pregnancy bump from press photographers. The Birkin was the result of a chance meeting between actress and singer Jane Birkin and Jean-Louis Dumas (the Chief Executive of Hermes) in 1981 on a flight from Paris to London. She was struggling with a straw travel bag and confided that she was looking for a more boho, less structured bag which was spacious and versatile. The Birkin has gone on to beat both the stock market and gold as an investment since its launch in 1984. It has been long considered a must-have fashion collectable for the super-rich and it has enjoyed stratospheric success at auction. The Hermes Lindy is a lesser known model and the Hermes Constance features printed designs.

Designer handbags have a hefty price tag because they are often high-quality artisanal products. At Hermes the Birkin is made by one master artisan and takes around 48 hours to complete. Craftsmen may be required to train for up to five years before being entrusted with the creation of an exotic skin bag, famously produced by a single craftsman from start to finish. Crocodile, alligator, ostrich and lizard are used but the finest of the exotic skins that Hermes uses is porosus crocodile, which is known for its smaller, symmetrical scales. The skin is buffed with an agate stone to reach its lustrous shiny finish. When kept by a collector ‘as if new’ its value might double.

Collectors of Hermes are known for their encyclopaedic knowledge of materials, shades and models. All leathers are treated and dyed in the workshops of Pantin. At auction, blues and pinks (such as the ultra-desirable Rose Confetti) tend to achieve the highest prices. In a world of supply and demand economics, Hermes enforces a stringent production quota. Experts look out for the horseshoe stamp, the presence of which denotes that the piece was custom made to special order, and which can consequently drive values sky-high.

If you are buying for investment, the best choices have proved to be Hermes Birkin, Hermes Kelly and the Chanel 2.55 (so called because it was first designed in February 1955). Since their launch, Birkin bags have on average realised an annual return of 14.2%, but some bags can generate returns of 30% a year. Auction house Christie’s says that the global pre-owned luxury handbag market has jumped from £5.1 million in 2011 to £26 million in 2016. In recent months Chiswick Auctions, who hold five specialist handbag auctions a year, sold a Hermes matte Havana Porosus Crocodile Birkin 35 c. 2007 for £21,875 and a Hermes black Alligator Kelly for £12,200 (both including premium). Provenance can also be a significant pricing factor. The handbag used by Mrs Thatcher on her last visit to No. 10 Downing Street sold at Christie’s for £47,500 against an estimate of £1,500. It is, however, well-nigh impossible to place a value on any of the Queen’s iconic Launer handbags, as none have ever been sold.

As with all collectibles, the secondary market demands that handbags must be kept in immaculate condition. Hardware such as padlocks or chains must not be left sitting on leather, as they can leave marks. Both Chanel and Hermes have ‘handbag spas’ in Paris where you can send your bag to be restored. Receipts for this, which detail any work undertaken, are useful for verifying that the bag is what it purports to be.

With such an insatiable secondary market, insurers have noted an increase in the number of thefts of luxury handbags. This is largely because they can be relatively easily converted into cash while also being hard to identify, as production quantities are sizeable and individual handbags do not normally feature edition numbers or other codes. Collectors should therefore strive to keep up-to-date inventories and valuations of their collections under the Personal Possessions section of their policies, as currently the value of handbags tends to be overlooked.