Who would pay $400,000 for a handbag?

The Hermes Birkin matte Himalayan crocodile handbag which was auctioned for US$300,168 by Christie's Hong Kong.
The Hermes Birkin matte Himalayan crocodile handbag which was auctioned for US$300,168 by Christie's Hong Kong.PHOTO: NEW YORK TIMES

A Himalayan Birkin was sold at auction for that price and Asia's affluent are fuelling demand

HONG KONG • In a packed bidding room last month, Christie's Hong Kong hosted its 30th-anniversary auction. The tightly curated catalogue featured 30 lots, each chosen for its desirability and origin in categories such as fine art, ancient ceramics, jewellery, watches and rare wines.

And handbags.

One of the auction's stars was a 30cm Hermes Birkin matte Himalayan crocodile handbag, with white-gold hardware set with 245 F-colour diamonds, weighing close to 10 carats. With a pre-sale estimate of US$190,000 (S$257,700) to US$260,000, it was billed as "the most valuable handbag in the world".

The standing-room-only crowd, mostly from China, with a smattering of collectors from Taiwan and Japan, watched with barely bated anticipation as Mr Jussi Pylkkanen, the global president for Christie's, presided from the podium over bidders who drove prices for the Birkin quickly past HK$1 million (S$174,600).

In a mere four minutes, the bag was sold to a private collector and a record set, at US$244,490, before a buyer's premium. Its final price was US$300,168, just over the bag's standard retail price of US$280,000.

That an Hermes Birkin fetched more money than a hanging scroll belonging to the Chinese Empress Dowager Cixi of the Qing dynasty (HK$1 million), or a rare, solar-powered dome clock by Patek Philippe (also HK$1 million), is testament to the mythical status the bag commands.

"Our London office began auctioning off fashion items as part of estate sales in the 1990s and in 2000 began including contemporary handbags as collectors' pieces," says Mr Matthew Rubinger, the Hong Kong-based international director of handbags and accessories for Asia.

After a successful stint selling bags in online auctions, Christie's opened its handbags and accessories departments in Hong Kong and Paris in 2014. Christie's now holds twice-yearly handbag and accessory auctions in Hong Kong, alongside its more traditional sales.

On the frenzy over the Himalayan Birkin, Mr Rubinger says: "White is the hardest colour to achieve with crocodile skin as you have to remove all of its natural pigment."

The bag's graduated tone, from grey to white, is inspired by the majestic mountains.

He adds: "To find a bag in its unused condition is even more rare."

The seller was a private collector who had owned the unused Birkin since 2008. It is believed that only one or two of these bags are produced each year by the Hermes atelier.

Mr Rubinger's job is now focused on sourcing the bags for his growing clientele and assessing the quality of the consigned products on a four-grade scale from a score of one for a brand new bag to a four for a used one. Many of his customers are clients of Christie's and collectors of jewellery and art, but Asia's affluent customers are quickly fuelling demand.

"Chanel has always done well in the secondary market and we also sell Gucci and Balenciaga, but Hermes clearly is the leader," he says, adding that the client base "is split between Asia and Europe", with many repeat customers.

"Our previous record-holder was a 35cm fuchsia crocodile Birkin with diamond hardware, which sold for HK$1.4 million, without the premium," he says. "Custom orders and exotic skins are always popular. Lizard skin is having a moment right now."

It might seem ridiculous to some to treat a handbag as an investment, but for a Birkin collector such as Ms Emily Chan, a Hong Kong- based investment banker, it is one worth making. She owns more than 50 of the bags, purchased as a VIP customer from the Paris, Hong Kong and Tokyo boutiques, as well as on secondary markets, via auctions.

She says: "Birkins are both an investment and a fashion accessory to me. They are like currency: You can cash out any time."

"For the past 35 years, the Birkin's price trend has been all the way up, performing even better than gold," says Ms Chan, who began collecting in 1993. "Art and jewellery are also good investments, but their barrier to entry is much higher and those markets, too, have volatility. And they are not as liquid as the Birkin."

Birkins have climbed in value by 500 per cent in the last 35 years, an increase expected to double in the next 10 years, according to baghunter.com, an online platform for buying and selling luxury handbags.

This may be why - even beyond auction houses - a secondary Birkin market run by a handful of resellers has sprung up in settings from Japan to Florida.

The pre-eminent reseller in Paris, Mr Loic Bocher, the founder of Collector Square, acquires his bags from a network of shoppers in Europe with ties to Hermes boutiques and resells them to customers in the Middle East and Asia.

In the United States, Prive Porter, a dealer based in Boca Raton, Florida, sold a red crocodile Birkin with diamond hardware last year for US$298,000. Mr Jeff Berk, Prive Porter's founder, started selling Birkins on eBay in 2012.

"There is just something about a Birkin," he says. "It's like owning a Mercedes-Benz: When you close the door of a Mercedes, it sounds different than a Toyota. And that's what Hermes customers know and buy into. To many of our customers, to own this bag is to achieve a sense of competence like nothing else."

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on June 06, 2016, with the headline 'Who would pay $400,000 for a handbag?'. Print Edition | Subscribe