Art, Hermés handbags remain high on shopping list of UHNIs

The must-have luxury investment of 2020 was Hermés handbags. According to a recent Knight Frank Luxury Investment Index (KFLII), prices of Hermés handbags increased by 17 per cent over the last 12 months, meaning the luxury handbag category outperformed categories like art, classic cars and fine wine.

“Covid-19 had a huge impact on the global marketplace for luxury investments in 2020 . Compared to other passion investments, luxury handbags were the best performing asset class,” says Andrew Shirley, editor of The Wealth Report and the Knight Frank Luxury Investment Index.

Shirley added, “The ever-increasing category of luxury handbags outperforms art, classic cars and even fine wine to claim number one position in the index.”


Aashumi Mahajan, co-founder, The Luxe Maison, believes the luxury sector wasn’t affected too badly by the pandemic. “Luxury is a segment which is not very occasional, because people endorse the brand and not the situation. People who are going to buy luxury items will continue to buy,” Mahajan explains.

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “Jewellery is the most prized object of desire, topping both these and other passion led investments.”

Shifting priorities
But while luxury has remained stable in certain categories, priorities and consumption trends have certainly shifted. “Personal safety is becoming a sought-after commodity. Well-heeled passengers are willing to spend an extra buck in return for their health and safety,” says Rajan Mehra, CEO, Club One Air, who saw business grow by 20 per cent from October to January, compared to the previous year. “For instance, we have a new segment of clients who used to use first class or business class [especially on international flights], but are now turning to chartered services.”

“Covid-19 changed consumption trends globally,” says Ashwin Chadha, president, India Sotheby’s International Realty. “Ultra-high-net-worth individuals [UHNIs] are re-prioritising what is essential, and have swapped it with what is long-term and secure. The pandemic has created a convergence between ‘luxury real estate’ and ‘quality of life’, such that the two are now seen as being synonymous.”

Sotheby’s International Realty said they recorded a 40 per cent growth in revenue during the last fiscal, as demand for ultra-luxury residential properties soared in the second half of 2020. “We witnessed a surge in demand from buyers looking for second homes or holiday homes located within city limits but in picturesque settings. Buyers have embraced a new concept of holistic living,” he says.

Going online
Clients were also increasingly comfortable placing bids and making purchases online, even in the luxury segment. In 2019, Sotheby’s recorded $80 million in online sales. In 2020, that number jumped to $575 million, with 80 per cent of all bids placed online.

Audi India recorded a similar digital shift, especially during the pre-buying phase. “Since the introduction of digital sales and services in May ’20, we have had a real spike in the number of people reaching out digitally; the unique visits on our website have gone up 35 per cent from last year. 18-20 per cent of sales leads are coming digitally, and this is only growing.”

But will it sustain? “The day China lifted its lockdown, some of the luxury stores saw their highest-ever sales, because there was such pent-up demand,” BCG MD Abheek Singhi had said during a recent ET panel. The indications all point to an economic bounce back from the pandemic in India too.