Luxury handbags are now good investments in South Africa
South Africa is currently facing a weak rand against the dollar, high levels of inflation and rising interest rates, which has seen returns from traditional investments come under increasing threat.
However, luxury items are proving to be a low-risk, high-reward option for investors.
“Investors stand to benefit from the robust demand for luxury items locally and globally as evidenced by double-digit growth from the likes of Richemont and LVMH Moët Hennessy Louis Vuitton over the past financial year,” said Michael Zahariev of Luxity, a pre-owned luxury reseller.
“The luxury market is resilient to economic turbulence and is even outshining the majority of mainstream investment classes.”
“For example, while gold has typically been a popular investment in trying economic conditions, personal luxury goods like the Louis Vuitton Favorite handbag has outperformed this commodity over the past five years with an annual return of 263%. Gold, on the other hand, only returned 67% within the same period.”
He said that luxury goods do not have any correlation with financial markets, unlike stocks and bonds, reducing their risk and protecting them from economic fluctuations.
He added that the reselling of luxury goods is also a good investment.
“As luxury goods from renowned brands retain their value over time and, in some cases, even appreciate in value, the pre-owned luxury market presents yet another investment opportunity.”
“If the 75% increase in pre-owned luxury sales locally is anything to go by, the market is ripe for investment amongst South Africans looking for tangible value, long-term growth potential and a hedge against market volatility.”
“Not only could the low risk and high returns of luxury investments help to secure their financial futures, this could also equip them with a safety net for navigating the current economic climate.”
Luxury growth
Luxury brands have had a strong year, with Richemont and LVMH seeing strong growth in the markets – increasing the wealth of their owners increase substantially.
According to Forbes, Richemont’s chairman, South Africa’s Johann Rupert, has seen his net worth climb from $8.9 billion (R165 billion) in 2022 to $11.9 (R206 billion) in 2023.
Moreover, LVMH’s Bernard Arnault has been fighting with South African-born Elon Musk over the last year for the title of the richest person on earth.
Arnault is currently the second-richest man on Forbes’ list, with his net worth currently at $224.3 billion (R4 trillion).
Read: South Africans are turning to ‘alternative investments’ – including solar and crypto