Persian Rugs as an Investment

There are a few ways of judging the attractiveness of investing in rugs. They are of course, in the older and rarer examples, a commodity like any other art form. There are rabid collectors of rugs and textiles who will compete for a fragment of 17thcentury Turkish ‘Oushak’ rug or 19thcentury Persian Q’ashqa’I salt bag. These buyers are not motivated by money but the thrill of the chase, a genuine love and admiration for the beauty and craftmanship and a fair amount of one upmanship in what is a fairly small world of arcane knowledge. A jewel toned wool or silk fragment, tribal bag or prayer rug, mounted properly and well-lit on a wall, becomes a terrifically unusual three-dimensional work of art which is very often a fraction of the price of any other option. So, in that sense they are a wise investment in taking the time and effort to source and display and, if bought from a reputable and honest dealer give some return, but not generally profit, when re-sold.

Buying a new rug from a dealer or online seller is exactly like buying a brand-new car. As soon as you take it home and use it the trade in value is at least half of what you have paid. It always struck me as odd and very frustrating that the public do not understand the levels of profit needed to run a shop or website, and the aggrieved reaction when given the re-sale value of a rug sold within 30 years of purchasing. What I call ‘furnishing rugs’, the vast majority of the rugs sold to the public to simply use as an attractive and complementary floor covering, are of a mediocre or poor quality and will be swimming around the market for decades, sold on ebay and other public auction sites for pennies in the pound. It is important to buy a rug that really strikes a chord rather than one that simply works with a current colour scheme as changing a good quality Persian or Oriental rug every five years or so does not make financial sense. To those who want to constantly re-decorate it is preferable to buy a mass-produced hand tufted or machine-made rug which can be either thrown or given away.

The lucky or hard-working buyer who can afford to buy the highest quality or oldest rugs to use will have a different experience. The ‘best’ rugs, the ones with the finest yarns, dyes and most knots per square inch are becoming more and more expensive as younger generations decide there is more excitement and interest in pursuing other forms of work. This is especially true in Turkey and Iran but even in India and Pakistan the financial crash of 2008 led to a worldwide drop in rug orders and many experienced weavers were laid off and subsequently lost to the industry. The galleries of London, New York and Milan and the rug departments of the high end department stores are places to find the diminishing quantities of finest new rugs but the prices are consequently eye watering to the average buyer. However, simply by the law of supply and demand purchasing such a rug will always result in a higher return on the purchase price when sold- but still it would take decades before the buyer  saw a profit.

One sure fire way of circumventing the problem of initial dealer profit is to attend auctions. By this I do not mean fake auctions that travel the land and turn up in the local hotel ballroom or village hall! These are a marvelously simple and clever way of appealing to peoples’ greed and offer a false sense of bypassing the established channels of commerce. The rugs sold are often of an inferior quality,  seconds with tensioning ( see How Persian and Oriental Rugs are Made ) or colour run problems. The better regional, every county has one, and all the national auction houses include rugs in their catalogue auctions. The major houses – Christies, Sothebys and Bonhams – have dedicated rug sales and in-house experts who catalogue, mostly accurately, the rugs on view. The buyer should take great care when taking this course and set aside plenty of time on the pre-sale viewing days to inspect the rugs they take a liking to. (See How to Buy a Persian Rug for an in-depth explanation of what to look for and what to look out for). If possible, you should ask for guidance from the resident expert who should explain the merits of the rugs and point out any glaring faults or general skullduggery. If you have a local rug dealer you trust then it is an option to ask them to accompany you to the viewing day to offer the same advice. It is up to you to negotiate a sensible and fair percentage of the hammer price with your advisor as this way of buying is of course taking business from their own shop or gallery. Even taking into account this fee and the auction house buyers percentage you will always save money over buying retail and therefore you can view buying these rugs an investment. Properly cared for and used sensibly these rugs will generally return the same buying price after ten to twenty years- with the advantage of giving service and adding beauty to the home. However it is important to remember that rug types come in and out of fashion like anything else, so if you have purchased a washed out Persian Lavar Kerman it may be out of vogue when the selling time arrives.Apart from the pitfalls of rugs having faults such as being re-sized (cut and shut, like two identical cars being re-joined after bad crashes), badly tensioned and with colour run problems the major disadvantage of buying at auction is that you cannot try them first at home to judge their suitability. This is not a problem however if the rug is the first item in the room – in this case the buyer can simply buy what they love and work upwards and outwards from there.

The internet has muddied the waters somewhat and thrown up opportunities to the general buyer to travel through the ether online direct to the manufacturers in the all the weaving countries. It is vitally important that there is a strong online social media presence backed up by a proper website giving the address and phone number. Ignore any online reviews of delighted customers in Los Angeles or West Sussex as these are almost always self-written. The first option here is to commission a bespoke rug – one existing in their catalogue online or give them a design of your own to design – and then to pay a deposit and wait for the finished article. The other is to simply purchase from their stock but always demand highly detailed as well as overall shots of the front and back before making a decision. Factor in shipping, duty and VAT to decide on whether it is worth it as all manufacturers from Istanbul to Beijing now know the Western retail prices and will try and achieve that sum. Ideally the rug bought direct should be at least 35-60% cheaper than the comparable UK retailer price. Bought like this rugs can be a sensible investment by merit of saving money, using for however long needed and then re-selling.

In short rugs are not a sure-fire way to riches – unless you happen to unearth a rare or unusual one at a car boot sale or buy one in Inverness to re-sell in London. Rugs should always be seen primarily as a beautiful and practical art form and any return on money- and rarely profit- should be viewed as a bonus.