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Hand Knotted Rugs: The Investment Piece

There are stocks, bonds, real estate, cryptocurrency, art, vintage cars, and rugs. People around the world buy all of these items in the hope that they will not only hold, but increase in value in the years to come. Rugs fall into a handful of investment categories: collectibles, antiques, handicrafts, et. Investment in collectibles is on the rise because many are realizing that as we hurtle through space on planet earth towards an increasingly digitized life, the items that become the most valuable are those from the past that cannot be replicated for one reason or another. These can be cars no longer manufactured, bottles of wine, stamps, baseball cards, old gadgets, fine china, comic books, even sneakers these days. These collectibles don’t have to be considered “antiques” to hold extraordinary value. 

The best part about many collectibles is that you can invest in something you truly love. As consumers we generally buy things that will never be resold or hold value longterm. We consume material things and the money is gone. With collectibles, however, you can enjoy an item and still be able to recoup your money. The only problem might be that when you get used to having something around, you may not want to part with it later. That’s love! And the great thing about collectibles is that when you fall out of love, the return on your investment could potentially be great. Handnotted rugs fall into this category in a big way.

Investment in Art: Handknotted Persian rug
Tabriz Persian Rug

Scarcity and Perception

Hand knotted rugs have always maintained tremendous value. For over 500 years, starting with elite citizens who coveted masterpieces of hand knotted rugs and displayed them in grand homes and palaces to today when even an average person can display a beautiful rug in a not so grand studio apartment. Over those years weavers increased production as the world’s appreciation grew. Yet, things have changed in the past 40 years. As the world sees fewer and fewer rugs actually made by hand and dyes become predominantly chemical, materials more synthetic, the value of even non-antique quality rugs that are new or only a few decades old has increased manyfold. Age hardly matters, it’s the quality of materials and handmade aspect that is dying out.

Depending on where you are from, you may see the value of a rug in different ways. Europeans have in the past seen hand knotted rugs as art and accordingly have been willing to spend more to invest in a great piece. European aristocrats started the trend, but many average European began to appreciate and collect “oriental” carpets, as they were known, starting in the 1960s. 

Others see rugs as a handicraft, a piece that represents the culture and traditions of a people from a particular region or nation. People who are interested in handmade rugs as a window into a different culture might buy rugs while on a trip abroad to bring home as a souvenir. Of course, these days you no longer have to travel to Morocco, Iran, Afghanistan, or Turkey to buy a rug. Online markets abound, bringing attention and accessibility to beautiful floor coverings from around the world. 


Accruing Value

There are several reasons hand knotted rugs are steadily increasing in value. As already mentioned, rugs are increasingly made in factories. The hand knotting traditions in various parts of the world are slowly dying and so the number of hand knotted rugs in the world will steadily decrease in the future. Make no mistake, the value of handmade rugs will at some point grow exponentially simply because there is a finite number. To be sure there are a few people in a few places who will possibly continue these traditions. But they are few and far between. The closest example of a similar invest is Bitcoin. There can only ever be a finite number of Bitcoin and there are very few left to mine. As such the price has recently shot up and will no doubt continue to rise as the alternative currency becomes more and more scarce. A similar phenomenon is happening to hand knotted rugs, in particular with Persian rugs.

Additionally, the quality of the limited hand knotted pieces that do continue to be made will actually decline, making the older ones more valuable in comparison. Organic materials are not just more difficult to acquire, they are more expensive, hence the shift is swift towards synthetic materials and machine made.

 Finally, exploding markets and demand contribute to rising values. Pre-pandemic, the travel and tourism industry had exploded to such a degree that those seeking rugs as collectibles had increased ten-fold over the previous decade. And those who didn’t and still don’t travel have access to online markets. So essentially, most people have access to art and handicrafts like hand knotted rugs from other countries at all times. As global wealth and everyone’s access multiplies, the hand knotted rug market is expected to double by 2023. So what does that mean? Well, if demand is doubling, but fewer pieces are being produced, it’s inevitable that values will rise, potentially tripling or even increasing 5x, maybe even 10x by 2025.

Investment art rug hand knotted Persian rug
Ultra Vintage washed Persian Rug

Caring for your investment piece

You don’t have to lock your rug away in a dark cellar away from sunlight, visiting it on Sundays for a quick moment of admiration. Your rug can retain and increase in value even with regular use. Because these rugs, particularly those made of primarily wool knotting on a cotton foundation, are so durable, they don’t lose value with use. In fact, the opposite can happen. That is not to say a rug can be torn apart and still be valuable, although that’s possible too. These days “patchwork” rugs, made of pieces from several different rugs, have become very popular. But normal wear and even occasional washing adds softness and a certain sheen to hand knotted rugs that cannot be attained when they are locked away in a bank vault. Some of the most beautiful Persian rugs in the world would not be as beautiful if they had never been used. 

So do not be afraid to place your rug in the living room, dining room, hallway, even the kitchen or bathroom. Everyday use adds charm to a well-made rug in a way that will never happen with machine made rugs. With hand knotted carpets you can literally sit on your invest. Heck, you can eat, dance, play, pray, and even sweat on your investment.

Traditional Persian Rug Handknotted Kashan
Kashan Persian Rug

Choosing a Rug

With stocks, a typical piece of advice is “buy what you use.” If you shop with Amazon, buy stock in Amazon. If you wash your clothes with Tide and wipe up spills with Bounty, buy Proctor & Gamble. Products you prefer and use regularly are probably also products many other people use and prefer. It’s the same with rugs. 

Rustic Persian Rug Gabbeh Hand Knotted
Investment Art: Handknotted Persian Rug Heriz

In more traditional cultures, rugs are a necessity to cover a dirt floor or keep a room in colder climates warm, but in the western world the main reason for acquiring a rug is aesthetic. The choice of rug depends on the style of home or in other elements of the home’s decor. If you prefer a more rustic, nomadic aesthetic, look toward investing in a Gabbeh rug from Iran or a Berber from Morocco. If your tastes are more refined and formal some great investments can be made in Isfahan and Nain rugs. Traditional Persian rugs like those made in Tabriz, Mashad, Kashan, and Kerman are always a great stable investment. If you prefer more geometric or abstract hand knotted pieces, Heriz, Bakhtiar, and Ziegler rugs are fantastic investments that have always increased tremendously in value.

No matter your taste, you are sure to pick one that will appreciate in value if it is hand knotted and well made. There is no use in agonizing over whether another person might find it attractive in the future. If you love it now, should you ever decide to sell in the future, it will surely find a new home with someone who can appreciate it. If not, you can always sell it back to us through our buyback program (See below).


The Marketplace

One of the biggest reasons for increased demand for any type of rug or carpet, is a global market expected to reach anywhere from $40 to possibly $100 billion (in the bull case so to speak). Construction has boomed and continues to boom despite some setbacks in 2020. This means that there are more spaces to fill, not just residential homes, but also commercial spaces like hotels, offices, shops, and even houses of worship. The market for rugs in cold climates is particularly robust because rugs can provide insulation and reduce heating costs, which is also climate friendly. In urban areas, rugs are essential in high density residential and commercial building for reduction of noise and echoing. 

Then there are the reasons for increased demand specifically for hand knotted rugs. As mentioned already, the global collectibles market is booming at a pace of double, often triple other investment types. Despite a larger disparity between the global rich and the global poor, the reality is that there is more money than ever in the hands of more people than ever across the globe. That money has to go somewhere and it is often finding a home in collectibles that can be bought, sold, and exchanged digitally, on the internet. That is the way people today do most of their shopping, banking, and investing. And for that reason, finding money value for items that may have once only had emotional value to a select few, can easily be accessed by anyone. A lava lamp, an old GI Joe toy, a car from the 1990s, a Persian rug from the 1980s, an East German police badge from the 1970s, an old Blackberry, almost anything you have stashed away has value and a buyer on the internet. 

The resale of hand knotted rugs also happens to be good for the environment. It’s the greenest way to cover your floors. All of the hand knotted rugs that are sourced from village are put through a rigorous washing and sanitizing process before export and go to customers with minimal expenditure of greenhouse gases. That is not so with new rugs made in factories. If you’re buying the rug from another individual, you can contact a local professional rug cleaner to do the job. 


An Element of Passion

When you investment in a stock, you’re looking for a company that’s demonstrated proof of concept and scalability among other things. With collectibles like Persian rugs the most important element is passion. Do you love what you’re buying? Do you want to keep it for a long time? Do you want to take good care of it so that it will last longer? If the answer is yes to any of these questions, then Persian rugs might be an investment for you.

Another way to look at collectibles as investments is to seek out a piece with longevity and durability. People have been collecting hand knotted carpets from around the world for centuries. The allure is not going to disappear overnight so your investment is safe. Rugs may not always be the hottest collectible, but they will never disappear as a collectible, much like stamps. By contrast, hot collectible markets like the Pokèmon trading cards could potentially lose their market. You can invest in these types of collectibles if you’re crazy about them, but beware they may not stand the test of time. 

Handknotted Persian Rug

Bottom Line

Beauty aside, what’s important in an investment is the bottom line. No one can tell you what to buy or where to invest your money, and financial advisors hardly have a great track record. They are wrong six times out of 10. But there is no question that Persian rugs have stood the test of time. A study by a British firm concluded that on average the value of a hand knotted Persian rug has risen 12 percent annually over the past 65 years. That definitely beats the stock market! 

We are so confident in the enduring value of Persian hand knotted rugs that Handknotted.com will buy your Persian carpet back any time. This is not a return policy. It is a buyback program that should make buying a rug from us an easy decision to make. 

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