The value of any object, commodity and even service is dictated by the laws of supply and demand. But knowing what influences the supply and demand of Persian and oriental rugs helps us understand the reason why the value of such rugs are so often quite high.

Demand

There are so many factors that affect the demand for Persian and oriental rugs, here are a few:

– Fashion and Preferences

Over time, society changes its preferences and people decide that the norm is now something different. For example, a minimalist home with clean lines and right angles is entirely acceptable nowadays but 100 years ago this would have been unheard of. Of course this is itself influenced by factors such as the availability of various materials such as glass or plastics.

– Technology

Often the widespread acceptance of something increases when it becomes more available. With the advent of flight making the export of rugs possible within hours rather than weeks, the availability of rugs and relative ease of purchase makes it much more attractive.

– Economy and Distribution of Wealth

The general state of the economy has a significant impact on the purchase of ‘luxury’ goods. Economic growth often leads to a higher level of disposable income and such more people have the financial capability to purchase a rug.

Certainly during a recession the opposite is true.

– Capital Markets and Precious Metals

The high values of Persian and oriental rugs alongside their ability to last a very long time makes them a worthwhile investment piece especially when other traditional investments are not performing well. If Persian and oriental rugs are seen as a more attractive investment than other typical portfolio entries such as shares, bonds or even precious metals, demand will increase.

Supply

The supply of oriental and Persian rugs is certainly variable and there are a number of factors involved.

– Civil issues

Traditionally, Persian rugs originate from a part of the world where at present there are a number of ongoing difficulties such as civil war, infrastructural issues and government instability.

All of these factors have a direct impact on the manufacture of rugs and as such there’s a direct impact on the level of supply.

Civil wars may displace those who have the skills required to create the rugs or there may not be enough people remaining to ensure the business is commercially viable.

– International agreements and sanctions

If a nation is embargoed in which rugs are made, supply will slow down significantly as the export market will have been removed. This has the effect of increasing the value of rugs that are already outside the country of origin as the supply is now finite and the number of surviving rugs will fall as years go by.

– Skills base

Internal strife in a nation where rugs are made will lead to a dilution of the skills base as those who are skilled in the manufacture of rugs will be otherwise occupied and unable to pass down their abilities to others. Furthermore, not using the skills one has for years leads to a gradual loss of the skill gained.