J.R. Azizollahoff, article, “Oriental Rugs as Investment:
The Unknown Ideal”, December, 2010

There is a conspiracy of silence in the media about carpets in general and rugs as investment in particular. No one has yet been able to break through the iron curtain of ignorance that surrounds the subject of oriental rugs.

There is also no consensus in the carpet trade about whether rugs can be a hedge against inflation, hold some value, or increase in value over time.

Despite the incredible beauty of carpets, and the long time it takes to make them, investment, art and antique, as well as decorating magazines have almost no interest in them. It is as if the editors of these journals are as ignorant of rugs as the lay public. This sad state of carpet neglect is as unfathomable as it is absurd, and has not helped the rug trade in this recession.

Now that margins have been reduced because of the recession, consumers are able to buy rugs at mark ups that are lower than ever before. This opens a greater possibility that rugs may become better investments comparable to paintings, ceramics, coins, furniture, and myriad art objects that have demanded more of the public’s attention. For rugs to be good investments, they should be purchased at about 25% above wholesale value up to a few thousand dollars and at a 15% mark up for rugs whose wholesale value exceeds $5000. In this recession, many rugs are now routinely sold for up to 20% below normal wholesale, and retail has largely merged into wholesale in many rug venues. Mom and Pop stores, while sometimes slightly less reliable than larger retail stores, are more likely to sell at investment level mark ups.

The popularity of the internet has also mitigated toward lower mark ups which might be a boon for the future perception of carpets as possible investments. The internet has severely chastened brick and mortar retail outlets, but demand should increase through word of mouth, if rugs are sold more cheaply. The great popularity of coins in the United States is largely the result of the small mark ups at retail for these charming collectibles. Coins are a good, albeit impossible, model for carpet retailers, but the benchmark or keystone of 100 plus 10% profit over cost has got to go, if it has not already been rendered obsolete in most stores by the recession. Regardless of their degree of success, retailers should not charge the keystone rate of 100 plus 10% for rugs at higher price points. The current rug recession may be more the result of overcharging for carpets than underperformance of stock portfolios.

Nothing is collectible if it is not bought right. Successful collectors cherry pick, or get selection on better rugs, without premiums, that are prorated with mediocre carpets. This is the secret of buying right. Even if the bottom line is unknown, haggling, even for small discounts, is also essential.

Rugs have the beauty and rarity that surpasses most of our most cherished, collectible crafts, as they take many months to make, in most cases. Any rug that takes many months to weave is a rarity because of the finite number of a particular type that is extant in the world, in good condition, at any given point in time.

Outside of intuition or common sense, the only way for the layperson to infer approximate wholesale value is through comparison shopping. By visiting several stores in search of the same or similar rug, the bottom line may be discovered, if one is fairly sensitive, rational, and intelligent. Check wool shedding by rubbing the surface of the pile, and select a rug with soft, shiny wool and the highest knot count per square inch one can afford. In order to maintain good customer relations, most stores will allow returns or exchanges for excess shedding within the first few months of use. If possible, one should get the non-shed guarantee in writing, particularly when buying from smaller rug or furniture retailers. Some shedding is normal, but excuses should not be made by reputable retailers for continuous shedding, which is a great inconvenience for consumers.

The better the hand-knotted carpet, the better the materials and workmanship, and the finer the weave. The public has opted for less expensive rugs in this recession. While this is understandable, it is risky, because the best quality rugs, with the highest number of knots per square inch, are at price levels that are greater than most will spend at this time. Durability is sacrificed because it is unknown or unappreciated.

Part of rug aesthetics is durability. Consumers are not as interested in durability today as they were many years ago, and this is unfortunate since durability is one of the chief aspects of the mystique of the oriental rug. What is more magical than walking on a rug for 100 years and still having an object of beauty and value underfoot? At a good rug sale, a $3500 hand knotted 8x10 foot rug, with about 150 knots per inch, can be purchased for the floor, which may be passed on to one’s children. It is not only in the beauty, but also in the durability, that the workmanship, and ultimate power of the oriental rug, is finally known to the consumer.

The beautiful luster or color clarity of a good traditional floor rug should last from generation to generation. This is yet another aspect of the mystique of the carpet: eternal color brilliance or vibrancy of jewel toned colors. The depth of colors that are maintained in traditional carpets, such as Kashan, Isfahan, Tabriz, and Kerman are similar to precious gems such as rubies, emeralds, and sapphires.

Making a hand-knotted city rug might be considered the impossible dream come true. From designing, drafting, drawing, painting, shearing, teasing, connecting, spinning, twisting, plying, dyeing, drying, knotting, wefting, tapping, wefting, trimming, disconnecting, brushing, washing, scrubbing, shearing, combing, untangling, trimming, sunning, stretching, and inspecting, a hand-knotted carpet is a miracle of unfathomable complexity. Besides the weavers, about one hundred other people are involved in ancillary activities, before and after knotting, who assist in the process of making a city carpet. If only more consumers could see how hard it is to create a carpet, sales would increase dramatically.

In India, from start to finish, including extensive pre and post weaving activities, a 9x12 foot rug with 150 knots per inch takes about six months for five people to weave, and a 225 knot per inch rug takes roughly nine months for five weavers to complete. It is no wonder that more countries in the East are reducing carpet production. Why bother making such complex and difficult crafts that may be ruined by a single mistake? Solid proof that a hand knotted rug is a good investment for consumers is the fact that many Eastern manufacturers would rather make easier and less risky products for export.

Either for the wall or floor, rugs are one of the best long-term investments. More small rugs should be placed on the wall, as that is the best way to address and preserve them. Few are aware of this simple fact.

For those with higher budgets, the real bargains are in the extra fine rugs that are well bought. In general, small extra fine rugs of 300 knots per inch or more should be hung, with a cotton sleeve for the hang rod professionally attached along the side or end. If hung, fine small rugs are not perishable. There are many fabulous extra fine rugs that are very small, or around 1x2 feet. Because of the diminishing number of highly skilled weavers capable of making these gems, they should, at the very least, be a hedge against the increase in worldwide inflation. Their value is more obvious than gold or silver and more easily verified by the senses.

Paintings crack without sufficient humidity, books dry out fairly rapidly or buckle in damp environments, rare coins develop carbon spots, pottery, ceramics, and crystal may break, but nothing will happen to a rug on the wall. Although improperly folded and rolled, with the pile incorrectly facing inwards by dealers, almost all antique rugs from 1900 and earlier, until today, are not dry rotted! This astonishing fact should allay the public’s anxiety about the so-called “perishable” nature of carpets. Rugs should be rolled in a cylinder, without folding, for conservatory storage.

Hand-knotted floor rugs are also good investments, particularly with high knot counts that assure high quality materials and workmanship. A double-wefted rug with a high knot count of tightly twisted and plied wool is insulated against the exigencies of time, because dirt cannot penetrate the structure, and damage the condensed looped knots and packed foundation threads. The scarcity of dry rot to the cotton foundation in antique rugs is the result of the insulation of the cotton warp and weft that is tightly tucked between and within the wool knots; rug investment is the result of the cotton insulation by the woolen knots. The further benefit of a finer rug with a higher knot count is that not only the cotton warp, but also the cotton weft is protected from the exigencies of time by the wool knots. In this sense, of all rugs woven, the jewel toned fine city carpet, whose structure fosters longevity, may be the most intriguing rug of all.

In better rugs, the wool is sure to be soft and shiny, but in cheaper carpets, the drier wool is more open to deterioration, and will not fully protect the cotton foundation that is essential to longevity.

Fine Indian, Chinese, Persian, and Pakistan rugs are being made with high knot counts that are virtually indestructible on the floor, with proper care. Periodically check to see that the rug is in good condition, and pride yourself on how well preserved it remains after ten or twenty years of hard use. It can eventually be retired, rolled in a cylinder and not folded, until one wishes to sell it, or leave it to the family.

Carpet care is critical to preserving rug investments. Blot spills out of the carpet pile, blot with club soda, and blot dry. Rotate rugs 180 degrees every few years, use a good pad that is changed every five years, and commercially clean every four years. A good carpet cleaning facility must safely get the dust out of the carpets without damaging foundation, and the rug should be soap washed on the floor by hand, if possible. After rinsing, the carpet should be dried or squeegeed on the floor with a smooth wooden object or flat back of a brush. The usual process of squeezing the water out of a carpet through rollers may flatten the rug too much and disturb the knot structure.

Small rugs may be sponge washed by their owners with mild detergent on a hot, dry, and sunny day, gently rinsed with buckets of water, blotted with towels, or squeegeed with a smooth wooden object, and dried in the sun with objects underneath to facilitate drying. Through an unknown chemical process, drying a rug in the sun enhances the colors.

Wear slippers in the home to reduce build up of dirt, as dirt is the chief culprit in reducing carpet longevity. Carpet wear and dry rot to the essential cotton foundation are primarily caused by impacted dirt. The cotton foundation is more precious than the pile, and must be preserved for long-term investment. Repair of dry spots requires soaking in order to remove impacted dirt that hardens damp areas of the carpet.

Rugs stored in the basement should be rolled and placed on top of plastic bags, off the damp cement floor, with a dehumidifier running, to minimize moisturization. Rugs should also be circulated to drier environments upstairs from time to time.

The value of a collectible is largely based upon rarity and demand. The finer the rug, the rarer it will be, because the long time it takes to make limits the numbers that can be produced. There are not a lot of Quom silk rugs of a particular design with 1600 knots per square inch extant in the world today. There are not many people in the world with extra fine rugs hanging on their walls.

As with all collectibles, there is the problem of finding a buyer, but quite a spirited trade in fine collectibles is occurring, quietly, between members of the lay public. Regardless of class, people visit one another, see what someone might wish to sell, offer a profit on the owner’s cost, and exchange object for money. Members of the upper class might exchange rugs of higher knotage, the middle class rugs of medium-fine knotage, and the lower class rugs of low knotage.

If not sold privately, rugs may be consigned to antique stores, carpet stores, or auctions, but patience is required if one wishes to get a better price.

Machine-made rugs may be considered collectible, but rarely resell privately, even in perfect preservation, for more than the purchase price. They represent the lowest level of rug investment, but should be purchased, if possible, at department store tent sales, or at deep reduction from retailers. A 9x12 foot, attractive beige or traditional red Tabriz design polypropylene machine-made rug, with good density of about one million points per meter, may be purchased at a tent sale for as little as $600. This rug may be used for several years, and sold to a neighbor fairly readily, for $400 to $500, when a person moves to another residence, if still in a perfect state of preservation, without stains. A $100 savings is not insignificant for consumers in need of basic floor covering, particularly in light of the fact that neither the buyer nor the seller knows for sure if the rug is machine or hand-made. Rarely, a machine-made rug is resold for more than the purchase price, but this usually occurs when the buyer, or both the buyer and seller, imagine that it might be hand-made.

The inability to discern machine from hand-made helps explain the great popularity of good quality inexpensive machine-made rugs, in good colors, even in this recession. Clients at the low end know that they have a fail-safe strategy if they buy an attractive machine-made rug at a low price because it is fairly easy to flip the piece at a negligible loss, with a little time, if the occasion arises.

Most of the truly magnificent hand-knotted rugs, which are well within the range of the middle class, are to be found in the range of approximately 150 knots per square inch. The short nap, tiny nubs of different colors on the back, and brilliant color contrast, that blossoms upon viewing in the sun light, are signs that one is addressing the fine city carpet from the Orient. These weavings will sell at discount for around $5000 for a 9x12 foot carpet.

These finer rugs may have a smooth even pile whose knots are not visible, or the rough texture of the Peshawar, with a visible knot structure that results from the hard or over twisted wool employed in knotting. In either case, these rugs may be considered collectible because of the superb quality and workmanship that must coincide with high knotage rugs of around 150 knots per square inch.

Although slightly drier and extensively sheared and finished, many finer pale Peshawar carpets are investment grade because they are always sought after by designers seeking to finish their rooms, regardless of whether the rug is new or used, in full pile or worn. Designers pay high prices for prosaic semi-antique rugs, around 60 years old, if the pale colors fit the room puzzle, like the last card in a straight flush in Poker. While these pale decorative rugs may not be quite as durable as their higher piled, more traditionally colored cousins, the glorious soft color combinations, and magnificent texture and patina, that so closely mimics priceless antiques, compensate for their slightly greater delicacy. Because of the strength of the designer market today, it may be easier to find potential buyers for the soothing, fine Peshawar than the more durable, less extensively finished, traditional carpet.

Finer hand knotted rugs can be restored and often merit restoration. This is a major advantage when compared other collectibles, such as paintings and coins, which cannot be restored. The outsourcing of restoration to the Near East has made repairing quite reasonable for those who can wait several months before the rug is finished. Wear is not a major concern with rugs of higher knotage, which is another reason to make the greater investment for the long term.

The price of antique rugs has never been lower than at present. Traditional rugs, in red, blue, and ivory, such as Kerman, Bidjar, Sarouk, Kashan, Heriz, and Mashad are now routinely sold well below normal wholesale value at both wholesale and retail. Antique rugs in excellent condition are rare, but limited demand has kept prices down. Because there are so few extant rugs from 1920 in excellent condition, and even less from 1900, the slightest increase in demand should increase the price of old carpets.

Less expensive, colorful traditional, rather than pale, decorative antique rugs are the safest investments, as they are almost always bought by wholesalers, in a normal market, in excellent condition. They will be more expensive than new rugs of similar knotage that are more plentiful, but from a collector’s standpoint, for those who can afford them, the antiques are quite cheap at this time.

Most traditional antique Iranian rugs from 1920 can be purchased for any reasonable offer now, and thus these rugs compare favorably with many new rugs in terms of value for the dollar today. The patina of a beautiful antique carpet can never quite be replicated in the finish of the new rug, because of the different rates of patination of the different dyes in old carpets. Many who are decorating homes in the manner of old manor estates would be well advised to purchase their old rug now.

Sad to say, old rug dealers are in dire straits financially at this time. The vast majority of old rugs would make excellent investments, and age should not be a deterrent to buying. There is always a slight risk that an antique rug may have a problem, but that risk is reduced by careful inspection, front and back. Most reputable dealers would be glad to allay any anxieties about condition issues, and allow thorough inspection prior to purchase. Ask the dealer to randomly fold the rug to assure that no dry spots are present.

Since the price for an antique rug is now so low, the financial risk of buying a carpet with a condition problem is correspondingly reduced.

Unfortunately, the new rugs of Iran are out of fashion. This is lamentable because they are among the most solid investments a person can make in carpets. New Tabriz, Heriz, Kerman, Nain, Quom, Isfahan, Mashad, Abadeh, Yalemeh, Shiraz, and Hamadan are not household words, but they should be, considering their beauty and extraordinary durability. These rugs constitute the most neglected category of investment carpets, with a long track record of resale in the antique carpet market. Their durability is derived from excellent materials and workmanship and minimal stress at the finish. They wear like iron and begin to show their true colors, or patinate, after about 50 years of use.

Like the solid wood furniture that often resides beside them, they live on and on, almost impervious to the ravages of time, as symbols of middle eastern society, that perfectly exemplify the art of the carpet at its best. Their neglect is chiefly the result of the abysmal lack of rug education, particularly in the United States.

The rug as investment is predicated upon education to increase demand. Manufacturers in the East, and importers and retailers in the West have not done enough to improve Western understanding of the incredibly complex process of creating a carpet. While they are useful, a few pamphlets at trade shows are not able to convey the life- blood of this art form. It is surprising that with all the wealth of the carpet trade, no one has been able to penetrate designer, antique, and investing magazines, or the cable networks, for the sake of the carpet craft.

While machine-made rugs at the low end are a new expanded niche that is probably here to stay, the children of older Gx’ers may develop a new interest in the exotic world of eastern art under foot, if they understand the long term value of the oriental carpet. If this interest can be enhanced through the media, the market share of hand-knotted relative to machine made rugs will rise. Because many experts believe globalization and gentrification will cause fewer hand knotted rugs to be woven, in fewer areas of the world, in the years to come, it definitely pays to make your carpet investment now.

In this era of corruption, it is time to leave Goldman Sachs for sacks of gold and piles of rugs. Have your wealth where it can be seen, enjoyed, and managed only by you and your loved ones. Invest your discretionary, so-called “mad money” in rugs, rather than commodities with no intrinsic worth. Whether the rug purchased is on the level of platinum, gold, silver, or copper, it makes sense to invest in a carpet.

You have come to the right place to ask questions about Oriental Rug Appraisal or to have your Rug Professionally Appraised online by J.R. AZIZOLLAHOFF himself-the author of The Illustrated Buyer's Guide to Oriental Carpets. He is now taking requests for appraisals online. After you fill out this form he will respond and ask you to send photos of your Oriental Rug. He will ask you questions about it and tell you what he would like photos of. After you pay for your appraisal you will receive it by email on official letterhead.