When it comes to buying luxury watches, people often have a knee-jerk reaction. They are largely seen as a fancy way to tell time, and more often than not, a show of wealth and status. However, there are many reasons that luxury watches can also make great investments for both casual and serious collectors.
If you’re considering buying a luxury watch and are eyeing brands like Rolex and Patek, then it might be a good time to jump in and make that investment. Why? Top luxury watch brands outperformed other asset classes in the past decade, and right now, the price of pre-owned luxury watches are on the decline.
Take the steel Rolex Daytona ref 116500 for example. Last March, the resale value of the highly sought after Rolex Daytona reached an all time high at US $48,500. More recently, WatchCharts says it’s dropped down a little closer to home at US $30,000 (which, mind you, is still double its original retail price).
It’s the law of supply and demand at work, and the supply in 2022 rose significantly among luxury watches. WatchCharts data shows double the number of Rolex and Patek watches on the market, and a huge 78% increase in Audemars Piguet watches. We all know that it may take years to get your much desired watch at an AD, and with demand vastly exceeding the supply of new watches, collectors the world over are putting theirs up for sale – leading to a very robust pre-owned watch market.
Even with this data, you’re probably asking: should you still make that considerable investment in a luxury watch during a down economy? Investment specialists are saying yes, now is the time to invest. It could very well be the best time to start your luxury watch collection as the market is trying to offload the large stockpile.
Still, this isn’t a decision you should make lightly. We’ve laid out what decisions you should make before investing in the world of luxury watches.
Why now is a good time to buy a luxury watch
Are luxury watches a sensible and worthwhile investment even in times of crisis?
Our answer is yes. With the stock market struggling, and the news of massive layoffs, people have legitimate and practical economic concerns. Despite these concerns about savings during a claimed recession – the value of used luxury watches like Rolex, Audemars Piguet, and Patek Philippe have skyrocketed during the first several months of 2022 before dipping slightly as the year ended.
It’s still true that these brands will always be in demand because they offer exceptional craftsmanship, heritage, and collectibility at a relatively lower price point compared to other luxury goods such as cars or boats (which rarely appreciate). Even looking at Rolex alone — the investment in a Rolex watch has consistently outperformed other investments like gold and the stock market for over a decade now.
The falling price of used luxury watches like Rolex can be explained by a simple economics: supply being pushed out to meet demand. In other words, demand was high. You can see the demand in the prices that collectors were willing to pay for the watches. This high demand encouraged collectors, dealers, and auction houses, into selling off some pieces from their stashes, thus creating additional supply which drove down prices across all models sold through this method.
Prices could continue to fall over the next few months, but it won’t stay that way. Considering the Rolex Daytona 116500 is still selling for twice its original retail price on the pre-owned market, luxury watches tend to build value over time, not lose it.
If you’re not going to rush into selling your new luxury watch, and instead take the time to enjoy its craftsmanship for a few years, now is the time to buy. After all, the most worthy investments are long-term investments.
Factors to consider before purchasing your luxury watch investment
If you’re on the fence about investing in a luxury watch, here are some factors to consider:
The Brand of the Watch
Let’s face it: the brand of the watch is just as important as its price. If you’re looking to resell your watch, you’ll want to make sure that you get a good return on your investment. A brand with a good reputation and top of mind awareness will hold its value better than others.
This means that if you buy an expensive Swiss-made timepiece from Rolex or Patek Philippe, it’s likely that when it comes time for resale in ten or twenty years time, there will still be demand for such high-end luxury goods even if their prices go up slightly during those years (which they probably will).
When it comes to investments, not all luxury watch brands are made equal. While there are plenty of brands that sell quality, luxury watches, they don’t all yield the same investment results. In that case, your top players are Rolex, Patek Philippe, and Audemars Piguet.
The simple fact that a watch is rare means it’s more valuable. In the case of vintage Rolexes, for example, there are only so many of them out there and they’re becoming increasingly difficult to find as time goes on. The same goes for other collectibles like cars and stamps: scarcity makes them worth more money over time.
Look at the production numbers of the piece that has caught your eye. Watches that are a limited edition or out of production usually hold their value, or even grow in value over time. You also cannot go wrong with iconic pieces – think Rolex Daytona or Patek Philippe Nautilus. When choosing a specific model, a little research on your part will go a long way.
Provenance and History of the Watch
Sticking with the idea of a little research, you’ll find that the watches that gain the most following and are worth the investment are those that have been given nicknames by aficionados.
Whether it’s named after a special color combination or having been recognized on the wrist of a celebrity, you’ll find that collection-worthy watches are not known by their reference number but by names like “Polar”, “Batman”, “John Mayer Rolex” and others.
Watches with a history and a back story, draw more attention on the market. The more the demand for that particular model, the higher the price. That’s an economic fact.
Condition and Original Parts
As with any investment, the condition of your watch determines its selling price. If you’re buying a luxury timepiece from an online auction or from a private seller, chances are the watch will not be restored before it is sold to you. Check out photos of similar models in good condition, so you can assess whether the watch you are about to buy has been taken care of by the owner.
Alongside the condition, it is also wise to ask if the watch has all-original parts. A timepiece that is as close as possible to its original state (with the original dial, hands, factory diamonds, bracelet, etc.) will always be valued higher than one with aftermarket parts or replacement components from a different era.
Another important thing to know is when the watch was last serviced. In general, Rolex recommends a full service anywhere between 3 to 5 years. If you’re buying a watch that has not been serviced, you’ll need to factor in the cost of servicing in addition to the watch’s price, and then consider if it’s still worth it.
Reputation of the seller
When you purchase a luxury watch, you’re shopping for the seller as much as you’re shopping for the watch. You’ll want to shop for someone who can stand by the watches they sell. Consider asking the following questions when shopping for a seller:
Can they assure you of the authenticity of their watches? Do they provide warranties and authenticity guarantees?
What’s their Return Policy? What happens if the watch isn’t what you thought it was once it’s in your hands, or if you change your mind about it as soon as you receive it?
Do their customers recommend them as trustworthy? Check their Google, Yelp, and Facebook reviews to see what others say about them.
Are luxury watches a good investment? Final Thoughts
Most luxury watches are made by a handful of well-known brands, and these companies have decades, if not centuries, of experience in creating beautiful timepieces. A watch can be an excellent investment if you know what to look for in terms of quality and design.
If you need expert advice on your next watch, the SwissWatchExpo sales team can provide individualized product advice and education, so that you can find the perfect item for your needs, taste, budget, and occasion.