Assembling a collection of rare high-end watches certainly seems like a glamorous way of storing your wealth, but does it really make sense as a heard-headed investment? Eric Torella, a former auctioneer and one of the world’s foremost experts on Patek Philippe and Rolex says:
Take a selection of ten watches and check their values from 1974 till today and make a comparison with the stock market. The performance for 1 USD will be 30 times more than the Dow Jones. In other words, you’d have 2 million USD today. But with watches, you’d have 60 million USD today.
Rich are Getting Richer
No wonder that more and more high-net-worth individuals are willing to devote considerable sums of money to such a passion investment as luxury watches. Especially in newer markets like Asia and Middle East where elites are developing a taste for fine watches, the demand is constantly on the rise.
China, for example, produces about 100 new millionaires a day, so the demand for Swiss luxury watches there has surged. And even amid the coronavirus recession, China’s wealthy continues to favor high-end timepieces, generating the most revenue on the global luxury watch market in 2020 . On top of that, this segment is expected to show a revenue growth of 19,7% in 2021 in China alone.
Objects of Desire
Knight Frank’s 10 year asset price volatility study showed that as an asset, luxury watches are surprisingly resilient and non-volatile. They were placed as second only to collectible furniture, while classic cars, stamps, and even gold happened to be among the most volatile assets .
Investment grade watches showed a +2% growth over the past 12 months in Q4 2019 and 60% over a decade . While it is true that it is not the most appreciable asset, it is the least volatile which makes it a safe middle ground with little downside.
Financial markets can be very volatile, especially in times of crisis, and even government bonds suffer. But just like diamonds, high-end watches have an underlying value – sometimes because they are iconic to their brands, or represent a breakthrough in watch industry, and of course because they are scarce.
Just like with stock market, it’s advisable for the watch investors to pick blue-chips. Such models as Patek Philippe Nautilus, Rolex Daytona and Audemars Piguet Royal Oak can be considered as blue-chips of the watch world. And as economies around the world are struggling to regain lost ground, these brands are experiencing a remarkable resurgence.
High-income earners who apparently didn’t spend money on summer vacations are fueling the demand in watches that cost thousands of dollars. After initial dip in sales in March 2020, the sales on the luxury watch market started to grow. As a result, one of the major online sellers – WatchBox – has sold about 48% more watches costing from $50,000 to $100,000, than the same period in 2019 .
A high-end watch is a safe bet. It won’t really degrade that much, especially if you keep it regularly serviced and avoid getting hit. But it’s not necessary going to net you a huge win either. It might not even appreciate at all. Roughly 97% of Swiss-made models that hit the market, won’t see the rise in value . That’s why we at Ineichen highly recommend seeking professional advice before investing in any large purchase.
 Ho, J. (2020, November 16). Watches As Investment and other Surprising Findings in Knight Frank Luxury Report 2018. Retrieved from https://www.luxuo.com/style/watches/watches-as-investment-and-other-surprising-findings-in-knight-frank-luxury-report-2018.html#:~:text=According%20to%20Knight%20Frank%20Luxury,gold%20as%20among%20the%20most
 Knight Frank. The Luxury Investment Index 2020: discover the world's most-coveted items. Retrieved from https://www.knightfrank.com/wealthreport/article/2020-03-03-the-luxury-investment-index-2020-discover-the-worlds-mostcoveted-items
 Safo, N. (2020, October 5). Pandemic is giving the luxury watch market its moment. Retrieved from https://www.marketplace.org/2020/10/05/pandemic-giving-luxury-watch-market-its-moment/
 Baumann, M. (2020, March 23). Are Luxury Watches an Effective Haven for Investors? Retrieved from https://www.finews.asia/high-end/31304-swiss-watches-luxury-goods-coronavirus-pandemic-rene-beyer-zurich-bahnhofstrasse-patek-philippe-audemars-piguet-rolex-dayton-nautilus-royal-oak-asia-hong-kong-singapore