High-end mechanical watches are a beauty, and they have been an enduring symbol of taste, class and wealth ever since they were invented. Despite their reputation, many people still can’t quite understand how luxury watches can be good investments. After all, a wristwatch is a physical asset that depreciates in value every year. Also, the advancement of digital technologies today offers a huge variety of quartz and smart watches, rendering mechanical watches impractical to use.

So is it wise to invest in a high-end watch? The answer is still “Yes!”, and here are the reasons why.

Accessible for New and Seasoned Investors

Luxury watches are good investments because this market is currently experiencing high activity. Inflation has greatly affected all cash investments, so investors are diverting to alternative assets like art, rare coins and high-end watches to protect their assets. The demand for high-yielding investments is sky-rocketing and alternative assets such as wristwatches are the best bet of many investors.

Compared to other alternative assets, watches are easier to be maintained as opposed to classic cars and wine, for example. Investors won’t need any expensive climate-controlled rooms and garages – they can keep their watches in the boxes when they are not wearing them. Not to mention that you can wear well-made luxury watches as long as you want until their prices go up and even pass them on to your kids.

I believe that luxury watches can definitely lift investor’s spirits in bad times. Because with high-end watches collection in my portfolio, I don’t need to worry about my stocks and shares becoming worthless during a financial crisis. It’s reassuring to see that tangible investment in your safe deposit box. It brings a smile to my face and if I choose I can wear it whenever I like. There is the fun factor.

Alan Chow, an investment banker and watch enthusiast from Hong Kong

Lifelong Passion with Valuable Returns

Investing these days is simply not the same as before. Many investors are already including alternatives to their investment portfolios due to the disappointing returns from mainstream asset classes. Despite the corona crisis, people are still buying watches, and they are just as popular as ever before. And just as expensive.

Certain models hold good investment value like a Hermès Birkin bag, because these are the high-end quality goods that have historically proven to retain value initially paid for them and even become significantly more valuable over time.

Richard Mille is like a Hermès bag of the watch world. And it’s not just the craftsmanship, it’s the supply and demand. Since the brand produces only 4,000-5,000 pieces a year, it’s hard to get them, while the demand, especially among celebrities, is high. So no wonder that some Richard Mille’s models consistently go up in value on the secondary market, from 20% to 30% every few months [1].

Global watch industry was hit by the corona crisis in March-April 2020, but according to Chrono24’s CEO, there also has been a quick recovery and now the sales numbers are 13% higher than before the coronavirus [2]. Vintage market, for example, is still thriving despite the pandemic. And while some brands are calling off their plans to release new models, Sotheby’s has managed to sell even more vintage watches this year [3].

So, how is it that luxury watch market has managed to weather financial storms and generate such consistent market-beating returns? The answer lies in a very simple economic model. The prices on the luxury watch market are dictated by supply and demand. Since the high-end watch is an artisanal products made in very low quantities, the supply is extremely limited.

As well as being a tangible asset, luxury watch investment has absolutely no correlation with the stock market, making it stable even during times of economic uncertainty. So while the overall industry has suffered during the global pandemic, there’s never been a better time to invest in luxury watches. 

[1] Davis, D.-M. (2020, June 3). A millennial entrepreneur who runs a high-end watch retailer explains why now is the time to invest in watches — and which timepieces are the most valuable. Retrieved from https://www.businessinsider.com/wealthy-people-buying-luxury-watches-as-they-shift-from-stocks-2020-4?r=US&IR=T

[2] Corder, R. (2020, August 6). Patek Philippe prices double in 5 years on Chrono24, but what should you invest in now? Retrieved from https://usa.watchpro.com/patek-philippe-prices-have-doubled-in-5-years-on-chrono24-but-what-should-you-invest-in-now/

[3] Co, C. (2020, October 19). In the Midst of a Pandemic, Jewellery and Watch Auction Sales Have Never Been Better. Retrieved from https://www.prestigeonline.com/hk/style/jewellery/in-the-midst-of-a-pandemic-jewellery-and-watch-auction-sales-have-never-been-better/