Despite challenging market conditions, luxury watch investment still boasts a notably impressive record. Coupled with an ever-increasing international demand that is confronted with diminishing supply, investing in high-end mechanical watches is an attractive proposition.

Over the past 10 years highly collectable watches have simply exploded in value, so today it’s not just about making a collection of nice-looking timepieces anymore. Savvy investors prefer rare high-end watches because they are an asset that has been increasing at a rate of 12-15% per year for the last decade [1].

The motivation of buyers has transformed. Today, buyers are looking to purchase jewels, diamonds and gemstones as a store of wealth and as a hedge against possible future inflation.

Graeme Thompson, Head of jewellery at Phillips

Financial Security

Traditional markets for luxury watch investment, such as Europe and North America, were joined over the recent few years by the emerging markets of the Far East. Pockets of wealthy high horology art lovers from across the world were attracted to luxury watch investment as a means of diversifying their investment portfolios. This created an unprecedented demand for the Switzerland’s leading luxury watch brands and effectively drove prices up.

According to the Financial Times, spring 2020 brought one of the most significant declines in stock markets since the Global Financial Crisis of 2008 [2]. As the stocks around the world suffered their worst day since December 2008, oil prices crashed and even bitcoin dropped by 9%, luxury watches proved to be a safe haven for investors thanks to booming online sales. After all, none of the Swiss luxury watch brands has to keep stock markets happy, so they concentrated on keeping their clients happy instead. 

Great Money Makers

Stock markets and the currency exchange have taken massive hits in 2020, so anyone who invested, were feeling out of luck. Watch prices, on the contrary, have been holding stable, but as the normal life returns, a price rise is likely to be in order, pushing up the prices on the pre-owned market, which means that now is the perfect opportunity to invest in your next timepiece.

The three giant privately-owned watchmakers - Patek Philippe, Audemars Piguet and Rolex - had to shut down their production sites in spring, which costed them up to one quarter of their 2020 production capacity [3]. But their waiting lists are not getting shorter, quite the contrary [4].

The blockbuster pieces by these titans of the watch investment world already have a long waiting list, and they usually sell for over double their retail prices on the secondary market. As they are gradually re-opening their production floors in Switzerland after couple of months’ layover, they continue to sell at well above the retail prices on the secondary market, and their waiting lists for the most desirable models are as long as ever [5].

Collectors don’t buy watches to tell the time. Luxury watches are classified as collectible pieces of art – valued on watch complications, craftsmanship, brand history, provenance, age and more – and can last for 100 years.

Kunal Kapoor, founder of The Luxury Closet

Digitally Savvy

With manufactures closed, travel at standstill and global lockdowns in place… people still wanted to buy watches. As their brick-and-mortar shops were closed down, the Watches of Switzerland group, the leading luxury watch retailer in UK, reported that their online sales almost doubled. And more than half of their turnover was generated by Rolex alone [6].

Increased online sales activity has also given rise to a more diversified clientele. E-commerce proved to be an effective way to both engage existing clients under the stay-at-home policy, and to attract new clients, especially young, digitally savvy collectors.

These are far from easy times for the global economy, but such brands as Patek and Rolex have gained a tremendous ground during the pandemic thanks to strong stories and strong value proposition. So if the past year proves anything, it’s that collectors remain passionate.

[1] Mullally, W. (2020, April 24). Coronavirus pandemic driving up demand for world’s most expensive watches. Retrieved from https://english.alarabiya.net/en/coronavirus/2020/04/24/Coronavirus-pandemic-driving-up-demand-for-world-s-most-expensive-watches

[2] Georgiadis, P. et al. (2020, March 10). US stocks fall 7.6% in worst day since December 2008. Retrieved from https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68

[3] Corder, R. (2020, June 11). CRISIS? WHAT CRISIS? Rolex, Patek Philippe and Audemars Piguet. Retrieved from https://usa.watchpro.com/crisis-what-crisis-rolex-patek-philippe-and-audemars-piguet/

[4] Corder, R. (2020, May 26). Rolex, Patek Philippe and Audemars Piguet waiting lists are just as long as before the pandemic say authorised dealers. Retrieved from https://www.watchpro.com/rolex-patek-philippe-and-audemars-piguet-waiting-lists-are-just-as-long-as-before-the-pandemic-say-authorised-dealers/

[5] Corder, R. (2020, June 11). CRISIS? WHAT CRISIS? Rolex, Patek Philippe and Audemars Piguet. Retrieved from https://usa.watchpro.com/crisis-what-crisis-rolex-patek-philippe-and-audemars-piguet/

[6] Foulkes, N. (2020, September 28). Trading faces: how the watch industry defied the odds. Retrieved from https://www.ft.com/content/ce2894b4-cced-4c16-946c-b145ae78f160