Investing in watches is something that has always come to mind at least once to anyone owning a watch. The big question we will try to answer is: should we watches be considered as investments? Let’s talk about watches and their resale value!
Investing in watches, the historical context
To better understand the topic, we need to put in perspective the pre-owned market with the economical context from last decades.
The watch industry growth has been steady for years. Except in 2008, the Federation of the Swiss watch industry’s exportation figures demonstrate a regular growth since 2000: +110% of value for the 2000-2015 period. Watch companies were selling thousands of products thanks to very high demand. Watch players have also taken the habit to raise prices on a regular basis to better leverage this demand.
For example, Patek Philippe’s watch prices have increased by 26% since 2010 (on average), Rolex by 30% since 2010 (on average) and Audemars Piguet ones by 35% since 2010 (on average).
Those repetitive increases had artificially pumped up the resale value of our watches. And some great bargain hunting could have been done this way! For example, you could have bought a Rolex Submariner Date in 2000 for 3’500 USD, while the new reference would be currently retailed at 8’500 USD (+142%). This Sub bought in 2000 is currently selling for 5’900 USD on Chrono24 -> ROI of +69%! This would obviously have made a great investment. Of course, your watch needs to be in excellent condition along with the original box and papers to get maximum value out of it.
Investing in watches, the current situation
Nowadays, the situation is more complicated. 2016 was the first year of high decrease in watch exportations: -10% over the last 12 months and we have yet to see what is going to happen in 2017. Consumers’ purchasing habits are also evolving as they are more connected and aware of pricing policies worldwide from the industry.
The demand is also slowing down and current macro situation is really tense. There is indeed terrorist’s threats over Europe and anti-corruption law flourishing every day in China (its a fact, Chinese are among the biggest buyers worldwide when it comes to hard luxury). Last but not least, there is a new 60% tax over luxury goods bought outside mainland China for Chinese…
This new situation combined with the intense competitive landscape, forbids watch players to keep increasing prices and actually rather seek to decrease them nowadays. A good example is Piaget with its Polos S or even Vacheron Constantin with Quai de l’Ile in steel.
Thus, if you buy a brand new watch today, you should definitely see it as a pleasure expense rather than an investment. You might very well never get your money back. We don’t say you won’t make an investment, but you’ll need to wait decades to find out and that’s not what we can call a safe investment!
As our friends from FratelloWatches say, today we are more about finding a watch retaining good resale value versus making an investment.
However, we can still notice a few exceptions to this rule. Some specific references from brands like Audemars Piguet, Patek Philippe and Rolex show great interest from customers and production is limited to keep the demand above the offer.
You can indeed wait for 6 months to get a Royal Oak 15202, or years for Nautilus 5711, 5712 and Daytona 116500LN. If you bought it to make money, you made a great choice as the new Daytonas are currently priced at 16k€ for immediate deliveries on Chrono24 (+45%!). Buying one of these watches new at retail price is never a bad option if we’re talking about resale value. Actually, it’s always a good idea, even without talking of resale value!
Also, some brands are creating limited edition products to in order both to raise demand and resale value. But, in this case, pay attention to the notoriety/image of the brand and its current strategic moves. A Patek Philippe Nautilus 40th anniversary might be worthy (despite the high production) while very limited production from common brand might no be…
Investing in watches, the vintage warket
What about vintage pieces and auctions houses??
Houses like Phillips, Christies, Sothebies currently get high demand for vintage pieces as both retail prices have reach summit and thousands of pieces with good bargain are on the pre-owned market.
Therefore it could be a good alternative to brand new watches if you don’t want to lose too much money when you leave the store. You should then rather focus on pieces in good overall condition, with box and papers, with interesting historical background and less appeal from the crowd (for now!). This way you could find-out the next must have vintage watch. Second choice watches could be better deal with higher ROI perspective.
To find those timepieces, you can check online sales (chrono24 is a good one) and small auctions houses with less spotlight from the press. Famous auction houses usually gather exclusive and expensive vintage pieces. But you can still bid on very interesting and rather cheap pieces at those auctions -> you could be lucky!
Bare in mind that auction houses add a 20-25% tax on the final hammered price
Still, if you want to go for highly expensive watches, go get advice directly from experts. Be cautious as well as prices can reach ridiculous summit, a bubble might be coming and that could make investing in watches a bumpy ride.
To sum-up, investing in watches has become complex nowadays. Brand new watches usually don’t retain their value on the pre-owned market, and vintage ones are attracting more and more watch enthusiasts, making it difficult to find out great bargain with high ROI perspective.
Today, we don’t see watches gaining value on a short-term perspective (except certain watches like Rolex Daytona, Patek Philippe Nautilus and Audemars Piguet Royal Oak and few limited editions). And we would recommend you to go for Patek Philippe and Rolex if you don’t want to lose too much on the pre-owned market!
Please, buy watches for your pleasure and enjoy wearing them!
The Toolwatch team
Watch Geek Guess : Do you know the hammered price of this gorgeous Paul Newman Daytona ref. 6263 with tropical dial?
=> 1.9 millions Swiss francs..! WOW!!