Watches
Published: 26/11/2023

Time is money: Investing in watches

April Newsletter (24)

High-quality luxury watches, particularly Rolex, Patek Philippe, and Audemars Piguet, enhance portfolios. Reports by the Boston Consulting Group reveal these watches gained an annual 20% appreciation from 2018 to 2023, surpassing the S&P 500's 8% yearly growth.

Leading brands consistently raise base prices, empowering secondary markets. This drives up older or discontinued models' values within a watch family. A Morgan Stanley report discussed by WatchBox has prompted consideration of the secondary watch market's future. Rolex's surging demand led to scarcity, favouring established client relationships. Standard Rolex models now trade 23.7% above retail on average, sparking sustainability concerns.

Looking ahead, non-rare current pieces might revert to or dip below retail in 12-18 months. The market's selectivity could bring some models close to retail in 18-24 months. While Patek Philippe and Audemars Piguet saw speculative price growth, bargains persist. Look for watches that will bring you long-term enjoyment, as speculation results in winners and losers in this thriving industry.

 

Screenshot 2023 11 26 at 19.16.21

 

Why invest in watches?

Luxury watches from well-known manufacturers have been an exciting investment opportunity for several years. The popular steel models from Rolex are so out of stock that enthusiasts are willing to pay a considerable premium on the secondary market. Especially popular are watches that do not yet show any noticeable signs of wear and are in good condition. In cooperation with our partners, we can guarantee the authenticity and quality of our assets.

Exclusivity: The watch should have been produced by one of the well-known Swiss watch manufacturers and should also enjoy a certain degree of recognition among buyers. In the best case, we buy a watch that is not directly accessible on the secondary market and can therefore be sold profitably at the end of the investment horizon.

Quality: When buying watches, we make sure that the watch has never been worn or is in very good condition. Furthermore, we only buy watches for which the original papers and packaging (the so-called box) are included in the purchase price. This is the only way we can guarantee the authenticity of the watch.

Production quantities: The most exciting watches are those that are only produced in small quantities or for which we assume that production will cease completely within our investment horizon. As soon as this happens, we can offer our investments on the secondary market with a price premium.

⚠️ What are the risk factors to consider?

Oversupply of watches: If watchmakers start to mass-produce their timepieces without considering limited editions, eventually the supply will meet the demand and the secondary market won‘t be so attractive anymore. Because what would be the point of paying a premium for a preowned watch if you could get the exact same one at a lower price from the original store?

However, this is not likely to happen. Companies such as Omega and Rolex are in this business for a very long time, and they know exactly what to do in order to keep the demand high. Waiting for a watch release is a very standard activity for certain models.

Recession: This means people have less disposable income and are therefore less likely to spend money on luxury watches. On the other side of the spectrum, it also means that many people may need extra money and therefore may be more willing to sell watches they own. As a result, demand falls and supply increases, which has a negative impact on prices.<

Counterfeit: Due to the popularity and exclusivity of premium watches, counterfeit pieces are not uncommon on the market. As popularity of the category increased, the issue will become even more paramount.

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Aurelio Image CEO

Aurelio

CEO & Co-Founder