It is difficult to buy a new Rolex these days. And the secondary market is booming into the stratosphere | Source: Getty

Investment Insight: The Secondhand Luxury Watch Market is Thriving

A luxury watch is many things. Historically, it’s a symbol of opulence and wealth, a reflection of personality and an expression of style.

Now more than ever, it’s an investment.

While digital technology is undoubtedly the way forward, there’s a new power in analog goods and second-hand is as good as new. People want a tactile piece attached to history, something connected with tradition or harbouring a feeling of exclusivity.

Vintage art, classic cars, vinyl records and of course luxury watches are all thriving right now in the modern resale marketplace.

According to U.S consulting firm McKinsey, the pre-owned luxury watch market was worth over A$24 billion in 2018 and is poised to grow to over A$40 billion by 2025. Online retailers such as Fashionphile have recorded a 73 per cent increase in the search term ‘watch’ since 2020.

And it’s driven by not only traditional collector passion but also an evolving target audience and limited supply.

Plagued with supply chain issues and manufacturing closures amidst the pandemic era, Elizabeth Layne, chief marketing officer at luxury resale platform Rebag, says watchmakers and brands produced fewer products last year.

It’s widely believed Rolex makes about a million units each year but according to Business Insider, “they’re controlling distribution and who gets what, at a retail level”. This is making it increasingly hard to buy the brand at retail from an authorised dealer – in turn limiting supply and fuelling a lucrative secondary market.

Leading reseller of Rolex watches, Bob’s Watches, CEO Paul Altieri says famed timepieces such as the Rolex Cosmograph Daytona can be “worth double or triple what you paid before you leave the store.”

Rolex Cosmograph Daytona | Source: SCMP

A decreased supply isn’t the only factor driving the resale market. The story of the stereotypical ‘collector’, who would historically choose a timepiece based on a fondness for the art of watchmaking, is also evolving.

Online influence and accessibility are having a huge impact on a growing younger generation of buyers who are interested in the market. Luxury watch-related content generated over 173 million views on TikTok, according to the app.

The once elusive luxury watch world is now available to the masses via content creators posting videos about buying a watch for the first time or giving a behind-the-scenes look at a career in the industry.

Other accounts on Instagram are posting trends, price changes and market news, ensuring industry insights are now effortlessly accessible and understandable.

@watch.eric My Daily Routine!! Keep you watches clean!! #clean #routine #success #watcheric #foryou ♬ Chan Chan – Buena Vista Social Club

It’s these factors that are keeping the luxury watch market ticking at a time when a savvy investor can capitalise on a growing opportunity.

It’s no surprise that the biggest luxury names like Rolex, Audemars Piguet and Patek Philippe dominate the market and continue to appreciate in value.

According to 10 years of sales data compiled by Bob’s Watches, Rolex has on average outperformed major assets like real estate, stocks, and gold.

The average Rolex price is now more than US$13,000 – nearly three times the 2011 average of US$5,000.

Source: Bob’s Watches

Popular models like the Daytona, Date Just and Sky-Dweller are on the higher end of the scale.

The Cosmograph Daytona commands more than US$31,000 on average on the secondary market – at retail, it’s about a third of that price. The Sky-Dweller, only introduced in 2012, has more than doubled in price on the resale market in just a decade.

new-sky-dweller-white-gold
New Rolex Sky Dweller in White Gold | Source: Rolex

Once seen as a prized unicorn in the luxury watch world, Patek Philippe has followed in Rolex’s footsteps and cemented itself as a mainstay for investors.

Its steel sports watches such as the Patek Philippe Nautilus and the Aquanaut are at the top of their game.

Collaborations with the likes of Tiffany & Co ensure the brand remains on the tip of everyone’s lips releasing exclusive pieces that have eased Patek into the realms of popular culture.

One iteration of just 170 Patek Philippe and Tiffany & Co Nautilus‘ sold for a record-breaking US$6.5 million on a retail price of around US$52,000.

When Patek Phillipe released its famed Nautilus with an exclusive green dial, even family members of Patek’s President, Theirry Stern couldn’t get one. A factory-sealed model sold at an auction for over A$641,000 last year – 11 times higher than its original price of A$47,641.

In 2012 Benjamin Clymer, founder of the watch site Hodinkee, bought a 1970s Patek Philippe Nautilus for US$18,000 – today it’s worth at least US$75,000 (approximately A$99,500).

The 40th Anniversary Nautilus named the holy grail of the Nautilus collection, retailed for just over A$150,000 when it was released in 2016. They now sell for over A$1.1 million online.

Completing the trio of investment juggernauts, Audemars Piguet, known as the sports watch king, is appealing to a more refined audience. Its watches are an aspirational symbol of sporting prowess adorning the wrists of winning tennis players and world-class Formula One drivers.

And with Tim Stracke, CEO of online luxury marketplace Chrome 24, saying “steel sports models from iconic brands” are usually the ones that out-perform the global stock indexes, it’s a great time to secure an Audemars. Especially the brand’s most popular export, the Royal Oak.

According to luxury watch digital marketplace Chronext, “all Royal Oak references increase in price,” and the Royal Oak Jumbo Extra-Thin, in particular, has more than doubled in price since 2020.

Source: Chronext

The brand is also the master of exclusivity, manufacturing fewer watches than its two biggest rivals. The Swiss company manufactured around 44,000 watches in 2019, according to investment bank Morgan Stanley’s estimates. And with scarcity comes higher prices.

An Audemars Piguet Royal Oak 50th Anniversary Rose Gold released just last month with a retail price of around A$94,000 now sells on Chrono 24 for over A$750,000.

Audemars Piguet Royal Oak 50th Anniversary Rose Gold
Audemars Piguet Royal Oak 50th Anniversary Rose Gold | Source: Luxify

Chronext also mentions that value appreciation is likely to continue with “no end to the price rise in sight”, stating that “there are many reasons to believe that the end of the road has not yet been reached.”

It seems that in 2022 fine watches continue to prove to be a safe-haven asset.

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