Investors are increasingly turning to luxury watches as an alternative investment opportunity, as the market for these timepieces continues to experience a three-year hot streak. The demand for luxury watches, particularly Rolex, has surged to the point where the company cannot produce enough watches to keep up. With the average watch taking a year to make and waitlists ranging from a few months to a couple of years, consumers are now looking to the secondhand market to fulfill their desires.
According to Boston Consulting Group, luxury watch sales amount to a $75 billion market, with secondhand sales making up 30% of that. This segment of the market is growing rapidly, especially among younger consumers who are increasingly interested in luxury watches. As a result, secondhand shops are holding inventory to supply walk-in customers who are unable to wait for a new watch.
One such shop is Prestige Watches, located in New York City’s Diamond District. Customers can walk in and secure a watch within 30 minutes, bypassing the long waitlists. This convenience has attracted customers from all over, including a tourist from Texas who purchased a Rolex watch for his wife after the model sold out at Macy’s. The shop’s founder, Yuri Iskhakov, identified the watch through a photo and made the sale, saving the tourist years of waiting.
However, the secondhand market comes at a higher price compared to buying directly from the retailer. Watches in the grey market can be a few hundred dollars more expensive than their brand-new counterparts, and rare watches can be thousands of dollars more expensive. For example, while a 36 mm Rolex Oyster Perpetual watch retails for $6,100 through Rolex’s direct platform, customers can buy it on the spot or virtually through Prestige Watches for nearly $13,000.
Despite the higher prices, many collectors are willing to pay more for pre-owned watches. According to a recent report by Boston Consulting Group, 29% of collectors reported paying more than the retail price for their most recent pre-owned watch. Additionally, 40% cited avoiding long lines in the retail market as one of their top reasons for turning to the secondhand market.
Luxury watches are not just seen as fashion accessories; they are also viewed as alternative investments. Some brands, such as Rolex, Patek Philippe, and Audemars Piguet, have outperformed traditional investments in recent years. From August 2018 to January 2023, average prices in the secondhand market for these luxury brands increased by 20% per year, even during the COVID-19 pandemic. In comparison, the S&P 500 index had an annual growth rate of 8% during the same period.
Investors also believe that luxury watches perform well during economic downturns. During the Great Recession from 2007 to 2009, luxury watches outperformed the S&P 500 and rebounded within two years after the 2008 market crash, while other categories took longer to recover.
The market for luxury watches is gaining credibility among buyers, thanks to authentication services and the availability of information in the digital era. Buyers are no longer as skeptical of dealers offering discounts and promotions, as transparency and accountability have improved.
Younger buyers are also entering the market, attracted by the potential for rare finds and special deals. Boston Consulting Group reports that 95% of watches are no longer in production, increasing their value and appreciation potential.
To attract younger customers and a new generation of buyers, many sellers are turning to social media. Prestige Watches, for example, saw a surge in sales after going viral on TikTok under the account handle “Prestige Brothers.” The shop’s founders, Yuri and Rafael, showcase their latest deals and engage with customers trading in luxury brand watches.
The popularity of the secondhand market has even prompted Rolex to launch its own certified pre-owned program in 2022, further solidifying the legitimacy and potential of this investment opportunity.
Overall, luxury watches have become a sought-after alternative investment, with their value and appreciation potential attracting investors and collectors alike. As the market continues to grow and gain credibility, more individuals are turning to watches as a way to diversify their investment portfolios and enjoy the luxury and style that these timepieces offer.
What factors have contributed to the increasing demand for luxury watches?
Have increased by 45%, according to a report by Knight Frank.
This surge in prices has attracted the attention of investors who are looking for alternative investment opportunities. Luxury watches offer a tangible and portable asset that can hold its value or even appreciate over time. Unlike traditional investments like stocks and bonds, luxury watches can be worn and enjoyed while still retaining their investment value.
The increasing demand for luxury watches and the scarcity of new models have created a thriving secondhand market. Collectors and enthusiasts are turning to trusted sellers like Prestige Watches to find their desired timepieces without having to wait for months or even years.
However, the convenience of the secondhand market comes at a cost. Prices in the grey market can be significantly higher than those offered by the brand directly. This premium is driven by the scarcity and desirability of certain models, as well as the convenience factor.
Despite the higher prices, collectors are willing to pay a premium for the right watch. For many, the satisfaction of acquiring a coveted timepiece immediately and avoiding the waitlists outweighs the additional cost. In fact, paying above the retail price for a pre-owned watch has become common among collectors.
Luxury watches have also proven to be a profitable investment in recent years. Brands like Rolex, Patek Philippe, and Audemars Piguet have seen their prices soar in the secondhand market, outperforming traditional investments. This has attracted attention from a new wave of investors who see luxury watches as a way to diversify their portfolios and potentially earn significant returns.
Overall, the demand for luxury watches and the growing secondhand market are fueling interest from investors. Luxury watches offer a unique combination of fashion, craftsmanship, and investment value, making them an appealing alternative investment opportunity. As the market continues to thrive, both collectors and investors are finding value in these timeless timepieces.
