by Sumit Nag
In the case of certain wristwatches, ‘what makes luxury watches investment worthy’ is literally a million-dollar question. In a world of complex investment products from the financial industry’s brightest, as well as property and fine art, how is it that a wristwatch can be considered an investment? There is no concise answer to the question, which is made even more complex by the recent flurry of articles highlighting a slump in the secondary-market prices of luxury wristwatches.
However, there is a multifaceted set of realities and opinions that cumulatively indicate that the luxury watch market is very viable and worth investing in – and the reasons aren’t all purely financial. According to experts and collectors, the following points demonstrate the value of investing in luxury wristwatches.
1. Long-term price growth
Credit: Clare Chan
Let’s address the recent slump in the secondary-market prices for luxury wristwatches. Ross Povey, author and expert on Rolex and Tudor watches, shares, “I believe the slump is primarily focused on ‘hype’ watches. These headline-grabbing corrections overshadow a steady growth in other areas of the market.” He goes on to assert, “I believe almost any watch, bought at a retail price, from Rolex, Patek Philippe, Vacheron Constantin or Audemars Piguet will give a decent return on investment. There is a danger in buying watches, regardless of the brand, from the secondary market at significantly above retail prices.”
Eric Ku, collector and co-founder of the community-driven online auction house Loupe This, says, “At the same time, the stock market has been even more volatile, so the recent turbulence in global economics has not changed my view on the long-term viability of watches as investments.”
Tom Chng, founder of the Singapore Watch Club, reaffirms these observations: “We are living in turbulent times, with many geopolitical uncertainties looming. Let’s not forget the pandemic that has thrown the world out of whack. I remember when I first started looking to purchase my first pre-owned timepiece, I had to scour pretty niche forums to connect with collectors looking to sell. Today, watches transact in far higher volumes, and on much more mainstream platforms. They have come a long way in their evolution and adoption by the general population. This transformation has seen timepieces become an alternative asset class that is more robust and liquid that before.”
Not all watches, of course, are made equal. Chng continues, “The recent dip hit certain types of watches harder than others. Naturally, the ones that are more fundamentally backed horological value held up better than those fuelled more by hype and speculation. I’d say when you look at the bigger picture, the neo-vintage genre of the post-quartz crisis era presented immense value to be discovered. That period saw renaissance of classical watchmaking, and a return to traditional high complications were often executed with handcrafts like skeletonisation, hand-engraving, or enamelling. I’d say this genre of timepieces was largely overlooked by the market even five years ago, and experiences growth in terms of their collectability and, as a result, prices.”
2. Collectors make the market
Credit: Clare Chan
The reason why there is such confidence in the market about sustained growth, regardless of the recent dip, is because it is the open market of collectors who set the tone when it comes to the price of a wristwatch in the secondary space. Platforms that facilitate the buying and selling of watches post-retail, such as global auction houses, publish prices that are publicly published and can be used to observe the current performance of a wristwatch. Also, such platforms can track a watch’s trajectory over the years.
While these are great barometers of current prices, the best way to ensure you are paying a fair price for any wristwatch is to interact with the collecting community and keep an eye on the market. Ultimately, it’s just a big group of people who share a common interest to the nth degree.
In terms of where and how prices generally find their mark, Povey share, “There is a strong eye locked onto the large secondary players such as WatchBox, Chrono24 and Watchfinder. Auction houses are also a good barometer. However, looking at Chrono24 gives you a view of asking prices, not sold prices; auction houses can demonstrate odd spikes and volatile results. Find a dealer you trust.” More succinctly, Ku sums up the factors that drive the secondary prices of luxury wristwacthes: “Auction results and support from the collector and community.”
3. Enjoy your investment while its value grows
Credit: Clare Chan
Considering that the luxury wristwatch market is driven by collecting and collectors that tend to drive the value of such items, it’s not difficult to understand why the prices of investment-worthy pieces do not usually simply skyrocket. Rather, their monetary value rises organically over time. This then provides an important and cathartic reason as to why luxury watches are investment-worthy: While you wait for the value of your watch to grow, you can enjoy you mechanical wrist-worn piece of art. Ku addresses this poetically, saying that investing in luxury wristwatches is akin to making “an investment in your personal pleasure. To me, this is even important than the monetary investment.”
Echoing Ku’s point and illustrating how despite the recent slump, even certain “hype” watches continue to be sold for well above retail, Povey cites the steel Rolex Daytona. “Even after a slump, the new ones are still going for two and a half to three times above retail. The previous iteration (reference 116520 from 2000 to 2016) seems to be strengthening every day. In two years, they have moved from [being listed as] £12,000 (S$19,857) watches to £22,000 watches (full set, good examples).”
For some, delving into wristwatches is a hobby that can even benefit their personal well-being. Chng says, “Watch-collecting leads you to explore and discover more about yourself and the attributes of the craft that we hold most dear. In a sense, it’s a reflection of our outlook on life. The hobby also brings people together, connecting like-minded individuals who share the same passion for horology. Some of the friendships I have formed on the way are far more rewarding and enriching than the hobby’s monetary returns.”
4. Maintenance and repairability
Credit: Clare Chan
At the end of the day, spending on a luxury wristwatch begs the question of investment-worthiness because people want to be assured that their well-earned dollar goes the distance. Their concern is that the money spent might have been better appreciated had it gone towards a more traditional investment product. To this, Ku shares, “They [luxury wristwatches] are absolutely investment-worthy. They are small and portable assets that require little maintenance or special care. As one of the few jewellery pieces or accessories that men wear, it’s something everyone pays attention to. Because of this, the collector base is very broad.”
Here, Ku brings up another reason why mechanical wristwatches grow in value over the course of time. Because of their all-mechanical nature, they tend to be fairly easy to upkeep and can therefore remain functional for years on end. A common story within the collecting community is how a watch passed on by a parental figure keeps great time despite the exterior wear and tear, and the many years it has been in the family.
It is generally advisable to rotate watches regularly and to avoid any jarring knocks or drops. Furthermore, some manufacturers recommend periodical servicing, preferably by the manufacturer itself. However, should something dire happen, reputable watch brands have robust repair and restoration capabilities in place to keep your timepiece running for many years to come.
When asked how repairability and maintenance matters affect the value of wristwatches, Ku responds, “Significantly. It is important that brands like Rolex, Audemars Piguet, Patek Philippe have robust after-sales care. There are some watches that literally can’t even be repaired by their manufactures anymore, which obviously greatly affects their value.”
5. A form of legacy
Credit: Clare Chan
As a result of the sustained growth of value and the period that it requires, many have also turned to luxury wristwatches as an investment towards other pursuits in life. For example, many couples are opting for wristwatches as an alternative to wedding bands. Of course, there remains the age-old tradition of marking personal milestones with the purchase of a wristwatch, which can go on to become an important family heirloom to be passed down from generation to generation. Povey says, “They make incredible gifts for special occasions or as heirloom gifts. Passionate watch fans can enjoy wearing and treasuring their watch and learning more about their hobby. That’s a great investment in yourself.”
