Are Watches a Good Investment? What You Need to Know
Do all watches retain their value? The Watches Pages asked a few online pre-owned luxury watch retailers for their insights on what you need to know before buying a watch for investment.
Watches as an Investment
If you are looking to buy a watch as an investment that will increase in value over time, there are several brands and specific models that have a proven track record on the second-hand market. However, there are never any guarantees. A watch’s price depends on supply and demand, much like anything in today’s world, and can vary for countless reasons.
Following the trends can affect the price of a watch, but it is rather difficult to spot new trends and invest in the right watch. Over time a few specific brands, such as Rolex, Omega, Patek Philippe, Audemars Piguet, and Tudor, have proven to be successful as watches as an investment. That being said, there are always those specific models from these five brands that are more coveted by collectors.
The Rolex Daytona, together with the Patek Philippe Nautilus, Audemars Piguet Royal Oak, and Tudor Black Bay Fifty-Eight, are today highly sought after and are sold at a premium, but it hasn’t always been that way. In fact, the Daytona was a model in the 60s and 70s that wasn’t popular at all. At the time, many pawn shops and jewelers specifically said that they had no interest in purchasing ANY Daytonas from Rolex.
It was the famous actor and racing driver Paul Newman that started wearing his rather unpopular Daytona reference 6239 making the Italians pay attention and start calling it the” Rolex Daytona Paul Newman.” The Rolex Daytona reference 6239 is still known by that nickname today and is one of the most iconic watches of all time and has significant meaning when it comes to the history of Rolex watches. The Daytona 6239 is an excellent example of how a trend or an event can completely change how a watch is seen.
Are Watches a Good Investment?
In today’s world, Rolex’s sports models tend to be extremely desirable, and the waiting lists at different authorized dealers are often non-existent simply because they are already too long.
The interest in Patek Philippe’s Nautilus and Aquanaut, or Audemars Piguet’s Royal Oaks, is so high today that the demand for these watches greatly surpasses the supply, which often results in a hefty premium when buying these watches secondhand. Will these watches always command a premium, or is it just temporary? Like the stock market, no one can accurately predict if their value will hold in the long term. That being said, in the current market, purchasing a Rolex Submariner, GMT Master II, Daytona, Patek Philippe Nautilus, or an Audemars Piguet Royal Oak does seem like a smart choice.
What Should I Look for When Buying a Watch as an Investment?
When looking to purchase a watch as an investment, several factors can make a difference. For example, if a brand is discontinuing one of its popular models. The Rolex GMT Master II reference 116710LN has, from the first day it came out, been an extremely popular watch. When Rolex discontinued it in 2019, the price immediately shot up on the second-hand market. At the time that it was discontinued, it was already almost impossible to find one at Authorized Dealers.
Predicting trends can be difficult, but it is worth taking the time to research popular models, like the Rolex Submariner 16610LV “Kermit,” which comes with different dials, cases, and insert variations. Small details make all the difference in the world for collectors, so it is necessary to know which ones are important.
Small changes, or in some cases errors such as the Rolex Daytona APH-dial, can be collectible in the future.
Can The Value of a Watch Drop?
The short answer is yes, the same way a stock can drop dramatically or how house prices can decrease suddenly.
Today the most popular Rolex sports models have a higher demand than supply, and second-hand Rolex demands a premium. This is referred to as the Rolex shortage, which is a hotly discussed topic. If Rolex were to increase their production to ensure that their supply meets with the growing demand, their models would be more readily available, causing second-hand prices to drop.
Other factors, such as a recession, may force watch owners to sell their watches, thus increasing the supply. When faced with a cash flow problem, the easiest models to sell are the ones most in demand. If a large number were to sell their popular sports models to get money fast, the obvious result would be that the prices would decrease. If you are not in that situation at the time, probably a good time to buy!
Another possible cause may be that the watch brand in question releases a new edition of the watch that becomes more popular than the previous one.
In Summary
The prices of watches are no different than other luxury products, and they follow the same simple principle of demand and supply.
If the demand is higher than the supply, such as for a stainless steel Rolex sports model, the price will be higher on the second-hand market.
Looking at the past prices, following the trends, and predicting future demand may result in you purchasing a watch that will increase in value over time. However, like with many things in life, there are no guarantees that the watch you consider will actually be an investment. So just in case buy what you love, and you will be proud to wear it on your wrist!
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