The Rise of the Luxury Watch: When Time Becomes an Investment

 

There was a time when buying a high-end watch was simply about owning something beautifully made. Today, for many collectors, a luxury watch is much more than a way of telling the time. It can be a statement of achievement, a piece of craftsmanship, a collector’s item and, when chosen carefully, a wearable asset.

From Rolex and Omega to Audemars Piguet, Vacheron Constantin and Patek Philippe, the world of fine watchmaking has developed into a global market where certain models can command extraordinary prices and maintain strong demand for years.

The names that define luxury watchmaking

Few names carry the prestige of Rolex. Models such as the Submariner, Daytona, GMT-Master II and Day-Date have become icons, recognised well beyond the traditional watch-collecting community.

Audemars Piguet, particularly with the Royal Oak, occupies another level of luxury watchmaking. Its distinctive design and highly regarded mechanical movements have made it one of the world’s most recognisable collector watches.

Then there is Patek Philippe, a name synonymous with traditional Swiss watchmaking. Its philosophy has always been centred on craftsmanship, exclusivity and longevity. Patek Philippe itself distributes watches through its authorised network, with availability dependent on the individual retailer and model.

Vacheron Constantin, one of Switzerland’s great historic manufacturers, appeals strongly to collectors who appreciate exceptional finishing and watchmaking heritage.

And then there is Omega. From the Speedmaster’s association with NASA and the Moon landing to the Seamaster’s long-standing reputation as a professional dive watch, Omega combines history, engineering and everyday wearability.

Other names including Cartier, Jaeger-LeCoultre, IWC, Panerai, Breitling, Tudor, Blancpain and Zenith have also established important places in the luxury-watch market.

A watch you can actually wear

Perhaps the greatest attraction of a luxury watch is that, unlike many traditional investments, you can enjoy it every day.

A share certificate stays in your portfolio. A property remains on the balance sheet. A luxury watch can be on your wrist.

That makes the concept of a wearable investment particularly appealing.

Of course, there are no guarantees. Not every luxury watch increases in value, and buying a watch purely because you expect it to appreciate can be risky. Model, reference, condition, rarity, provenance, box and papers, servicing history and market demand can all influence future value.

But certain watches have demonstrated remarkable resilience because collectors continue to want them.

The current market also shows how strongly the high end of Swiss watchmaking continues to attract collectors. Recent industry analysis indicates that value growth has become increasingly concentrated in ultra-luxury and highly sought-after timepieces, while the broader market has been more mixed.

The authorised retailer: The traditional way to buy

For many buyers, purchasing directly through an authorised retailer remains the ultimate luxury experience.

You get the brand environment, expert advice, manufacturer’s warranty and the knowledge that you are purchasing a genuine new timepiece through the manufacturer’s official distribution network. Rolex, for example, states that new genuine Rolex watches are sold exclusively through Official Rolex Retailers.

There is, however, one significant drawback.

You may have to wait.

For some of the most desirable models, availability can be extremely limited. The watch you want may not simply be sitting in a display cabinet waiting for the next customer.

You may register your interest, develop a relationship with the retailer and wait for the right allocation. Depending on the model and circumstances, that wait can be lengthy.

And that creates an interesting dilemma.

Do you wait years for the opportunity to buy the exact watch you want new?

Or do you find the watch now?

The rise of the specialist watch dealer

This is where the specialist secondary-market dealer has changed the way collectors buy luxury watches.

Rather than waiting indefinitely for a particular allocation, collectors can purchase an existing watch that has already entered the market.

One Sydney business that has embraced this model is The Watch Business, founded and operated by Dmitri.

Based in the Sydney CBD, The Watch Business specialises in pre-owned luxury watches and deals in brands including Rolex, Omega, Audemars Piguet, Patek Philippe, Vacheron Constantin, Cartier and many others. The business operates by private appointment and says its watches are inspected and authenticated by a professional watchmaker before being offered for sale.

For the collector, the attraction is simple:

If the watch you want is available, you don’t necessarily have to wait years to own it.

And that has fundamentally changed the buying experience.

From new to pre-owned and from one watch to another

Perhaps the biggest evolution is not simply the ability to buy a watch. It is the ability to trade.

Collectors rarely stay with one watch forever.

You might start with an Omega Speedmaster. A few years later, you decide you want a Rolex Submariner. Eventually, you might aspire to an Audemars Piguet Royal Oak or a Patek Philippe.

Traditionally, moving between watches could mean selling your existing watch privately, negotiating with buyers, waiting for payment and then starting the search for the next piece.

A specialist dealer can simplify that process.

The Watch Business, for example, offers buying and trade-in services, allowing clients to use an existing watch as part-payment towards another timepiece.

That creates a completely different way of thinking about collecting.

Instead of asking, “How much will my next watch cost?”

The collector can ask:

“What is my current watch worth, and what does it cost me to move up to the next one?”

That difference is significant.

The great advantage of the specialist dealer

There is another important distinction between the traditional retail model and the specialist dealer.

A traditional authorised watch retailer’s primary business is selling the manufacturer’s watches. It is not necessarily a place where you can walk in with your existing Rolex, Omega or Patek Philippe and negotiate a trade against another brand or model.

A specialist dealer operates in a different ecosystem.

They buy watches.

They sell watches.

They trade watches.

They source watches.

And, importantly, they can provide a market for the watch you already own.

This is one of the major limitations of the traditional retail experience: the store where you purchased a new watch may not be the same place that will buy it back from you or trade it towards your next watch.

That is where specialist dealers have carved out an increasingly important role.

The collector’s choice

For someone who has the time and patience, buying from an authorised retailer can be a wonderful experience.

You get the new-watch presentation, manufacturer’s warranty and the satisfaction of being the original owner.

But if you have decided exactly which watch you want and you don’t want to wait potentially years for availability the specialist dealer offers another route.

You can inspect the watch, establish its condition and provenance, understand its market value and potentially walk away with the watch you have been searching for.

And when you eventually decide to upgrade, you can return to the same market and trade your existing piece towards something different.

That makes luxury-watch collecting increasingly fluid.

A changing definition of investment

The luxury watch market has changed dramatically.

The modern collector isn’t necessarily buying one watch and keeping it locked away in a safe.

They may buy a watch, wear it, enjoy it, trade it, upgrade it and eventually move into another piece.

That is what makes a great luxury watch so interesting.

It can be craftsmanship, jewellery, history, status and a potentially valuable asset all on your wrist.

For today’s discerning collector, the question is no longer simply:

“What watch should I buy?”

It is increasingly:

“What watch should I own next?”

And with specialist dealers such as The Watch Business changing the way Australians buy, sell and trade luxury timepieces, building a collection has never been more accessible.

For collectors who value experience, expertise and the ability to trade one exceptional timepiece for another, this has quickly become a compelling alternative to the traditional retail model.

Source: DCLA

Mother’s Day Jewellery Demand Drives Record Consumer Spending

 

Jewellery is set to play a leading role in what is to be a record-breaking Mother’s Day for consumer spending in the United States, according to the latest survey released by the National Retail Federation (NRF).

Despite ongoing economic uncertainty, sentiment remains resilient. Consumers continue to prioritise meaningful gifting, with jewellery emerging as a key category driven by emotional value and lasting significance.

“Mother’s Day remains a priority for many Americans,” noted Mark Mathews, Chief Economist at the NRF. “Consumers are increasingly seeking unique, sentimental gifts that create enduring memories.”

Total spending for the holiday is projected to reach a record US$38 billion, surpassing last year’s US$34.1 billion and exceeding the previous high of US$35.7 billion set in 2023. Within this, jewellery alone is expected to account for US$7.5 billion, representing a 10% increase year-on-year and reinforcing its position as one of the most significant gifting categories.

On an individual level, consumers are forecast to spend an average of US$284, marking a continued upward trend in per-person expenditure.

Beyond jewellery, experiential gifting continues to gain traction, with special outings projected to generate US$6.4 billion in spending. Electronics are expected to reach US$4.4 billion, followed by flowers at US$3.2 billion and greeting cards at US$1.3 billion.

According to Phil Rist of Prosper Insights & Analytics, consumers are not only budgeting more but also diversifying their spending across multiple gift categories.

The survey further highlights that:

• 54% of consumers plan to purchase gifts for their mother or stepmother
• 22% will buy for a spouse
• 13% intend to purchase gifts for daughters

Retail channels remain mixed, with 33% of shoppers favouring online and department stores, while 29% opt for specialty retailers a segment particularly relevant to the jewellery trade and 26% turning to discount outlets.

For the jewellery industry, the data underscores continued strength in consumer demand for pieces that combine emotional resonance with intrinsic value, reinforcing jewellery’s role as both a luxury purchase and a meaningful store of sentiment.

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Swiss Watch Exports Ease as Key Markets Show Weakness

Swiss watch exports recorded a modest decline in March, reflecting softer demand across several key international markets, according to figures released by the Federation of the Swiss Watch Industry.

Total shipments fell 1% year-on-year to CHF 2.11 billion (US$2.71 billion), following a period of strong growth in February across major markets.

The United States, the largest export destination for Swiss watches, led the downturn with a 1.6% decline to CHF 398.9 million. More pronounced weakness was observed in Asia and Europe, with exports to Japan falling 13% and Germany declining 9%.

While some markets showed resilience exports to the United Kingdom rose 3.2%, and China posted a 4.2% increase these gains were insufficient to offset broader softness. France recorded a sharp 72% increase, although this was largely attributed to re-exports rather than underlying consumer demand.

The Middle East presented a mixed picture. Exports to the United Arab Emirates edged up 0.7%, indicating continued stability, while Saudi Arabia experienced a notable 17% contraction.

From a pricing perspective, the only segment to record growth was watches priced between CHF 200 and CHF 500, which rose 15%. All other categories declined:

• Entry-level watches (below CHF 200): down 0.3%
• Mid-range (CHF 500–CHF 3,000): down 3.7%
• High-end (above CHF 3,000): down 0.5%

Despite the March slowdown, the first quarter as a whole remained positive, with exports increasing 1.4% to CHF 6.2 billion (US$7.95 billion).

The data suggests a market entering a phase of consolidation following periods of strong post-pandemic growth, with demand becoming increasingly uneven across regions and price segments.

Source: IDEX

Tariffs Prompt Surge in Swiss Watch Exports to US

Exports of Swiss watches in July rebounded, up 6.9 per cent to CHF 2.4bn (USD 2.98bn) after two months of decline.

The growth was largely driven by front-loading of shipments ahead of 39 per cent US tariffs.

The Federation of the Swiss Watch Industry Exports (FHS) acknowledged that without the tariff-related increase in US sales, overall exports for the month would have fallen by 0.9 per cent.

“In reality, this was a move to build up local stocks and provides little insight into the actual state of the market,” it said.

The US started charging a 39 per cent tariff on all Swiss watch imports, as of 7 August. Manufacturers responded by building up their US stocks ahead of that deadline as a short-term fix.

Swatch Group CEO Nick Hayek told Reuters: “We shipped much more product to the United States, so this means there is not an immediate impact on us.”

Sales to China were down 6.5 per cent after a 6.1 per cent increase in June. And Hong Kong was up 4.6 per cent after a 10.6 per cent drop in June.

Source: IDEX

Thousands of Swiss Watchmakers’ Jobs at Risk

Thousands of Swiss watchmakers are facing an uncertain future from 1 August, when the state-funded furlough program comes to an end.

Employers will have to find a way to pay their salary, or let them go.

The furlough scheme, widely used during the Covid pandemic, was never intended to meet such long-term needs as the ongoing decline in demand for luxury watches.

The industry has been relying heavily on support from the government, which has until now covered 80 per cent of furloughed workers’ salaries.

But a decline in global demand since the second half of 2023 shows little sign of recovery.

Smaller and mid-market brands are feeling the squeeze more than large, high-end brands such as Rolex, Patek Philippe, and may be forced to lay off staff.

Watchmakers avoid permanent job losses wherever possible, because of the difficulties in recruiting skilled workers when demand picks up.

Many watchmaking companies have put workers on short-time working even if they have been able to avoid temporary retrenchments.

Swiss watch exports were down 2.8 per cent by value in 2024, according to the Federation of the Swiss Watch Industry, with sales in China down by almost 26 per cent.

Last September we reported that Girard-Perregaux and Ulysse Nardin, (sold off by the Kering Group), had put 15 per cent of their workforce on short-time working and that 40 companies – mostly tool, machinery or component suppliers – applied for permission to cut their workers’ hours in Jura, one of Switzerland’s 26 cantons.

Source: DCLA

“Sharp Contraction” for Swiss Watch Exports

Swiss watch exports slumped in December, with the US suffering its first drop in six months.

Total foreign sales were down 5.4 per cent year-on-year to CHF 2.033bn ($2.23bn) in what the Federation of the Swiss Watch Industry Exports (FHS) said was a “sharp contraction”. It’s the biggest drop since June 2024 (-7.2 per cent).

Sales in China continued their decline (down 19.0 per cent), ditto Hong Kong (down 6.4 per cent). Hong Kong is currently the second biggest market globally for Swiss watches and China is the third.

Exports to the biggest single market, the US, fell by 1.0 per cent during the month, ins spite of the holiday season, following on from a 4.7 per cent increase in November.

Among the top 15 markets, the only ones to show growth during the month were UAE (+0.6 per cent), United Kingdom (+5.8 per cent), Spain (+19.3 per cent) and Australia (+7.2 per cent).

The FHS said it recorded falls in all price segments, with the sharpest decline among watches priced at CHF 200 to CHF 500 ($220 to $550). The CHF 500 to CHF 3,000 ($550 to $3,300) segment held up better, declining by just 1.8 per cent.

Source: Idex

Gold Surge Pushes up Rolex Prices

Rolex has increased the cost of some watches by up to 8 per cent in response to surging gold prices.

A yellow gold Day-Date with a 40 millimeter black dial now costs $45,809, following a 1 January increase, up from $42,587. And a yellow gold Rolex GMT-Master II is up from $45,100.

Gold prices increased by around 27 per cent during 2024 and currently stand at $2,624 per ounce, after hitting a record high of $2,790 last October.

Prices for watches made of platinum, steel, or other materials have also increased, but generally by no more than 3 per cent.

Rolex, the biggest of all; luxury Swiss watchmakers, traditionally puts its prices up on New Year’s Day.

Meanwhile, prices of second hand Rolex’s fell during 2024 by 4.9 per cent, according to the WatchCharts Overall Watch Market index.

Source: Idex

First Dedicated Rolex Store in China

Shenyang,Liaoning,China

China is to get its first dedicated Rolex store.

The luxury Swiss watchmaker will sell direct to consumers at the HKRI Taikoo Hui mall, in Shanghai, according to Chinese media reports.

The store will be operated by Bucherer, the long-established watch retailer that was wholly acquired by Rolex last September, and will carry Bucherer branding. No date has been given for its opening

China is the second biggest market for Swiss watches after the US, accounting for $209m of exports in August.

But it is currently intensifying efforts to curb conspicuous extravagance, particularly through a crackdown on social media influencers who flaunt excessive wealth.

In addition overall sales of Swiss watches are suffering, according to the Federation of the Swiss Watch Industry, which describes the outlook for the rest of the year as negative.

Rolex dominates the Swiss watch market, with a share of more than 30 per cent. It has always relied on authorized dealers to manage its Chinese operations.

Source: DCLA

US Watch and Jewelry Sales in June: Biggest Monthly Increase for Two Years

 US Watch and Jewelry Sales in June: Biggest Monthly Increase for Two Years

                Rolex Submeriner Date 41mm Oyster yellow gold

Watch and jewelry sales in the US picked up significantly in June, with their biggest single monthly increase in two years.
The year-on-year increase was 6.2 per cent, according to the latest figures published by the US Department of Commerce. The last time we saw such an increase was in July 2022 (also 6.25 per cent).
The trend for the last three months has been of continued growth, but at a slower rate (March 4.5 per cent; April 3.7 per cent; May 3.3 per cent). The rise in sales follows a year or so of almost relentless decline (October 2022 to October 2023).
Revisions to figures for April and May by the Bureau of Economic Analysis (BEA) at the US Department of Commerce show sales were higher than initially reported. The year-on-year increase for April was 3.7 per cent (revised up from 2.7 per cent based on actual transactions rather than estimates) and for May it was 3.3 per cent (revised up from 1.4 per cent).

Source: DCLA

Swiss Watch Exports Plunge Amid Halt in Asia Demand

Swiss watch exports recorded a steep decline in March as demand in China and Hong Kong dipped below that of four years ago, during the height of the pandemic.

Shipments of timepieces slid 16% to CHF 2 billion ($2.2 billion) for the month, the Federation of the Swiss Watch Industry reported Thursday. The downturn followed a 3.8% fall in February, the first drop in more than two years, as appetite began to falter in Asia.

“Swiss watch exports recorded a sharp decline in March,” the federation noted. “China and Hong Kong accounted for a particularly high proportion of the trend. China suffered a decline…dropping to a level below that of March 2020, when the sector practically came to a halt in the middle of the month because of the Covid-19 pandemic. Hong Kong…saw a similar change.”

Supply to the US fell 7% to CHF 340.5 million ($374.5 million). In China, the federation’s second-largest market, shipments plunged 42% to CHF 150.2 million ($165.2 million), and in Hong Kong they plummeted 44% to CHF 148.1 million ($162.9 million). In Japan exports saw a 3.5% drop, while they slipped 3.6% in the United Arab Emirates (UAE). Decreases of 15% in Singapore, 13% in the UK and Germany, and 12% in France were closer to the global average, the federation explained.

Timepieces at each price point noted decreases. Watches that cost less than CHF 200 ($220) fell 19%, as did those priced between CHF 200 and CHF 500 ($550). Watches valued at CHF 500 to CHF 3,000 ($3,300) slid 38%, while those worth over CHF 3,000 decreased 10%.

For the first quarter of the year, exports went down 6% to CHF 6.08 billion ($6.69 billion).

Source: DCLA

Rolex’s 30% Share of Swiss Watch Market

Rolex Submariner

Rolex remains the king of Swiss watches, with more than a 30 per cent share of the market in 2023, according to new research by the investment bank Morgan Stanley and consultants LuxeConsult.

“No other luxury brand can claim such a dominant position in its respective sector,” they say in a new report.

Rolex’s market share is more than next five biggest brands combined: Cartier (8 per cent), Omega (7 per cent), Patek Philippe (6 per cent) Audemars Piguet (5 per cent) and Richard Mille (3 per cent).

Rolex’s revenue for the year are estimated at $11.43bn (CHF 10.1bn). It sold an estimated 1.24m watches last year, at an average cost of $13,832 (CHF 12,218). Second-placed Cartier sold 660,00 watches at an average cost of $6,467 (CHF 5,712).

Total sales of Swiss watches last year returned to pre-Covid levels, up 7.6 per cent year-on-year to $30.23bn (CHF 26.7bn).

Source: DCLA

What the Rolex-Bucherer Deal Could Mean for the Watch Market

Rolex’s pending acquisition of watch and jewelry retailer Bucherer could fundamentally change the luxury watch industry, according to industry observers.

There’s concern and speculation throughout the industry regarding how the purchase will alter Bucherer’s relationship with its competitors, how it will affect “grey market” watch sales, and how it will influence Rolex’s relationships with its retailer network in the US, UK, and Europe.

In fact, the impact on Watches of Switzerland (WOS), Bucherer’s biggest competitor, was immediate, with its shares on the London Stock Exchange (LSE) plunging nearly 21% on the day after Rolex’s August 24 announcement.

WOS — which numbers more than 200 retail outlets, including 87 mono-brand boutiques — issued a statement on August 25 to reassure investors. Rolex will not have operational involvement in the Bucherer business, it will elect nonexecutive members to Bucherer’s board, and there will be no change to how Rolex allocates products, the retailer said.

Omega, Rolex’s closest competitor, issued a vaguely worded statement congratulating Rolex and Bucherer on the acquisition, pointing out that Omega generated nearly 40% of its sales from its own global network of stores.

“We do not have many points of sale within Bucherer’s stores, nor do we need many. There are also no current plans to increase that number,” the release read. “Naturally, we make regular adaptions and updates within our distribution network. However, our strategy is completely independent of other watch brands and is solely considered around Omega’s own planning.”

Bucherer operates more than 100 stores in Europe, the UK and the US. A total of 53 Bucherer stores distribute Rolex products and 48 offer the Tudor brand, Rolex’s sister company.

Rolex, in its brief statement about the acquisition, tried to assure the industry there would be no dramatic moves.

“Bucherer will keep its name and continue to independently run its business,” Rolex said. “The group’s management team will remain unchanged. The fruitful collaboration between Rolex and the other official retailers in its sales network will remain unchanged.”

Whether Rolex will manage to limit its influence is questionable, particularly in the long term, according to industry observers.

“Some people have faith the company can put up a firewall,” said Brendan Cunningham, professor of economics at Eastern Connecticut State University and founder of horolonomics.com, a website that specializes in the economics of the watch industry. “I don’t know how they are going to work that out. Over time there will be a temptation to do more through that relationship and leverage it a little more.”

“There is no reason Rolex will not push its watches into all 100 [Bucherer] stores,” added Alexander Linz of WatchAdvisor, a YouTube program about watches and the industry. “It won’t be tomorrow, but it will happen.”

In addition, this acquisition will likely allow Rolex to sell its most sought-after watches exclusively through Bucherer stores, Linz continued.

There’s also a belief that the move will affect online retailers of “grey market” watches — authentic goods that are sold through unauthorized sources — with Rolex having more control over its own distribution. Some authorized Rolex retailers give the most coveted Rolex timepieces to grey-market sellers, where they could get much more than the authorized price. Rolex wants to stop this practice.

“If the distribution process is in-house, they will have more tools to determine where their watches are going and to mete out consequences if people are doing what they are not supposed to be doing,” Cunningham observed. “It’s kind of a tough situation for Rolex because it can either cancel the distribution agreement or deal with the reputational impact when it happens. If something like that happens at Bucherer, you can do your own investigation and get rid of people responsible.”

Another area where the Rolex-Bucherer arrangement could provide leverage over other retailers is through used-watch sales. Bucherer was the first retailer to be approved for the Rolex Certified Pre-Owned (CPO) watch program, in which Rolex provides a certificate of authenticity, a two-year warranty and a wax seal tag for an approved pre-owned Rolex.

“The way it used to work is that Bucherer would send pre-owned watches for a once-over and service,” Cunningham explained. “They would charge Bucherer, and Bucherer would add it to the price. These transaction costs don’t have to happen anymore. That could make the Rolex CPO program at Bucherer a stronger competitor for the secondary market.”

One of the main unanswered questions is how this acquisition will affect the long-term relationships with its authorized dealer network. Rolex retailers include large luxury watch chains like WOS, German-based watch and jewelry retailer Wempe, and US luxury jewelry retailer Ben Bridge. However, the majority of its retail partners are independent retailers, many of whom depend on Rolex for a significant portion of their sales and as a way to attract people into their stores.

“I’m sure the authorized retailers are wondering, ‘What does this mean for us?’ I’m assuming those conversations, if they haven’t started already, are going to start soon,” Cunningham pointed out. “At a minimum, it puts folks on notice to have a ready alternative for distribution and maybe it will get some dealers to tighten up their businesses a little bit. Rolex is important to any retailer that has that dealer agreement. I’m sure having Rolex increases foot traffic.”

Source: DCLA

 Watches of Switzerland Annual Revenue Hits Record

Watches of Switzerland’s group revenue soared 25% for the full fiscal year as it expanded its store network and demand for luxury timepieces rose.

The UK-based retailer achieved sales of GBP 1.54 billion ($2.02 billion) for the 52 weeks that ended April 30, the company said last week. That amount is a record for the firm and has placed it “significantly ahead” of where it expected to be when it released a long-term strategic plan in 2021, it explained.

Sales grew 10% in the UK and Europe to GBP 890 million ($1.17 billion), driven by the opening of 15 new UK showrooms, as well as its first in Germany. In the US, revenue jumped 52% to GBP 653 million ($855 million), with the company opening six mono-brand shops and a Rolex store. The US now represents 42% of total group revenue, the company noted. The rise was also the result of increased appetite for luxury watches, which continues to outpace supply. Watches of Switzerland’s client registration for timepieces is growing, as is the average selling price per piece, it said.

Profit for the period advanced 21% year on year to GBP 121.8 million ($159.5 million).

“Luxury watch sales grew 28% year on year, representing 87% of group revenue,” said Watches of Switzerland CEO Brian Duffy. “Luxury jewelry sales increased at a more modest 10% in the year, reflecting a tougher macroeconomic backdrop and focus on full-price sales. Following two years of exceptional performance, sales are significantly ahead of plan, by over GBP 200 million [$261.9 million].”

During the year, Watches of Switzerland also opened five shops in Sweden and Denmark, and a boutique in Ireland. In fiscal 2024, it will debut a flagship Rolex store on London’s Old Bond Street and a shop in Manchester, UK, as well as a joint venture with watch brand Audemars Piguet. The company expects revenue of between GBP 1.65 billion ($2.16 billion) and GBP 1.7 billion ($2.23 billion) for the full year.

Source: DCLA

Secondhand Watches Are in Hot Demand. Is the Surge Sustainable?

       

                            Audemars Piguet

Pre-owned timepieces are beating jewelry at auction and outselling hard-to-get newer models.

The pre-owned watch market is having a banner year. The five top auction houses for the category — Phillips, Sotheby’s, Christie’s, Antiquorum and Bonhams — finished 2021 with a combined total of CHF 634 million ($646 million) in watch sales, according to The Mercury Project, a study by auction-focused consulting firm Hammertrack. In the first half of 2022, the five houses sold CHF 379 million ($386 million) worth of watches — 47% more year on year than 2021 and 133% more than the first half of 2019.

This year is likely to set a new record, surpassing the $900 million mark, the study says — and that doesn’t include sales by non-auction dealers. Secondhand-timepiece vendor WatchBox, for example, posted sales of $310 million in 2021. Its tally for the first half of 2022 was $200 million, and the projected figure for the full year is $400 million.

A collector’s market
The boom is partly due to organic growth from a steadily burgeoning community of collectors with no qualms about buying pre-owned watches. Over the past five years, online resale platforms for luxury timepieces have evolved from bulletin-board-style marketplaces run by largely anonymous sellers, to organized professional dealers who own, authenticate, restore and service their inventory. And the scale of that inventory has exploded: A 2021 study by McKinsey & Company valued the secondhand watch market at $18 billion in 2019, predicting a jump to $32 billion by 2025.

In fact, watches now outpace jewelry at auction: Auction sales of pre-owned jewelry rose 55% in 2021, while watch sales doubled, according to Hammertrack. In 2022’s first half, jewelry sales were up only 8% year on year against watches’ 47%.

The other main factor driving the boom in pre-owned timepieces is the shrinking number of new ones at retail. Brands are producing fewer watches, mainly offering limited editions at premium prices, and that puts many new models beyond the reach of most collectors. Hot commodities like the Rolex Daytona are obtainable only through waiting lists, which can be decades long. In contrast, a buyer could get a nice secondhand Rolex Daytona or other coveted model right now, online or at auction.

Outrageous prices
The Rolex Daytona and Patek Philippe Nautilus are prime examples of how some watches have become commoditized. Patek discontinued the Nautilus Ref. 5711-1A with blue dial in 2021 — partly because it was overshadowing the rest of Patek’s collection, including the company’s elite complications, and partly because the hype was elevating prices to absurd levels, many times beyond retail. While the Daytona is still in production, it has been selling for up to five times its retail price, which makes it ripe for speculators.

That said, the Daytona and the Nautilus are exceptions, and over the past year, prices for these models have retreated from the all-time highs they reached in early spring 2022.

Some dealers welcome the correction.

“It’s been a wild ride the last few years, and I, for one, am looking forward to the watch market getting back to normal,” says Ken DeVaul, director of timepiece operations for retailer International Diamond Center (IDC) in Clearwater, Florida. “I got tired of talking about watches through the financial-commodity lens of resale value. I got into this business because I really enjoy watches, not because it outpaced the stock market.”

The era when a “few flippers” could buy a watch at list price “and make an easy $20,000 or more by selling to us dealers is pretty much over,” he continues. “In fact, all Rolex sports models have come down in price over the past year, inching back to [the manufacturer suggested retail price (MSRP)], where they typically lived in the past.”

Dealer Eric Wind of Florida-based Wind Vintage describes “the pre-owned hysteria” as “not much different than people paying crazy amounts for cryptocurrencies and non-fungible tokens (NFTs). The speculators were mainly active in the primary retail market, and they aren’t true collectors. The real collectors are in the vintage and independent markets.” His advice to consumers: “I personally would not recommend paying huge premiums over retail price for modern, currently produced watches right now. I am not bullish [about the value of goods on the secondary market].”

Steel and small brands
The Daytona and Nautilus hype may have subsided, but it’s left its mark: a lingering preference for stainless steel sports watches.

“Steel sports models have been super popular for several years now,” says Leigh Zagoory, a watch specialist at Sotheby’s. “But trends are cyclical, and true collectors covet watches for different qualities. They’re looking for more rare examples of specific models, and those vintage pieces can only be sourced on the secondary market.”

The recent surge also shed some light on a hitherto more niche corner of the pre-owned market: independents and smaller brands. More collectors are discovering these watchmakers’ superior technical prowess and craftsmanship, especially compared to the hype models. As a result, interest in brands that were almost unheard of 10 years ago is soaring.

The top 10 watch brands that sold at auction in 2021 were a mix of established elite and smaller independents, according to the Mercury Project study. Patek Philippe was the clear leader, with 378 lots netting a total of CHF 338.8 million ($350.8 million). Next came Audemars Piguet, Rolex, F.P. Journe, A. Lange & Söhne, Richard Mille, Cartier, Greubel Forsey, Omega, and Vacheron Constantin.

Uptick in demand
Bidders are interested in rare, top-quality watches, especially those with private-collection provenance, and they’re still willing to pay top dollar. Last year at auction, 29 lots surpassed the $1 million mark — a result that would have been rare 10 years ago. Phillips, Christie’s and Sotheby’s saw record sales in 2021. Among the auction houses, Phillips in Association with Bacs & Russo is leading the pack with a 33% market share, followed by Christie’s, Sotheby’s, Antiquorum and Bonhams.

“Over the last number of years, everything was seemingly on fire, with unprecedented demand across the board for both the primary and secondary markets,” says WatchBox CEO Justin Reis. “But we have witnessed a substantial increase in activity across the $50,000 to $100,000-plus spectrum. Consumer interest has markedly increased for high-end independent brands, with no signs of a forthcoming slowdown.”

Paul Boutros, head of watches for the Americas at Phillips, has found that “demand continues to be extremely strong for rare, best-quality collectors’ watches — especially in vintage and independents. For modern-production watches, prices achieved in our spring 2022 auction season were in line with the results we saw a year earlier.” Indeed, he adds, “those prices were more realistic than the peaks seen on the secondary market in early 2022 — though still significantly above retail in most cases.”

For dealers, the only downside of the surging secondhand market is keeping up with demand. There are rumors that retailers are training their staff in how to let customers down gently when their choice of model is not available.

“More people are interested in watches than ever before,” says Wind. “So my challenge is just continuing to engage with current and prospective clients. I get thousands of emails and messages each day, wanting to speak about watches.”

Rolex remains king
We asked three dealers to name their Holy Grail watches for collectors right now, and all of them chose models by Rolex, proving that the brand with the crown on the dial still reigns supreme.

“I predict the Rolex James Cameron Deepsea will be discontinued. When this happens, it will become an instant collectible.”

Ken DeVaul
Director of timepiece operations, IDC
In 2012, a special Deepsea model, the Deepsea Challenge, accompanied filmmaker and explorer James Cameron on his 10,908-meter dive in the Mariana Trench. The commemorative D-Blue version of the Deepsea was introduced in 2014 to mark the event. It goes for $14,500 at retail, while models on the pre-owned market sell for up to $16,000.

“2023 will be the 60th anniversary of the Rolex Daytona, so this model is my pick as the one to watch next year.”

Paul Boutros
Head of watches for the Americas, Phillips in Association With Bacs & Russo
Introduced in 1963 to mark Rolex’s sponsorship of the Daytona Speedway, the Oyster Perpetual Cosmograph Daytona has become the world’s most coveted sports watch. The latest model has a black Cerachrom (ceramic) bezel, a state-of-the-art movement and a black Oysterflex rubber strap. It sells for about $46,000 at retail, and up to high six figures on the pre-owned market, depending on the model and provenance.

“Whatever Rolex comes out with will be hot, especially this year’s new left-hand GMT-Master II.”

Justin Reis
CEO, WatchBox
The new GMT-Master II is ideal for lefties, with the crown and the date window on the left of the case so it’s comfortable to wear on the right wrist. The green and black color combo is exclusive to this line, with the option of either a Jubilee or Oyster bracelet. It’s $10,500 at retail, or up to $40,000 on the secondary market.

Source: Diamonds.net