Time Ticking On Investments: Are Watches The New Gold Rush?

Some brands have seen the substantial value appreciation of timepieces, in some cases even outpacing traditional investments
A number of timepieces have become coveted collectibles with some hard to snag pieces floating in the resale market for over three times the retail price. In a world of volatile markets and economic uncertainty, investors are progressively exploring alternative realms for their investments – Cryptocurrency, NFTs, and precious metals have been prominent areas for capital allocation in recent years.
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However, one such ‘safe haven’ that is growing in popularity is – watches.

Not just any watches, high-end watches. Once mere timekeepers, these timepieces have become coveted collectibles with some hard to snag pieces floating in the resale market for over three times the retail price. Hublot, Audemars Piguet, Richard Mille, and Rolex are among the names of watch collectors candy. However, are watches really a good investment?

Time ticking on investments: Are watches the new gold rush?

A number of timepieces have become coveted collectibles with some hard to snag pieces floating in the resale market for over three times the retail price

Time ticking on investments: Are watches the new gold rush?
Some brands have seen the substantial value appreciation of timepieces, in some cases even outpacing traditional investments

In a world of volatile markets and economic uncertainty, investors are progressively exploring alternative realms for their investments – CryptocurrencyNFTs, and precious metals have been prominent areas for capital allocation in recent years. However, one such ‘safe haven’ that is growing in popularity is – watches.

Not just any watches, high-end watches. Once mere timekeepers, these timepieces have become coveted collectibles with some hard to snag pieces floating in the resale market for over three times the retail price. Hublot, Audemars Piguet, Richard Mille, and Rolex are among the names of watch collectors candy. However, are watches really a good investment?

“In the first place, watches are tools and luxury objects. Only in the second place can they be considered an investment,” watch expert, Khatchatour Mkrtoumian, said in an exclusive interview with Arabian Business.

“Rare and historically important watches are interesting from an investment perspective because they offer the possibility of having a physical asset that you can see, feel, and enjoy wearing and collecting. If we compare watches to cars, paintings, or other art, watches are easy to store and transport,” he added.

Mkrtoumian cautioned against allocating all savings to watches

“When considering watches as an investment compared to other types of investments, it’s important to acknowledge it’s a niche market. Unlike traditional investments like equities, bonds, or property, watches are collectibles whose value can be more subjective and influenced by factors like rarity, brand prestige, and fashion trends,” said Mike Coady, financial planner and wealth adviser.

Undoubtedly, watches do hold potential for profits, similar to any other asset class, a well-informed decision is the key to making a good investment. For instance, a vintage Rolex Submariner bought for a few hundred dollars in the 50s can fetch tens of thousands today. However, this form of investment might not be the right choice for those looking for short-term gains.

Some brands including Patek Philippe and Audemars Piguet have seen the substantial value appreciation of timepieces, in some cases even outpacing traditional investments.

Despite their allure, Mkrtoumian shockingly cautioned against allocating all savings to watches, “Even though I think that some rare and historically important watches are a good investment, I don’t recommend putting all your money into watches.” He highlighted the unpredictability of the global economy as the “problem.”

“We also need to understand that today’s watch market is also depending on the market of stocks and crypto, as people who made good money in these markets usually buy a watch, which causes a rise in prices,” he explained.

Watch comparison: Retail vs Resale

“Rolex watches, for instance, have shown an impressive average return on investment over five years. Specific models such as the Rolex Submariner ‘Kermit’ have seen their value more than double in a relatively short period, moving from. Patek Philippe and Audemars Piguet have led the luxury watch market in ROI, with certain models like the Patek Philippe Nautilus 57116A achieving and the Audemars Piguet 15202ST seeing significant growth,” Coady detailed.

Frederic Watrelot – Sotheby’s Senior Watch Specialist for the Middle East believes that, “Once a watch is in demand, it can stay in demand for years or decades. That’s the appeal of leading historic brands such as Patek Philippe, Rolex, Audemars Piguet, and Cartier to name a few, which have all produced highly collectible models overtime.”

“The brand is everything,” Watrelot said, “You might find some highly complicated watches – feats of watch engineering that should command commensurate prices, selling for far less than other simple watches, just because they are made by less popular brands.”

Richard Mille 35-02 Rafael Nadal

In ode to one of the brand’s most famous ambassador, tennis player Rafael Nadal. The brand has made several light-weight watches for the sportsman including the Richard Mille 35-02 Rafael Nadal.

This watch emerged in 2016, retailing for $145,000. Currently, the timepiece can range anywhere up to $500,000.

Rolex Cosmograph Daytona Oyster 40mm Platinum

One of the brand’s most popular series, the Rolex Cosmograph Daytona Oyster 40mm Platinum was available at a retail price of $14,150. However, the average market price of this timepiece has increased significantly ranging from approximately AED400,000.

Patek Philippe Aquanaut 5167A

The Aquanaut series launched in 1997 boasting a rounded version of the octagon shape, inspired by the Nautilus, featuring straps made from a composite material resistant to wear, salt water and UV radiation.

The Aquanaut 5167A with the 40.8mm steel strap, as of the third quarter of 2023, the watch retailed for $24,250 with a resale market value of $55,000.

Price appreciation of watches

“The appreciation in value is not guaranteed and can be slower compared to more conventional investments. Also, the liquidity of watches as an asset is lower, meaning they might not be easily convertible to cash when needed,” Coady explained.

There are several factors that influence the price appreciation for watches such as rarity and craftsmanship.

“Overall, modern Rolex and Patek Philippe watches are more wearable, and the quality is higher than on the older models. So if you buy them to wear all your life and don’t care about the price in the short term, these are very beautiful watches of very high quality, and they will become vintage after 20 years. I would recommend buying them for the retail price or close to retail price,” Mkrtoumian advised.

However, he cautioned that “not every Rolex and Patek Philippe watch is a good investment. There are also other good brands like Omega, Cartier, Vacheron Constantin, Jaeger-LeCoultre, Zenith. Each of this brands have models that are overprice and models that are undervalued in my opinion.”

A vintage Rolex Submariner bought for a few hundred dollars in the 50s can fetch tens of thousands today

Caution for resellers, watch fairs

Mkrtoumian based on his extensive visits to watch fairs, almost every month said, “It is painful to see how many dealers lie about the originality of the parts and if the dial is repainted or not, while the dial of a vintage watch can have a value of 80 percent of the total value of the watch. There are also many dealers that just go with the flow and don’t make their research and checks at all.

“There are also many fakes of modern watches that come with boxes and papers. Even more fakes than in the vintage market. As I have years of experience, I can see what is original and what’s not, but there are also many dealers that sold fakes,” he said.

Investing in a watch and wider financial planning

The lack of liquidity, speculative nature, and absence of income generation make watches less suitable for critical financial objectives like retirement or education funding.

“When considering luxury watches within the broader scope of financial planning, such as retirement, home ownership, or funding children’s education, a cautious approach is advisable. Luxury watches, while potentially appealing to enthusiasts, may not align well with traditional financial objectives for several reasons,” Coady said.

The risk and volatility associated with watch investments, coupled with maintenance and insurance costs, suggest a misalignment with traditional financial planning principles focused on stability, risk mitigation, and predictable growth.

Luxury watches lack liquidity, making them less suitable for individuals who might require quick access to funds for emergencies, said Coady

“Luxury watches lack liquidity, making them less suitable for individuals who might require quick access to funds for emergencies or other significant financial goals. The value of luxury watches can be highly speculative, subject to market trends and fashions, unlike more traditional investments like equities or bonds, which are based on underlying economic factors. The volatility and speculative nature of watch investment make it a risky endeavor for most individuals,” he explained.

So, are watches a good investment? The answer, like the intricate clockwork within a fine timepiece, is nuanced. Carefully weigh the potential risks and rewards and conduct thorough research.

“In summary, while luxury watches can be a fascinating and rewarding hobby, they typically do not align well with core financial planning goals for most individuals. Focusing on more traditional and stable investment vehicles is generally advisable, particularly for essential long-term objectives,” Coady concluded.

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