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Why buying a Rolex is more profitable than investing in the stock market


The second-hand market for luxury watches is growing strongly and moves more than 20,000 million dollars

18-carat gold Rolex watch that belonged to Konrad Adenauer sold at auction in 2011 in Geneva for 142,000 euros.FABRICE COFFRINI (AFP/Getty Images)

They have a fashionable part and at the same time they are a symbol of social status.

A mixture of state-of-the-art technology and the know-how of a centuries-old trade.

Luxury watches have always been desired for their beauty;

now they are also an investment asset.

And very profitable.

Whoever considered traditional watches for amortized with the advent of smart devices was wrong.

Between August 2018 and January 2023, the average price in the secondary market of the models of the three big brands (Rolex, Patek Philippe and Audemars Piguet) rose by 20%, despite the sharp economic slowdown caused by the pandemic. , according to data published by the Boston Consulting Group (BCG) in a recent study.

During the same period, the US S&P 500 stock index only rose 8%.

As money calls money, the appreciation of these investments is attracting new investors to the market.

Pre-owned watch sales reached a total volume of $22 billion in 2021 and accounted for almost a third of the $75 billion that moved the entire global luxury watch business.

“The second-hand market had always evoked obscure deals, doubts about authenticity, and risk of fraud.

However, today it is a totally transparent segment, driven by all the information that is shared on the Internet, which has authentication services, and is made up of trained buyers and experienced sellers”, the experts from the US consultancy point out.

Younger consumers are one of the main drivers of the days of wine and roses for luxury watches.

Platforms like WatchBox, Chrono24, and Watchfinder have contributed to the development of the market, especially among members of Generation Z and millennials.

Online sales have almost surpassed those made in auction houses and, according to BCG estimates, they will already account for 60% of the second-hand market in 2026.

In addition to the strength of the new generations, in a context of sharp rise in prices, millionaires seek alternative assets to the traditional ones (stocks, bonds, currencies) to obtain a hedge against inflation.

And there luxury watches have shown their resilience even in very complicated contexts.

An example is what happened during the Great Recession that followed the financial crisis.

The price of watches recovered the levels prior to the lows of 2008 in just two years, while for other financial assets the journey through the desert was much longer.

“Investors are also attracted to these add-ons because they provide diversification to their portfolios.

Buyers see them as a stable physical investment, which is backed by well-known brands and which attracts many great fortunes”, say the consultant's experts.

Between 2013 and 2022, the price of used watches achieved an annualized increase of 7%, beating the revaluation of other luxury items such as jewelry, bags, art and furniture.

mythical models

Investors' attention is focused on a small number of mythical models —Patek Philippe Nautilus, Audemars Piguet Royal Oak and Rolex Daytona and Rolex GMT-Master II—, according to collectors' mentions on specialized platforms.

“In the secondary market it is quite common for these models to revalue 200% compared to their original price.

Some of the Rolex Cosmograph Daytona, with store valuations of $14,800, have recently sold at pre-owned auctions for prices ranging from $24,500 to $38,500,” the BCG report describes.

In addition to the traditional manufacturers, a group of new independent brands are also finding a foothold in the auctions, such as FP Journe, De Bethune and H. Moser & Cie.

Investors value in these cases that they are brands with high added value and difficult to find.

The second-hand market in the US is stronger than in Europe, and Asia is emerging as a growth area for watch investors.

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Source: elparis

All business articles on 2023-03-18

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