There’s a tendency for people to refer to expensive purchases as investments.
“I’m going to invest in a new car,” someone might say. Yet new cars hold their value about as well as a chocolate teapot. Cars are not investments. Neither is a phone or a television, unless it’s a rare vintage car that will be kept in a garage and never touched.
Clearly, pretty much anything with a technological expiration date is a bad financial investment. This is why many skeptics have voiced concerns about the priciest Apple Watches. You see it makes little sense to drop hundreds of pounds on a gadget-fashion piece that will be outdated and lose value as time passes.
Like wine, art, or other hard assets such as diamonds, gold, and property, people sometimes do refer to watches as “investments” without completely misusing the word. And yet it would be silly to view a watch, or a collection of watches, as a core component of your investment portfolio.
A large part of the reason is the fickle and emotional nature of the watch market. A single collector alone has the power to influence the tastes, trends, and values of the entire market. Pop culture plays a role too: There’s no doubt that James Bond propelled Rolex even higher when it debuted on Sean Connery’s wrist in Dr. No. Essentially, it’s really hard to predict where the market will go, even where tried-and-true marques are concerned, which makes watches troublesome as investment fodder.
So what watches best hold their value?
Certain relatively attainable (£3,000-£8,000) watches are known to hold their value extremely well—even appreciating in some cases. Interestingly, they’re almost all made by Rolex. I hate to say it, but in this price range, vintage Rolex are the best game in town if you’re looking for an investment-grade piece that doesn’t have to sit in the safe.
Everybody who I work with in the watch industry seems to agree on this. Along with Patek Philippe -a brand with a much higher price range- it’s the only brand that is able to maintain the high resale value with the majority of its products. Rolex has spent decades creating the marketing image that a Rolex watch is a sign of success—it also happens to be a good watch.
Not all Rolexes mature equally, however.
In general the watches that have done the best over time have been the sport watches: The GMT, the Submariner, and the Daytona. This is due to the more casual nature of a watch designed for a job or use, not a formal occasion.
One of the reasons for Rolex’s success in value retention, is that it has kept the product line small, enabling many of these watches to become household names. Omega, in comparison, does okay on the second-hand market, but has hurt itself by peppering the field with so many different models over the years.
How to at least break even on a watch as an investment.
While you shouldn’t count on a watch to produce a solid ROI, you can do a few things besides just getting a Rolex to give yourself the best chance at making a profit in 10 or 20 years.
One option is going vintage. So when does a watch become vintage and not merely “pre-owned”? According to most of my suppliers its after 20 or 30 years it starts to appreciate gradually in value—that’s what’s happened to almost all Rolex watches. So we’re starting to see the 16800 become collectible. That’s the last Submariner made before the current one now.
As for why vintage models are most likely to keep going up in value, well, the limited supply is key. They’re not making any more old watches, they’ve only made so many 5512s, one of the first Submariners with a crown guard, and there’s a finite amount of those left and every year more and more die off.
The other advantage of vintage is increased visibility of the market. You already know everything which happens with that product, you know the demand, how well they’ve aged, the competition. You can look back on a watch and see its complete history and make a conclusion. You know generally how it’s held up. With new stuff you never know.
Watches that fall into the “pre-owned” category—anything that’s not new, yet not considered vintage yet—are far more affordable, and they can often represent good deals for someone who wants a high-quality model to wear for the long haul. Much like a car, a new £10,000 Rolex driven off the lot is suddenly worth about half, considering the dealer probably paid £6,000 for it. On the pre-owned market, you may be able to acquire the same watch for a heavy discount of 20% or more off the original price, giving you a smaller target to hit if your goal is to break even in the future.
The real reason you should buy a luxury watch.
While the world of watches is unapologetically aware of value, money, and prestige, everyone agrees on one thing: Buying one should be about your enjoyment of the watch itself, not the possibility of getting a return on your investment. Above all, it’s piece of jewellery you wear, something emotional and personal, not something soulless like a portfolio of shares.
I always tell people to buy something they like, not something for an investment. It’s not a bar of gold, you actually get to wear and enjoy it.
If you are looking to purchase a luxury watch, Rolex - Patek Philippe or a different brand, then please get in touch with Lewis Malka London. I would be delighted to assist you.
Source Ethan Woolfe-Mann.
