Words: Tom Ward
Bad news for horology enthusiasts; The WatchCharts Overall Market Index — which tracks the prices of high-end wrist wear from the likes of Patek Philippe and Audemars Piguet — has reported a 32 percent drop in value from a March 2022 peak. Rolex is in special trouble, with a 27 percent decline all of its own.
With economic uncertainty across Europe, the UK and the US, coupled with high interest rates, it seems fewer of us have the spare dosh to spaff on fancy watches, especially in the secondary market which is where the current downturn is reported. Which sheds new light on a Telegraph article from three weeks ago which declared “Demand for Rolex watches jumps as super-rich shrug off inflation crisis” and “Luxury timepieces regarded as a recession-proof investment.”
In the US, Business Insider notes that: “The US central bank’s aggressive monetary tightening over the past five quarters is seen as a key reason for the slump in watch prices. Higher interest rates have fuelled fears of an economic downturn, spurring investors to scale back luxury spending and boost savings. The downturn in the crypto market, also precipitated by rate rises, has also hurt demand for watches.”
The piece notes that the most expensive watches have suffered the largest drop-offs. “Those in the $50,001 to $100,000 price bracket slumped over 15% in the past 12 months, while the $10,001 to $20,000 group fell 10.4%, according to WatchCharts data. The $5,001 to $10,000 band dropped 6.8%.”
It’s also interesting how individual brands have suffered within the larger, industry-wide down-turn. Business Insider notes that The Rolex Market Index – which monitors the brand’s 30 most valuable models – is down 12.5 percent, while the Patek index is down 18 percent, and Audemars has lost 20 percent year on year.
The downturn can be seen as part of the general economic downturn post-pandemic. With governments handing out lots of free cash to keep markets afloat during lockdowns, they’ve been forced to raise interest rates to prevent recessions as the world emerges from the shadow of Covid. We saw the ultra rich invest in super yachts and ultra expensive champagne during this period, and now it seems the bubble is set to burst.
Accordingly, prices of luxury watches were at record highs early last year. Business Insider notes preowned watch sales totalled $22bn the previous year, making up almost a third of the total luxury watch market. Between August 2018 and January 2023, the second hand market for the brands mentioned above – the three largest luxury watch brands – rose by 20 percent. “Luxury watches have performed well, especially over the long term, in comparison with traditional investment categories,” Boston Consulting Group said in a report published earlier this year.
What this means for you is that it’s a bad time to sell that family heirloom, but a great time to invest, especially as a report by SkyQuest Technology predicts the luxury watch market is set to surpass $62.12bn by 2030. The report points to a multitude of (sometimes baffling) reasons for the predicted growth: “The growing aesthetic consciousness, increasing prevalence of obesity and overweight population, advancements in technology and treatment options, rising disposable incomes, expanding beauty and wellness industry, growing demand for non-invasive and minimally invasive procedures, the influence of social media and celebrity culture, improving safety and efficacy of Luxury Watch, rising focus on personal appearance and self-confidence, increasing awareness about the benefits of body contouring procedures is fuelling the market’s growth.”
Not every brand seems to be feeling the heat. Bloomberg reported in July that Omega has raised its prices as its competitors struggle – sometimes by up to eight percent. Morgan Stanley has said the move could hurt sales, but at a time when no on is selling watches, will it make that much difference?
With the market predicted to recover and surpass its previous heights by 2030, the answer, for watch brands and aficionados alike, seems to be to wait it out. They’ll just have to make sure they aren’t watching the clock too much in the meantime…
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