Over The Past Five Years, Rolex And Patek Investment Have Outperformed The S&P 500

Since mid-2018, the prices of Rolex, Patek Philippe, and Audemars Piguet watches have risen by an average of 20% a year, outpacing the S&P 500 Index, as pre-owned luxury timepiece values increased dramatically, according to a new report.

‍

There was an average return of 8% on the S&P 500 stock index from August 2018 to January 2023, while a basket of pre-owned watch models from top Swiss brands grew at two times the rate, according to a report by Boston Consulting Group Inc. and secondary market dealer WatchBox. This is despite the fact that the prices of some preowned models, including Rolex Daytonas, Patek Nautilus, and AP Royal Oaks, have fallen by as much as a third since the market peaked in the first quarter of 2022.

‍

In terms of price reductions over the same period, a basket of watches belonging to so-called independent brands, such as FP Journe, H. Moser & Cie, and De Bethune, which is a small Swiss manufacturer owned mostly by WatchBox, returned 15%. Among the asset classes cited in the report are luxury watches, bonds, art, and wines, all of which are considered alternative assets.

‍

When it comes to investing in watches, stocks have outperformed watches over a longer period of time. Between 2012 and 2022, the S&P 500 index had a compound annual growth rate of 12%, whereas Rolex, Patek, and AP watches had an average compound annual growth rate of 7%.

‍

Due to Millennial and Generation Z consumers being cash-flush and stuck at home during the pandemic, watch prices on secondary markets accelerated sharply as they discovered a pricey new hobby collecting Swiss watches during that time. The price of used watches has also been correlated with the rise and fall of cryptocurrency values in recent years.

‍

“The value and transparency of the secondary market are the two key drivers of liquidity, and those two factors are driving the secondary market,” Sarah Willersdorf, a managing director and partner at BCG in New York, said in an interview.

‍

It was estimated that more than 60% of the transactions were made online compared to 15% for new purchases. Although men are still the majority of collectors, the number of women and younger collectors is on the rise, she said, adding that the number of male collectors is declining.

‍

WatchBox, based in Philadelphia, is one of the world's top sellers of pre-owned watches with operations in the US, Switzerland, and Hong Kong. This company has received backing from a number of people including former NBA great Michael Jordan and activist investor Bill Ackman.

‍

Consumer research conducted by Boston Consulting Group and WatchBox for this report was co-funded by Boston Consulting Group and WatchBox.

‍

The secondary luxury watch market is expected to grow to $24 billion in 2022, compared to the primary retail market's worth of $55 billion in 2022. According to BCG forecasts, the pre-owned watch market is expected to grow by 9% a year to $35 billion by 2026 as consumer spending rises and more people begin collecting watches as the price of watches continues to rise. 

‍

It has recently been predicted that used luxury watch sales will overtake the primary retail market by 2033, with sales surging to $85 billion, according to an independent Swiss analyst and consulting firm, LuxeConsult.

‍

Often referred to as the "grey market," the secondary luxury watch sector received a boost in December when Swiss giant Rolex SA announced that it would start authenticating pre-owned watches for resale through its network of authorized dealers in order to drive sales.