Financial Performance of Luxury Watches

by Ennio Nico Limbach Brun del Re

In 2021, sales of pre-owned watches surged to $22 billion, constituting almost one-third of the entire $75 billion luxury watch market. This segment is expanding at a quicker pace than the primary market, and this trajectory is expected to persist, with an estimated $35 billion CHF anticipated in 2023 by the Deloitte Swiss Watch Industry Study by 2030. Other studies see this peak being reached even earlier.

This surge in revenue was accompanied by a strong and steady performance of luxury watches in value acceleration. Since 2010, luxury watches have exceeded the returns of the S&P 500, long-term treasury bonds, real estate, and art. Moreover, from 2013 to 2022, the Boston Consulting Group indicated that watches surpassed other collectible assets like jewelry, handbags, wine, art, and furniture, experiencing an average annual growth rate of 7%—and a remarkable 27% growth from 2020 to 2022 — based on indices monitoring these categories. Rolex watches in particular even outperformed every other asset class over the last 50 years. This led to an increased investment in luxury watches as an asset, with data showing that purchases of luxury watches as investment rose by 18% in 2022, or 147% over ten years since 2012 as shown by the Knight Frank Luxury Investment Index.

Watches showed themselves to be unaffected by economic downturns. The Boston Consulting Group indicated that between August 2018 and January 2023, prices for top models from the three leading luxury brands—Rolex, Patek Philippe, and Audemars Piguet—increased at an annual rate of 20% in the secondhand market. This acceleration in growth peaked between 2020 and 2023, with luxury watches experiencing close to 30% annual returns.This growth occurred despite general market downturns during the pandemic, in contrast to the S&P 500 index, which saw an annual increase of 8%. During the 2007–2009 recession, luxury watch prices surpassed those of the S&P, rebounding from the 2008 market crash in less than two years. In contrast, numerous traditional financial and consumer product categories took longer to recover, with the S&P 500 taking over five years to return to pre-recession levels. 

 

But growth, as shown by Tilburg University, outpaced comparable assets even before the pandemic, with research indicating that luxury watches showed nominal growth of around 20.4% between 2016 and 2019. Simultaneously, standard deviation of the S&P 500 and MSCI World indices was nearly 6.5 times greater than that of the examined watch portfolios, suggesting that investment in luxury watches may appeal to investors who are more risk-averse and perceive equity markets as excessively volatile, while providing constantly higher yields than other alternative and traditional assets alike.

 


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