More than just a status symbol, luxury watches are becoming an increasingly attractive investment opportunity, with the pre-owned luxury watch market set to be worth US$32 billion (R545 billion) by 2025. “Now is the perfect time for people to capitalise on this trend,” says Michael Zahariev, co-founder of Luxity – South Africa’s largest pre-owned luxury reseller.
He explains that buyers are able to secure their money in the short term and earn a profit when reselling a few years later due to the value of these items increasing over time. “This phenomenon has been seen with other luxury accessories like the Hermès Birkin which cost $2,000 in 1984 but $13,200 in 2022. Likewise, the Chanel Medium Classic Flap price went from $220 in 1955 to $8,800 in 2022.”
Time is money
Zahariev points out that, watches tend to appreciate in value over time too. “Take Rolex for instance, over the past 10 years, long-term investments in these watches have outperformed gold, real estate and even the Dow Jones Industrial Average. There are several reasons for this, but chief amongst them is price stability driven by a discrepancy in supply and demand. With watch manufacturers producing limited numbers of certain models to ensure exclusivity and quality, this intensifies both desirability and demand and, in turn, affects prices.”
According to wealth management and capital preservation company UrHandleren Invest, even amid economic turmoil, luxury watches hold or even increase in price. “During the initial stages of the pandemic, for instance, production ground to a halt which meant that there were even fewer watches on the market, thereby increasing their allure. Now, with the Russia-Ukraine crisis affecting the prices and availability of precious metals used in the creation of these timepieces, this is pushing their value up even further. That said, investment is a long-term game so whatever is happening now shouldn’t be a concern,” shares Zahariev.
He notes that, nowadays, people – especially Millennials and Gen Zs – are entering the luxury watch market through the purchase of pre-owned items as this presents them with an opportunity to acquire timepieces at lower prices so they can start building up their collections.
Advice for aspirant investors
When considering their options, Zahariev cautions investors to weigh up whether they would like to invest in a ‘fashion watch’ or a ‘classic timepiece’. “The former is usually designed by luxury, fashion-forward brands like Chanel, Gucci, and Louis Vuitton, whereas the latter is crafted by brands such as Cartier, Rolex, and Patek Philippe which specialise in watches. While personal preference and budget are ultimately the deciding factors, timepieces tend to retain more value. On average, Cartier pieces retain 62% of their value, while Rolexes hold 82%.”
He advises investors to do their research. “This is fundamental to any investment. In the watch world, fledgling investors often buy the most expensive piece that they can afford in the hopes of making a quick buck. Don’t make this mistake – all luxury watches aren’t made equal, with some models proving to be a better investment over others from the same brand. Do research and ask the advice of experts in the industry or other investors. Ensure too that watches are purchased from a trustworthy source and are verified and undergo brand-specific tests. Everything from the watch hands, colour and movements, through to the quality of the box and its papers must be scrutinised to ensure authenticity.”
“Watches present an exciting and worthwhile investment opportunity. With some cautious investment, extensive research and a reputable reseller, building up a solid watch portfolio is a cinch,” concludes Zahariev.
For more information go to https://luxity.co.za.