Over the past five years, luxury watchmaking has undoubtedly been one of the best sectors for investment. The exponential increase in the value of these coveted items stems from multiple interconnected factors, primarily the law of supply and demand. It has become a widespread trend for the most renowned watches to be challenging to find at authorized dealers, with waiting lists stretching up to five years.
Carlo Costantini, a well-known entrepreneur in the industry with a reputation spanning Italy and abroad, explains the dynamics of the luxury watch market:
“The leading brands I focus on—Richard Mille, Audemars Piguet, Rolex, and Patek Philippe—have intensified the principle of product scarcity by producing fewer pieces, making the ones available on the market increasingly desirable. This has resulted in a significant revaluation of these items on the secondary market,” he says. “Unlike the financial world, the luxury watch market offers the unique advantage of allowing investors to wear and enjoy their investments. However, unlike other ‘emotional’ investments like art, vintage cars, or fine wine, luxury watches provide the ability to quickly liquidate the investment without significant losses, especially when dealing with an experienced and honest dealer,” he adds.
Thanks to his databases, Costantini has created benchmark indices for the three brands, encompassing the most important references from each. Additionally, he can compare investments in Rolex, Patek Philippe, and Audemars Piguet against gold prices and the world’s leading stock market index, the S&P 500. “As we can see, those who invested in gold five years ago saw their investment grow by about 150%, or 1.5x, while the S&P 500 rose approximately 160%, or 1.6x. Meanwhile, the average Rolex more than doubled its value at 208%, or 2.08x, AP rose by 233%, or 2.33x, and the winner, Patek Philippe, achieved a 300% increase, or 3x. These indices include references that performed less well than the most famous watches,” he assures.
In March 2022, luxury watch prices began to decline, primarily due to the war and reduced growth expectations in China and Asia more broadly, which, along with Russia, constitute one of the most important markets for luxury watches. The onset of the economic recession is expected to slow down the appreciation of watches. However, Costantini believes this is an exceptionally favorable time to accumulate watches.
“The future of the market, in this more challenging macroeconomic landscape, undoubtedly highlights the importance of selecting certain references. Whereas in the past, nearly every branded watch saw its value appreciate on average, today, the expertise of an industry professional is crucial to understanding market trends and making the right choices while avoiding unpleasant surprises,” he concludes.
