Luxury watch collectors often refer to the watches they buy as an investment but how much of an investment can luxury watches be?
Thankfully, RCWATCHES can help. We have extensive knowledge in trading in blue chip collectable watches along with investment-grade watches. This article will explore the benefits of buying an investment watch and the best watch brands to look for.
Keep reading to learn how to start investing in luxury watches and discover our top 5 watches to get you started.
Why Invest In Luxury Watches
Choosing how to invest money can be challenging. Investing in property or the stock market can yield impressive results, but there is a significant risk factor.
An investment in a luxury watch is much less risky. It is closer to an investment in raw materials like gold or other precious metals. Not only is the watch typically made from these precious materials, but it often holds its value. This can rise at a higher rate than the raw materials themselves.
Like investing in whisky, RC Watches Investment gives the owner a tangible asset. The value of this can increase over time due to rarity or reputation.
The price development of an investment watch will be dependent on the condition of the watch and how many were made.
Watches (in the UK) are also exempt from the capital gains tax. The tax-free aspect of luxury watch investments is particularly appealing.
Watches can be a great way to diversify an investment portfolio. You won’t have all your eggs in one basket and the saleability of some luxury watch brands makes this a more liquid asset.
Finally, a tangible asset like a luxury watch is similar to investing in fine art. You can appreciate the craftsmanship that has gone into creating them and they won’t deteriorate when properly looked after. A watch that has matured with age can be a fine asset to pass down the family line.
The Pre-Owned Watch Market
According to RC Watches Investment, the pre-owned watch market has steadily grown over time. This is because reputable sellers provide collectors with a safe way to invest in discontinued or rare pre-owned luxury watches.
Significant global events including COVID and the war in Ukraine have had an impact on the watch market as a whole. This has had a knock-on effect on the pre-owned watch market.
As with any market, there will be fluctuations. The impact of trade limitations in Eastern Europe and production and distribution issues due to COVID-19 have seen a slight dip in the market. However, this could be good news for those looking to invest.
Is now a good time to invest in a luxury watch?
Knowing when to buy and sell is key to a good investment and the pre-owned luxury watch market is currently a buyers’ market.
For example, the Rolex Daytona 116508 ‘John Mayer’ was trading for around £98,000 at their peak. This model (at the time of writing) is available for just £60,000.
Because the model has now been discontinued, it is a collectible item that is likely to rise in value in the future.
Another example, the Patek Philippe Nautilus 5980/1R-001 was trading at £250,000 at their peak. This model (at the time of writing) are available at just £145,000.
How High Is The Expected Return When Investing In Luxury Watches?
Investing in a tangible asset like a watch can yield greater returns than the precious metals they are made from.
While gold and silver are steady investments, the luxury watch market has seen returns that reach 12 times that of silver and four times that of gold.
The key factors that will influence returns on luxury watch investments include:
- Luxury watch brand reputation
- Brand collaborations
- Rarity
- Condition
- Maintenance
- Documentation
- Materials
- Current market demand
- Historical performance
- Economic factors
What Initial Investment Should You Expect?
Initial investments will be dependent on the available budget and the type of watch people want to invest in.
Different luxury brands and models will have vastly differing price points. However, it is possible to find excellent starter watches from £10k – £15k.
How To Start Investing In Luxury Watches?
The following tips should help you find the best investment watches and ensure you are able to sell them at a profit.
1. Research luxury brands and models
Start by thoroughly researching the pre-owned luxury watch market. Explore the most popular brands, models, and materials to identify potential in newer models.
2. Make a list of watches and models you are interested in
Create a list of brands and models based on your research. This will help you focus on investment opportunities that align with your goals.
3. Find trustworthy resellers
It is essential that you identify trustworthy and reliable resellers. Reputable dealers, authorised resellers, and auction houses will ensure you invest in genuine luxury watches with the proper documentation.
4. Monitor the market for the right watches
By researching the market thoroughly at the start of your investment journey, you will be able to properly monitor it. This will allow you to identify trends, demand, and accurate pricing.
This information will make it easier for you to identify potential investment opportunities. You will then be able to make an informed decision as to whether the investment is right for you.
5. Make a purchase – online or in-store
After you have identified a model that fits your criteria, you should make your purchase. Take the time to research the seller and decide whether you want to buy online or in-store.
In-store buying lets you check the watch in person. However, there are often great online watch investment opportunities. Online buying is a convenient way to secure a luxury watch as long as you buy from a trusted source.
Ask questions to determine the condition, maintenance history, and documentation the watch comes with.
6. Monitor the price for development
After purchasing a luxury watch you should continue to monitor the market. This will help you keep up-to-date with its price development.
Monitor the model’s performance by tracking resale values, auction results, and market trends.
It is important that you monitor your investment performance over time to determine the best time to sell it.
7. Sell your watch at the right time
By monitoring the market you will see trends and patterns over time. You can discuss your investment with experts and use the data you collate to determine the best time to sell your luxury watch.
RCWATCHES Advice When Starting to Invest In Luxury Watches
There are lots of things to consider when investing in luxury watches and it can seem overwhelming. The tips above are a great way to break things down, but here’s some more advice that will help you make a successful investment.
When it comes to finding luxury watches that are likely to appreciate in value, limited edition or low-run models are typically a good choice.
Small production sizes create scarcity and rare models often become highly sought after.
When looking at limited edition watch models you should consider:
- The size of the production run
- The brand’s reputation
- The design and features of the model
Choosing between new and pre-owned models will also be a consideration for your investment.
You will often find great bargains in the pre-owned watch market. However, you must be sure of the seller’s reputation and ensure the condition of the watch meets your expectations.
New watches will come with the box and documentation which will both affect resale value. If you are buying a pre-owned model you must check what documentation comes with it. The price you pay should reflect the condition and documentation. At RC WATCHES Investment, nearly all our pre-owned watches come with original documentation and box.
You should also research the brand’s resale value. For example, Rolex watches are known to hold their value well in the new and pre-owned markets. This may not be the case for all brands.
Brands and models that are known to have impressive resale values include:
- Audemars Piguet Royal Oak
- Patek Philippe Nautilus
- Patek Philippe Calatrava
- Richard Mille
- Rolex Submariner
- Rolex Daytona
- Rolex GMT-Master
These are just some examples worth exploring when making a luxury watch investment.
Some other top tips that will help you make the best luxury watch investment include looking for discontinued models or those that are to be discontinued soon.
Speaking with an expert can often help you identify this potential. If a model is discontinued, investors will mostly concern themselves with the price development of the model.
They will also keep a close eye on whether the new model that is being launched will be a good investment.
Potential investors who want to study the market should look at auction sites. Sotheby’s and Phillips are great options. This will give you a better understanding of price and performance.
The last tip has been mentioned before but is well worth mentioning again: Find a reputable dealer that you trust. Having peace of mind when making an investment is worth the time and effort of finding a good watch dealer.
You may even discuss buy-back guarantees that provide additional safety to the buyer.
