Is a Luxury Watch a Good Investment?
By Carl Blackburn
When Benjamin Franklin coined the phrase “time is money,” he was figuratively referring to business practices—but he could have literally been referring to timepieces. Just last month, a rare 1949 Oyster Perpetual model Rolex, which was expected to sell for between $570,000 and $1.13 million, sold for $1.2 million at a Christie’s auction. In fact, that same auction boasted the sale of over 400 watches for a total of $26.5 million in sales. As the public is developing a greater awareness and appreciation for timepieces as well as looking for investments that hedge inflation and volatile markets, rare watches have become more than functional jewelry; they have become an investment strategy.
Investment Watches: Rarity Factors
There are many factors that contribute to a watch’s rarity: limited production, craftsmanship, complicated movement, and brand. The 1949 Oyster Perpetual model Rolex, for example, is 18-karat gold, automatic with sweep center seconds, automatic jeweled lever movement, star numerals and an enamel dial. Patek Philippe’s Sky Moon Tourbillon is Patek Philippe’s most complicated work. It has front and back dials, and in addition to displaying the time, it displays the retrograde date, day, month, leap year, moon phase, angular motion of the moon, chart of stars, sidereal time, and the meridian passage of Sirius and the moon. Other highly coveted watch brands, in addition to Rolex and Patek Philippe, are Audemars Piguet and A. Lange & Söhne. Celebrity connections can also add value to a timepiece, like Paul Newman’s association with the Rolex Daytona. And the most fascinating aspect is that these rare watches are mechanical devices, not electronic, that can take up to three years to craft.
Investment Watches Increase in Value
The value of rare watches continues to increase. The primary reason is the rising global demand— especially from China, India, Russia and Latin America—thanks to rising incomes, increasing aspirations, and heightened awareness of international trends. According to the World Watch Report 2014, the overall global interest in watches grew 5.7 percent, the largest percentage of growth coming from China. Demand is also highest for the most well-known watch brands, such as Rolex and Patek Philippe.
The Return on Your Watch Investment
Rare timepieces traditionally increase in value 5-15 percent annually. That means, depending on the timepiece, a watch investment could double in value in 5-10 years. And, of course, the more rare and prestigious a watch is, the greater the investment return. For example, a rare 18 karat white gold Patek Philippe purchased in 1995 for $430,000 sold in 2010 for $3.47 million.
Timepieces as Functional Investments
According to Christie’s vice-president and head of watches in New York, people have become dismayed by how little their money is earning in the bank, so they have been opting to invest in watches, which not only hold their value, but can be worn and enjoyed. Luxury timepieces are functional, beautiful, understated, prestigious, can be enjoyed by both men and women, and passed on as heirlooms to the next generation. In essence, an owner of a luxury watch is wearing a functional work of art, but it’s even more than that: as author William Gibson said, each watch is “a miniature world unto itself, “a congeries of minute and mysterious moving parts” that are “in a sense, alive.”
Visit our La Jolla store to learn more about valuable timepieces. Or contact us at http://diamondestate.com or 858-454-2200. We are pleased to share decades of experience with luxury watches with you.
Wondering about the investment potential of diamonds? Read what Carl Blackburn has to say at: Are Diamonds a Good Investment?
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