Luxury wristwatch prices: Outperforming S&P 500

Luxury wristwatch prices: Outperforming S&P 500

Prices of pre-owned luxury wristwatches from Rolex, Audemars Piguet, and Patek Philippe have risen an average of 20% annually since mid-2018, outperforming the S&P 500 stock index.

According to a Wall Street Journal report which cites information from the Boston Consulting Group and secondary market dealers, the S&P 500 stock index averaged an annualized return of 8% from August 2018 to January 2023. However, a pre-owned basket of watches from leading Swiss brands grew more than twice as quickly.

And that result came despite prices of some pre-owned models, including the Rolex Daytona, AP Royal Oaks, and Patek Nautilus, falling by as much as a third since the market peaked in the first quarter of last year.

The value of a selection of watches from independent watchmakers, such as FP Journe, De Bethune, and H. Moser & Cie, increased by 15% during the same period. The report highlights that luxury watches have become an alternative asset class to stocks, bonds, or art.

Gen Z is the biggest customer

Over a longer period, stocks yield higher returns than watches as investment assets. Between 2012 and 2022, the S&P 500 had a compounded annual growth rate of 12%, whereas Patek, Rolex, and AP watches averaged a growth rate of 7%.

The rise in watch prices on the secondary market has accelerated during the pandemic, as cash-strapped and stuck-at-home millennial and Gen Z consumers have discovered this expensive new hobby. The rise and fall in the value of crypto also correlate with the prices of used watches.

The secondary market for luxury watches expanded to $24B in the previous year, which was in contrast to the primary retail market, standing at a value of $55B. The second-hand market should grow about 9% annually to $35B by 2026 as prices rise and more people start collecting watches.