A beginner's guide to investing in luxury watches

When you hear the word "investment", what comes to mind? We're guessing traditional instruments like stocks, real estate or bonds. But what about luxury watches?

Luxury watches are more than just fancy timepieces. They're also specimens of precision and craftsmanship, make beautiful family heirlooms, and can be good investments — if you pick the right ones.

To successfully invest in watches, you need to get acquainted with which particular models hold value over the years. Here are the basics of how to invest in luxury watches and the return on investment (ROI) of top watch brands like Rolex and Patek Philippe to get you started.

Are luxury watches a good investment?

Hold up now. Before we go into the how of investing in luxury watches, let's evaluate the why.

In the chart above, we see Rolex compared against gold, real estate and Dow Jones. Another big watch brand to watch (pun intended) is Patek Philippe. Here's how the ROI for Rolex and Patek compare to the overall watch market and stocks:

Evidently, these watch brands are comparable to or even outperforming traditional investments like stocks.

But here's the catch: Only a small number of luxury watch brands are leading the way. Other watchmakers don't enjoy nearly as high returns as big players like Rolex and Patek:

Take Hublot for example. In the same time period, its ROI was eight per cent — that's 12 times less than Rolex and 26 times less than Patek Philippe. And in 2020, the ROI even went negative.

So, back to the big question: Are watches a good investment?

Luxury watches are a good investment if you choose the right brands and the right watch models. For example, the Patek Philippe 57111A's ROI was a colossal 788 per cent from 2017 to 2022, and is predicted to continue on its upward trend.

On the flipside, watch models from brands like Hublot or Piaget generally don't see high ROIs over time. That doesn't mean Hublot makes lousy watches — it just means that Hublot watches aren't the best ones for investment.

With the fast-growing pre-owned watch market projected to hit $29 to $32 billion in sales by 2025, it can be worth your time and money to invest in a luxury watch. The trick is to know how to pick the right one — which brings us to our next section.

How do I know if a watch is good for investment?

Choosing an investment watch involves more than just ogling at beautiful timepieces and picking out your favourite. The design of a watch might make it a nice wrist candy, but that's just one of many factors that contribute towards turning a luxury watch into a worthy investment.

Here are six factors to consider when evaluating a luxury watch.

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1. Popularity of the brand

In a battle of luxury watches with centuries of rich craftsmanship history, it isn't just a popularity contest, right? Well, yes and no.

While not the only factor, brand popularity is very important when it comes to investment value. No matter how exquisite the craftsmanship, the value of your watch over time depends on how much demand there is for it (more on this in the next section!).

And among other factors, demand is affected by brand provenance and prestige. Just like how we regard a Rolls-Royce to be more prestigious than a Toyota, certain watchmakers have more established reputations than others.

So if you're a newbie, it's best to stick to the brands that are known for being investor-friendly. These are some luxury watch brands that generally produce models that appreciate over time:

• Rolex is one luxury watch brand that probably needs no introduction. Founded in 1905, the Swiss watch manufacturer is known for timeless designs such as the Rolex Submariner, the quintessential diving watch, and the GMT-Master. When it comes to investment value, Rolex pieces generally appreciate over time.
• Patek Philippe is one of the 'Holy Trinity' or 'Big Three' of watches, and easily one of the most prestigious watch manufacturers in the world. As a long time family-owned business, the brand has a great reputation and a rich history of superb craftsmanship to back it up. Put it this way, if Rolex is BMW, Patek Philippe is Rolls-Royce. That also means a Patek Philippe generally costs more and sells for more than a Rolex. In fact, of the top 20 most expensive watches sold in 2022 at auctions, 11 were Patek Philippe models.
• Audemars Piguet is another one of the 'Big Three' Swiss watch manufacturers. Founded in 1875, Audemars Piguet has been family-owned since its founding. It's perhaps best known for the Royal Oak, a 1972 stainless steel wristwatch which listed price at the time was comparable to that of a gold watch.

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2. Price movements

Anyone selling anything makes money by buying low and selling high. Investing in luxury watches is no different. That's why it's important to track price movements and get a sense of which models will appreciate over time.

How and why do luxury watch prices fluctuate over time? Basically, it all comes down to supply and demand. The greater the demand for a particular watch, and the fewer pieces a watch manufacturer makes the higher a price that model can fetch. 

In fact, scarcity is one reason Patek Philipe watches can sell for such astronomical prices (we're talking seven digits!). It's said that the prestigious Swiss watch manufacturer has made less than one million watches since 1839. To put things into perspective, Rolex makes about one million watches in a single year.

Ideally, if you're just getting started in the luxury watch investment game, you want to get a watch that has a pretty solid track record of appreciating in price. There's no golden rule for a good time period to track a watch for, but you'd probably want to look at a bare minimum of at least the past six months.

Of course, you can also gamble on a totally new model with no price movement history to speak of. Because other than historical price movements, there are other factors that can be pretty good indicators a watch will increase in value over time. Read on!

3. Watch craftsmanship

Luxury watches aren't just churned out in some factory in China. Craftsmanship plays a big part in determining a watch's value. The most valuable watches have extremely strict craftsmanship rules which might go back centuries.

For instance, at Jaeger LeCoultre (which has nothing to do with jägerbombs), entire teams of watchmakers and craftsmen are involved in the creation of one single timepiece, bringing to the table skills such as enamelling, engraving, setting gems and decorating dials.

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At Patek Phillipe, it takes craftsmen nine months to produce its most basic watch — so yes, a woman could literally bring life into this world in the time it takes Patek to make their lowest tier timepiece. More complicated pieces can take over two years to complete.

When choosing a watch to invest in, find out about how the watch is made. Not only will you appreciate your chosen timepiece a lot more, it will also give you a better understanding of which timepieces are more difficult to make. In terms of investment, exquisite craftsmanship will contribute to the value of your timepiece.

4. Design of a luxury watch

Of course design matters — but maybe not in the way you might think. Depending on the brand, watch collectors tend to focus on different design aspects when evaluating a watch.

The safest thing a newbie watch investor can do is go for classic watch designs that have stood the test of time. That usually means sticking to a signature or iconic model for a watch brand. For Rolex, the Daytona, Submariner, and GMT-Master models are pretty good bets. If you're eyeing a Patek Phillipe, the Nautilus is probably the most sought after model. However, the Calatrava is also a coveted classic and is generally more affordable than the Nautilus.

What if you want to go for a less 'classic' model? Is it less 'safe'? Not necessarily. The key is to do your research, talk to watch experts and hang out on watch forums to see what people are saying before you decide.

5. Whether it was worn by a celebrity

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Being seen on the wrists of a celebrity can do a lot to boost the demand of a luxury timepiece. For investors, that translates to higher returns, especially if they purchased their timepiece before the celebrity boosted its popularity.

For instance, Brad Pitt's face in those old TAG Heuer ads has undoubtedly raised the brand's profile, while the dainty Cartier Tank Française became the envy of women all over world after appearing on Princess Diana's wrist.

If you need further proof of just how influential celebrities are when it comes to luxury watch demand, just head over to the Instagram page @celebwatchspotter. They'll tell you who wore what, when, the watch's list price and current market value.

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6. The story behind the watch

Watches that are associated with a compelling story often end up being more sellable than others.

For instance, the iconic Omega Seamaster is widely known for being the James Bond watch. It's been spotted on Daniel Craig's wrist both on and offscreen — so it earns points for celebrity endorsement as well.

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And what if we told you that there was a watch that saved the lives of the Apollo 13 astronauts? The Omega Speedmaster Professional made history as the first watch to be worn on the moon on the Apollo 11 voyage, and became known as the Moonwatch thereafter. It was also the watch that the Apollo 13 astronauts used to time their return to Earth on their damaged spacecraft in 1970 — just a second off, and they could have been lost in space forever.

In 2015, Omega released a special Silver Snoopy Award edition as a tribute to the 45th anniversary of Apollo 13. If you think an original list price of US$6,100 (S$8,193) is steep, can you imagine it was fetching some US$50,000 by 2022?

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Oh and fun fact: The original Omega Speedmaster that astronaut Buzz Aldrin wore on the moon went missing en route to the Smithsonian. Imagine how much that timepiece would fetch if it were ever found!

What is the ROI of the top luxury watches?

So, if you pick the best watch brand and the best watch models for investment, what kind of returns can you expect?

First, let's assume you picked the best luxury watch brand for investment. This is the ROI of the top five performing luxury watch brands over the past five years or so.

As you can see, Patek Philippe and Audemars Piguet are leading the way with ROIs topping 150 per cent over five years. In third place, there's Rolex with an ROI of around 90 per cent — still a great figure to hit. So, generally speaking, you would have a higher chance of seeing pretty decent returns if you invest in a luxury watch from one of these three brands.

What if within these brands, you also picked the best watch model for investment? Let's take a look at the ROI for the top performing watch from each of the brands above.

Patek Philippe and Audemars Piguet again lead the way with crazy high ROIs of 788 per cent for the Patek Philippe Nautilus 57111A and 613 per cent for the Audemars Piguet 15202ST. These are almost ridiculous appreciations.

You'd be hard pressed to find many other investment instruments with returns like that (in case you're wondering, certain art investments and cryptocurrencies are the only assets that topped these watches in the last five years).

Which is the best watch for investment?

If you're going to buy a watch for investment, there are two routes you can take. The first is to invest in a modern luxury watch that you are pretty confident will appreciate in value over the next few years. That's on you to decide the model.

The second route is to invest in classic luxury watch models with a track record of appreciating in value, which is probably safer for the watch investor newbie. Here are the top five watch models to bet on for investment: 

Source: Prices are for secondhand pieces in very good or mint condition as listed on Chrono24 as of Feb 21, 2023.

Do note that we're giving you the best known watch models, but each model comes in a multitude of different editions. You'll have to do some research and budgeting to pick the right one for you. For now, here's a quick intro to each of the classic luxury watch models above.

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Audemars Piguet Royal Oak

When the Audemars Piguet Royal Oak was launched in 1972, it became the world's first luxury sports watch. That sounds impressive, but the Royal Oak wasn't well-received at the beginning.

In 1972, the original A series 5402 Royal Oaks rocked the watch industry as the first stainless steel watch to cost more than a gold one. The first run of 1,000 pieces took Audemars Piguet more than a year to sell.

But since then, the Royal Oak has only gotten more and more popular — especially from the 2000s onwards. Today, it's Audemars Piguet's largest collection and is seen as an alternative to the more pricey Patek Philippe Nautilus.

The Audemars Piguet Royal Oak comes in a wide range of editions for both ladies and men, and generally has a pretty good record of appreciating in value.

From 2016 to 2022, the price of the Royal Oak 15202ST appreciated 21.87 per cent, the 26574OR 19.95 per cent, and the 15407ST 21.68 per cent.

While not all Royal Oaks see a jump in appreciation, others hold their value. For example, Offshore 26210OI Lebron James appreciated just under two per cent from 2016 to 2022.

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Patek Philippe Calatrava

Patek Philippe is a watchmaker that is always in demand. But which Patek Philippe models are the best for investment? When it comes to Patek Philippe, you can bet on more exclusive models — these tend to be more sought — after amongst collectors.

One such model is the flagship model Patek Philippe Calatrava, of which there are less than a million in the world. It's got over 90 years of production behind it, so you'll see many vintage editions of these watches being sold on the secondary market. Of all the editions, the Calatrava Ref. 96 is seen as a "holy grail" for collectors as the first Calatrava ever produced.

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Rolex Submariner

This diver's watch is one of the most popular timepieces of all time. Launched in the 1950s, the Rolex Submariner became the first diver's wristwatch that was waterproof to a depth of 100 metres — a pretty big deal back then.

In fact, the Submariner is arguably the model which sparked off the diving watch tradition which other watch brands have since latched on to.

While a great many Rolex models are considered decent investment pieces, the Submariner is a very safe bet. From 1994 to 2016, the Rolex Submariner value grew by 297 per cent, with an average increase of 5.4 per cent each year. 

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Patek Phillipe Nautilus

The Patek Philippe Nautilus is probably Patek Philippe's most sought after timepiece. In particular, the 5711 has been said to be the most coveted watch in the world. As we saw in the previous section, the Nautilus 57111A's ROI over the past five years was a whopping 788 per cent. It looks set to continue on this upward trend, and there's a pretty good reason why.

At the height of the Nautilus 5711's popularity in 2021, Patek Philippe did the opposite of what the laws of demand and supply command: It discontinued the watch. This sent prices skyrocketing, on a trajectory it'll probably sustain for the immediate future.

The only downside when it comes to investing in a Patek Philippe Nautilus is that they don't come cheap. You can expect to pay at least $15,000 for a 4700/51 Nautilus Ladies, while prices for the discontinued 5711 series start at about $100,000 on the secondary market.

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Rolex Daytona

This iconic Rolex model has its roots on the racetrack. Originally made for professional motor racers, the Daytona today enjoys near universal popularity as one of Rolex's best selling models. On the secondary market, the Daytona also fetches the highest prices among Rolex's 16 collections.

However, Rolex Daytona watches can come with hefty price tags. The two-tone editions tend to be more affordable, while stainless steel editions are probably going to be your best bet for investment. You might think that people would value precious metals more than steel, but market demand has generally always favoured classic stainless steel Rolex models like the 116500LN.

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Why are investment luxury watches so expensive?

If you've made it this far and are now wondering if there are more affordable luxury watches to invest in, we've got to burst your bubble. The truth is, the watches that are the surest bets for investment aren't beginner friendly in price. Here's why.

With other more traditional types of investment like stocks and bonds, you can get started with as little as $1,000. Can $1,000 get you a good watch? Yes. Will that watch be a good choice for investment? In all likelihood, no.

The thing with luxury watches is that they are very closely tied to luxury brands. Names like Rolex and Patek Philippe produce exquisite watches that aren't just fine pieces of craftsmanship, but carry a brand name that casts them in gold as symbols of class and status. 

Other watchmakers may make watches that are, functionally, just as good as a Patek Philippe. But if they can't claim the Patek name, they won't see much (if any) appreciation in price.

A flat watch price over time isn't necessarily a bad thing — if you're just buying a luxury watch. But if you're buying a luxury watch for investment, don't confuse that with simply growing (or starting) your luxury watch collection.

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Where can I get luxury watches at cheaper prices?

Browsing and reading up on watch models is the fun part. But once you've decided on a model, you'll have to go through the painstaking process of comparing prices and trying to find a seller who'll charge you a lower price without trying to con you.

You definitely should not be hitting up your friendly neighbourhood pasar malam for their "Rollex" watches. Instead, try one of these retailers that are known for selling authentic luxury watches at lower prices.

Luxury watch retailers in Singapore

There is no shortage of luxury watch retailers in Singapore, including big names such as The Hour Glass and Cortina Watch.

If you've decided to get a brand new watch, don't just walk into the first luxury watch shop you see and start reaching for your wallet. Do your homework and compare prices between shops before committing.

Duty-free watch shops at Changi Airport

Shave more than a few hundred bucks off your watch purchase by buying them duty-free at Changi Airport the next time you go on an overseas trip.

At Gassan Watches, which has outlets at the Terminal 1 and 4 transit areas, you'll find watches from Omega, Breitling, Cartier, Longines and more. If you're eyeing a Rolex, head over to Terminal 3 for Gassan Watches' Rolex Boutique.

At the Terminal 3 transit area, there's Maison de Chronus, which carries Tissot, Breguet and Piaget watches.

Second hand watch shops

If your heart is set on a vintage model, you have no other option but to get it second hand. And even if your desired model is still in production, buying second hand is still a smart way to lower the cost of your purchase.

You should of course be very vigilant as to the condition and authenticity of your purchase. If you're a newbie, bring along a more experienced friend when you go and inspect the watch.

Remember, buying a second hand luxury watch is not the same as buying a second hand H&M tee at a flea market. Many second hand luxury watches have been very well taken care of, or might even have spent their entire lives in a display case.

This is, in fact, the main advantage of buying pre-owned — you can get never-worn watches at a much lower price. You might even be able to save yourself a five figure sum.

So, where can you buy second hand luxury watches in Singapore? The two principal choices open to you are second hand dealers such as HJ Luxury, Chuan Watch and Goldman Luxury, or the online marketplace on sites such as Chrono24 or even eBay.

You can even hit up pawnshops, but do so at your own risk. The shop owner might not know (or want to tell you) whether the watch is authentic.

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Visit Mustafa Centre

Yes, don't laugh. Mustafa might sell diapers, Kitkat and Merlion statues, but they also sell lower-end luxury watches from TAG Heuer and Seiko. You may not be able to get higher end brands like Patek Philippe at Mustafa, but it's still on the cards if you're looking to take a bet on investing in a luxury watch from another brand.

Pro tip: Use a cashback credit card to pay for your purchase

When you're paying a four, five or even six figure sum for your watch, you can save a hefty amount just by using a cashback credit card to pay for your purchase.

However, pay attention to the cashback cap. A credit card that offers 10 per cent cashback but a cap of $50 a month is not necessarily better than one that offers 1.5 per cent unlimited cashback.

How do I become a watch investor?

Investing in luxury watches is just like any other investment. Simply put, you need to buy low and sell high in order to make a profit. That means tracking watch prices over time.

One way you can chart watch prices is by using online resources such as WatchCharts. However, the basic free version only lets you see up to six months worth of past data and track only five watches.

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You'll have to pay US$159.99 per year to upgrade to the next tier, which shows you one year of data and lets you track up to 10 watches in your collection.

You can also keep an eye out on online watch marketplaces, such as Chrono24. Just search for any watch model and you'll see listings from watch collectors seeking to sell their timepieces.

If you scroll all the way down past the listings, you'll get to read information on that model, including its history and notable price changes. 

One more tip: When we say watch the model not the brand, don't estimate the power of tiny, subtle differences in detail across editions. Let's take a look at the Patek Phillipe Reference 1579 as an example.

From 1943 to 1964, Patek Phillipe produced about 470 of these watches. Of these, only about 185 were made in pink gold and only six of those are thought to have been double signed by Patek Philippe and Milan retailer Gobbi. These double signed specimens are now valued at about US$400,000 to US$700,000!

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When and where should I sell luxury watches?

So let's say you've already bought a couple of watches, and you'd like to be able to sell them for a profit now that the time is ripe.

To make money out of watches, you will likely be turning to the second hand market. Most of your options have already been covered in the sub-section on buying second hand watches, but selling watches is a slightly different game from buying them.

Here are the main avenues through which you can sell your luxury watches for a profit:

• Luxury watch buy-and-sell sites: The most well-known example by far is Chrono24, which has become the eBay of luxury watches. It is an international site, so you'll be able to reach buyers from all over the world. If you're selling a Rolex, BobsWatches is a good platform specialising in the brand.
• General buy-and-sell sites and apps: General second hand sale or auction sites like eBay, Carousell and Gumtree enable you to reach a more general audience. One advantage of using local sites like Carousell is that buyers can meet up with you to inspect the watch to set their minds at ease.
• Sell directly to watch collectors: Connections are important when watches change hands since there is a degree of trust required. If you've been hanging out in affluent circles, you're sure to run into some watch collectors. These people are often willing to pay decent prices for a good watch.

• Invest in The Watch Fund: Unlike the other options on this list, investing in The Watch Fund is like trading oil or other commodities. Fund managers buy and sell the watches in order to make money for the fund, and during the investment period, you get to hold onto the watch as a "double collateral".
• Auction houses: This is the lazy man's way to get rid of a watch, since you won't have to create your own listing or do your own marketing. The auction will go all out to make your watch sound as desirable as possible, while reaching out to people who can afford it. The trade-off is that you will have to pay them rather high commissions. Some auction houses include GPJW Auctions and Lawsons Jewelry and Watch Specialty Auctions.
• Second hand watch dealers: HJ Luxury, Chuan Watch, Goldman Luxury, Seasons Time Watches, Monster Time and Bronze Age are just some of the many second hand watch dealers that will gladly buy your watch from you. The main downside? You won't get a great price on your watch. But hey, they have to make money too.

Just like art, luxury watches can be an investment if you choose wisely and become knowledgeable about the collectors' market. However, be aware that not every luxury watch is an investor's piece. In fact, less than half of luxury watches are considered investment-worthy.

That said, the second hand market has kicked into high gear thanks to the Internet, so there is perhaps no better time to become a watch investor than the present.

This article was first published in MoneySmart.

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