Returns on luxury watch purchases have exceeded those from stocks and cryptocurrencies even as prices for brands such as Rolex, Patek Philippe and Audemars Piguet continue to drop, according to Morgan Stanley, reported Bloomberg on Thursday.
The secondary market for luxury watches shrunk by 8% last year, according to research platform WatchCharts. That compares to a drop of 19% for the S&P 500 stock index and a 65% decline for Bitcoin, added the report.
“Nearly all asset classes are down so far over the past 18 months but the market for second hand watches is actually down less in comparison to others,” Morgan Stanley analysts led by Eduard Aubin, were quoted as saying by Bloomberg.
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After an unprecedented surge in 2021 and a bump in the first quarter of 2022 driven by cash-flush consumers stuck at home during the pandemic and crypto investors looking to diversify their gains, prices for the most exclusive Swiss watches later saw a sharp drop in the secondary markets.
Flooded market
The market has recently been flooded with models that were hard to come by in the past nine months including the Rolex Daytona, the Patek Nautilus and the AP Royal Oak as watch dealers and individual investors offload their stocks.
The number of Rolex watches on the secondary market increased by 19% in the fourth quarter alone, reported Bloomberg across 2022 as a whole, the supply of Rolex, Patek Philippe and Audemars Piguet watches rose 104%, 110% and 78%, respectively.
The report added that the price correction of the big three brands was most profound in the fourth quarter with Audemars Piguet losing 6.8%, Patek Philippe down 6.7% and Rolex dropping 5.1% primarily because of losses from its Daytona, GMT Master II and Submariner models.
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Bucking the trend
However, timepieces made by A Lange & Sohne, a German watchmaker owned by Richemont that produces high-end watches in very limited quantities, rose 1.7% in the fourth quarter.
Additionally, the secondary market prices of Tag Heuer, a mass market brand owned by LVMH, and Tissot, another popular mass brand owned by Swatch Group, rose 3.3% and 3.2%, respectively, during the quarter.
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