In times of war there are only 2 things that retain value: a Rolex and gold. This popular adage finds a particularly meaningful illustration in recent months with the explosion in the price of luxury men’s watches. It’s very simple: for some brands, there is nothing left to sell. At Pate Philippe, Rolex, Aude mars Piquet, for example, no product is available and the waiting period reaches 10 years for certain models. From then on, the market for second-hand luxury watches ignited and some models are trading for 10 times the list price. A speculative bubble has clearly formed on some models and even the empty boxes are reaching highs. In this article we analyze the (relatively) recent explosion of the second-hand watch market and try to predict its evolution in the short and medium term.
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- Shortage of luxury watches
- The prices of Pate Philippe, Rolex and Aude mars Piquet keep going up
- Pate Philippe, Rolex, Aude mars Piquet: which are the most speculative watch models?
- The FP Journee case: market manipulation?
- The second-hand market has become key for watch brands
- How will the luxury watch market evolve in the medium term?
The explosion in prices is making you dizzy: +383% for Aude mars Piquet, +202% for Rolex, +153% for Pate Philippe in 10 years.
Shortage of luxury men’s watches
Who would have thought 2 years ago that the market would go crazy and that luxury watchmakers would have to refuse customers? Because that’s the situation. Rolex no longer takes any orders, Pate Philippe has no watches in stock, and the waiting list exceeds 10 years on certain models. Has the market gone crazy? Some current Pate Philippe-branded models are in such demand that they are more expensive on the secondary market (the “grey market” as it is called) than at authorized dealers.
Everyone has been announcing for months that this is a speculative bubble. To find out for sure, we analyzed the selling prices of 141 watch models. The results, unpublished, show a much more contrasting reality. If you want to learn more about Pate Philippe, the pinnacle of luxury watchmaking, watch the short video below.
The prices of Pate Philippe, Rolex and Aude mars Piquet keep going up
The first lesson of this study is that the prices of certain brands of luxury ghost book writers are only going up. If we exclude certain speculative models, Rolex has gained 147% in 10 years on average, Aude mars Piquet 119% and Pate Philippe 126%.
These vertiginous growths are represented on the graph below. The curves relating to each brand are the average progression calculated on 89 models:
- 7 for Aude mars Piquet
- 68 for Pate Philippe
- 14 for Rolex
The reference year is 2012. In order to reflect the true growth potential of each brand, we have excluded the most speculative models which we will discuss in the following paragraphs.
We will note an inflection towards December 2020 for the 3 brands studied. This inflection in average prices is particularly visible at Pate Philippe and Aude mars Piquet, whose prices had increased in a fairly linear fashion (or even decreased) between 2014 and 2020.
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The results are somewhat different when taking into account the most speculative models of the 3 brands:
- Rolex Daytona
- Pate Philippe Nautilus
- Pate Philippe Aquanaut
- Aude mars Piquet Royal Oak
These models boost the trends observed previously. Aude mars Piquet in particular is taking full advantage of the explosion in prices for its blue 39 mm Royal Oak model.
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On the scale of these 3 brands, the explosion in prices is dizzying: +383% for Aude mars Piquet, +202% for Rolex, +153% for Pate Philippe in 10 years.
In the next paragraph we reveal to you which are the most speculative models, those which have gained the most value but which are also likely to fall the fastest.
Pate Philippe, Rolex, Aude mars Piquet: which are the most speculative models?
To appreciate speculation on certain models, just look at the chart below. We can clearly see that certain models “take off” and follow their own growth curve.
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10 models saw their rating soar by more than 100% over the 2018-2021 period. The common point between them is that they are sports models. This craze for models with metal or rubber straps also benefits other brands by ricochet: Acheron Constantin with its 222, Blancpain and its Fifty Fathoms, the Brogue XXI, We will also remember this crazy auction for a Patek Philippe Nautilus model Tiffany sold at $6.5m (see video above).
The second-hand market has become key for watch brands
What is clear is that the second-hand market has become key for luxury watch brands. They had previously neglected him, even snubbed him. The “grey market” was not worthy of their attention, nor even the customers buying from it.
FP Journee, of whom we spoke above, had been a pioneer in the field. In 2016, he launched his heritage service. Second-hand watches were bought back, overhauled and then resold. An excellent way to control to whom these exceptional pieces were sold and thus to expand the customer portfolio.
In 2018, Richmond (Cartier, IWC, Girard Perregaux, Ulysses Nard in, etc.) bought the Watch finder site, no doubt also sensing the shift the market was taking. LVMH also participated in the financing round (series B) of Hoodwinked in 2020 ($40m raised).
It is a fact today that the clientele of these watch manufacturers is changing. A rejuvenation, in every sense of the word, is at work. On the one hand, a rejuvenation of the clientele with crypto-millionaires barely out of their teens but eager to show off their fortunes. On the other hand, a rejuvenation of sales methods and watch marketing. Centenary Swiss houses are seeing their methods shaken up by social networks where unboxing videos abound and, since 2020, successful series on gray market merchants.
The crank return is brutal
Luxury second-hand market: statistics and analysis
How will the luxury watch market evolve in the medium term?
The Coved crisis marked the beginning of soaring prices. This upward movement began in August 2020, that is to say well before galloping inflation took root. One can be lost in conjecture on the reasons for this frenzy, but undoubtedly that fear was a powerful driving force. After the period of amazement of the first weeks, the fear of a collapse of the economy pushed certain defensive values towards heights still unknown. Gold, a safe haven in essence, thus exceeded $2,000 an ounce in August 2020.
This anxiety-provoking climate, this fear of losing everything, will no doubt have pushed some to invest in tangible values. Luxury non fiction ghostwriter are one of them.
Since 2021 we have entered another phase, inflationary this time. It pushes watch manufacturers to revise their selling prices upwards. Brogue increased its prices by 3%, as did Pate Philippe. Inflation is gradually eating away at purchasing power and some are no doubt tempted to buy watches today that they will no longer be able to afford tomorrow. Inflation will indeed add to the organic growth in the price of luxury watches and make them even more elitist.
Watchmaking is no longer a hobby for enthusiasts. It is now a market where marketing and speculation have taken over. We thus see the appearance of financial products around luxury watches, which offer, for example, the purchase of watch shares.
Does this mean that it is a speculative bubble? For some models (see list above), certainly. For others, not at all. If the bubble were to burst, the direct effects would only affect the Nautilus, Aquanaut and other Royal Oaks. The other models would undergo only an indirect correction.
If you have money to invest, then focus on models that have not been affected by the speculative frenzy, especially neo-vintage (90s) models. They are still too recent to interest vintage collectors, and too old for new collectors who are still finding their marks among modern watches.