Here's how some luxury brand watches are an outperforming investment class
Arguably the numbers speak for themselves: Chrono24 which analyses tens of thousands of monthly transactions reported that the prices for the ten bestselling Audemars Piguet models went up by 73 percent between July 2015 and July 2020. Patek Philippe on the other hand saw an even more impressive appreciation, with prices increasing by an average of 105 percent over the same five years. Moreover, the wider impact of these brands is notable; in 2018 one in eight Hip Hop songs that charted mentioned Patek Philippe, and as Jay Z cites “I don’t get the bright watch, I got the right watch, I don’t buy out the bar, I bought the nightspot I got the right stock”. So what’s exactly behind these asymmetric returns and are there some deeper fundamentals to it?
Ironically factors such as the history and heritage of the brand, initial capital expenditure as well as the marketing and storytelling placed on the individual timepiece may not necessarily translate into price appreciation. In fact, data indicates that most watches within the luxury segment depreciate in value and even different models under the same brand can vary vastly in terms of return on investment.
However, some timepieces buck this trend and the payoff can be big. Richard Mille, a brand just over a decade old is an example of this. When the RM-11 first came out they had an approximate price range of $50,000—$60,000, today these are selling from $175,000—$250,000. A contributing factor to this was a strategy no watchmaker had ever made—within a year of its launch, it increased retail prices by 40 percent and cut production by over 70 percent.