Luxury Swiss watches still beat stocks and crypto despite Rolex, Patek drop

Prices for the most coveted Rolex, Patek Philippe and Audemars Piguet watches are still falling but have outperformed returns from stocks and cryptocurrencies, according to Morgan Stanley.

Luxury watches on the secondary market declined 8 per cent in value last year, an index compiled by research platform WatchCharts found. That compares to a drop of 19 per cent for the S&P 500 stock index and a 65 per cent plunge for Bitcoin.

“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,” said Morgan Stanley analysts led by Eduard Aubin.

After an unprecedented surge in 2021 and the first quarter of 2022 driven by cash-flush consumers stuck at home during the pandemic and cryptocurrency investors looking to diversify their gains, prices for the most in-demand Swiss watches have been falling sharply on secondary markets.

Flooded market

The market has been flooded with once hard-to-get models 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 per cent in the fourth quarter alone, Morgan Stanley and WatchCharts estimated. Across 2022 as a whole, the supply of Rolex, Patek Philippe and Audemars Piguet watches rose 104 per cent, 110 per cent and 78 per cent respectively.

Morgan Stanley said the price correction of the big three brands was most profound in the fourth quarter with Audemars Piguet losing 6.8 per cent, Patek Philippe down 6.7 per cent and Rolex dropping 5.1 per cent primarily because of losses from its Daytona, GMT Master II and Submariner models.

Bucking the trend

Still, timepieces made by A.Lange & Sohne, a German watchmaker owned by Richemont that produces high-end watches in very limited quantities, rose 1.7 per cent in the fourth quarter.

Secondary market prices of TAG Heuer, a mass market brand owned by LVMH, and Tissot, another popular mass brand owned by Swatch Group AG, rose 3.3 per cent and 3.2 per cent respectively during the quarter.