An instant investment profit of close to 250pc sounds fantastical — impossible, even. But in the sleek world of luxury watches, those who manage to get their hands on brand new rare timepieces can sell them on for a fortune.
A high-end Swiss watch is the symbol of wealth, and while many view them as unaffordable and frivolous items, a subset of collectors have approached them purely as a sound investment.
Michael Ayres, of pawnbrokers Suttons & Robertsons, said: “I know plenty of people who have used their savings on a watch as a store of wealth, so it can be a family heirloom for the next generation. Others don’t save towards a pension at all and claim their collection will be their retirement fund. Watches are like liquid cash.”
The global stock market has gained 63.1pc over the past five years, according to FE Fundinfo, a data company, while house prices have increased 28.9pc, the Office for National Statistics found. But many high-end watches have far outstripped this: some Rolex models have gained 250pc in value over the same period.
Part of the appeal – and the rise in value – is due to the rarity factor. Mike Manjos, of WatchBox, a secondhand luxury watch seller, compared owning a luxury watch to having a vintage Ferrari. One of the most exclusive brands in the world is Swiss watchmaker F.P. Journe. The company trades on its rarity and makes just 800 watches a year. Only 20 exist worldwide of its initial Tourbillon range.
Mr Manjos said: “All over the world people are chasing this very small pool of watches, which can be as expensive as £2.9m each. It seems crazy until you realise the rarity and artistry.”
But even the more common and affordable watch ranges have become hard to come by in recent months. Buyers have been unable to get their hands on many Rolex and Patek Philippe watches this year. Demand has far exceeded supply, which has driven up prices on resale, led to record-breaking auctions and interminable waiting lists for the average buyer.
Mr Ayres said it had become almost impossible to buy a Rolex off the shelf in Britain. “Gone are the days you could walk past a window, spot one you like and buy it. Customers have to fight to be put on a waiting list by building a relationship with the seller,” he said.
But the secondhand market has been flooded with sales as owners cash in thanks to rising prices. Many have also sold up as a result of the recent cryptocurrency collapse.
Others have been forced to sell their watches to pay large tax bills or pay rising staff wages, according to Mr Ayres. The number of people taking out a loan against their luxury goods has increased by 30pc this year, with the average person owing £5,000 on watches and jewellery, according to the pawnbroker. However, the largest collections run up loans in the hundreds of thousands, he said.
For those starting out, Rolex watches are the “safest bet”, Mr Manjos said. “It is globally recognised and is always in short supply. You are never making a mistake if you buy the Rolex Submariner, for example; it will always hold its value and you can enjoy wearing it.”
The Submariner sells at a retail price of £12,000 but at £36,000 secondhand, Mr Manjos said. Likewise, a Rolex Daytona has more than doubled in value from £14,000 a few years ago to up to £31,000 today.
Novice watch owners can start low and gradually work their way up to higher-end investments by upgrading the watches they have every few years and trading in. “We see a lot of people starting with a £3,000 Omega and then upgrading it for one worth £9,000 years later and then again further down the line,” he said.
However, newcomers shopping for their first watch should steer clear of “hype watches”, Mr Manjos said.
The Patek Philippe Nautilus 5711 watch has been in the spotlight over recent months after the model was discontinued last year. “People rushed to buy it and prices shot up. That watch was worth £33,000 five years ago and hit £122,000 earlier this year, but has now steadied at a cost of £82,000.”
The coveted design costs just a fraction when bought new from Patek Philippe, at a retail price of £23,680. There is a catch, however. The waiting time for a brand new watch is between eight and 10 years, Mr Ayres said. “They have a very select VIP list of people who can buy them,” he said.
But whoever does “can make a huge profit by selling it on” – they can more than treble their money.