If the headlines of summer 2022 are annihilation to go by, the secondary luxury watch market place has tanked, dragged downward by the crypto-crash.
Not only have prices plunged but the market is suddenly awash with normally impossible-to-find Rolex and Patek Philippe models, sold past “crypto bros” looking to compensate their losses. And the phenomenon is global, spilling over into the Chinese market place.
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Is the accident to the secondary watch market fatal? Not quite, according to analysts and industry players. While prices have certainly gone down by double-digit percentages, not all brands are equal and neither are models within product families.
“This is mainly the super iconic models from the super iconic brands,” explained Tim Stracke, founder and co-chief executive officeholder of luxury watch market Chrono24.
He named the Patek Philippe Nautilus, Audemars Piguet’s Royal Oak and the Rolex Daytona timepieces as “the glorious 3” that received maximum hype and whose prices peaked in April before embarking on a steep slide.
And when Austen Chu, founder and CEO of Hong Kong-based spotter platform Wristcheck, said it had been “an incredible bull run from March 2020 until April-May 2022” that saw prices skyrocket up to 300 pct for a number of “blue scrap watches,” he was referring to the same timepieces — those “glorious three” and a few additional Rolex references.
“Information technology’s a very, very, very minor percentage [of watches] that is going through this loftier volatility,” said Charles Tian, founder of WatchCharts, a comprehensive market research platform for pre-owned timepieces that looks at some 21,000 watch references and bases its findings on end-user transactions alone. “We’re talking about the 0.1 percent of watches here.”
Ultimately, only those who had entered the market near its bound 2022 peak and were hoping to turn a profit short-term might become burned.
WatchCharts’ picket market index, tabulated from 30 popular models with high trade activeness, showed a fifteen.five pct slump over the past half dozen months, which brought it back to its January 2022 levels. It remains up virtually 14 percent if looking at the i-year moving picture, and has leapt nearly 90 percent since 2019.
To wit, with the gains of the first half of 2022 wiped out, a Rolex Cosmograph Daytona fell from $47,600 to $35,420. That’southward roughly the cost it was in tardily 2021 — and withal more than double its $14,550 retail toll.
Year-over-year, Vacheron Constantin’s secondary marketplace prices rose 38.5 percent, and Audemars Piguet and Patek Philippe were cervix-and-neck, with increases of 27.3 percent and 27.2 per centum, respectively, according to WatchCharts.
To pin the recent correction on the collapse of cryptocurrencies lone would be inaccurate.
Though prices were driven past an influx of new consumers seeking to convert their crypto-riches into real world assets, the frenzy around particular models — like watches from Audemars Piguet’southward Royal Oak family and the steel version of the Nautilus 5711 — was amplified by their discontinuation, explained Mario Ortelli, managing partner of strategic mergers and acquisitions advisory firm Ortelli & Co.
Continued geopolitical uncertainties, including the war in Ukraine, looming recession and a succession of lockdowns in Cathay, besides weighed heavily on secondary market prices.
“Watches are an asset grade that is still exposed to the same variables every bit collectibles like art or collectible cars,” Ortelli said. “Therefore the same triggers in the economical bicycle — inflation, weak prospects, high unemployment — will make prices fluctuate.”
The increase in available units may not be solely straight related to the crypto-rich becoming cash-squeezed and looking to sell off their assets, either.
Years of skyrocketing prices attracted plenty of intermediates looking to tap into a lucrative segment, with secondhand luxury merchants often stockpiling coveted models to bulldoze prices up.
“Now the [party] is over, these merchants are scrambling to greenbacks out, but consumers only want to buy when the prices are propped upwardly,” said Ting Zhou, dean of Yaok Establish, a professional person research and consulting organisation for high-stop lifestyles in Mainland china.
And equally far every bit scout experts are concerned, the writing had long been on the wall virtually this secondary market bubble.
“The whole marketplace got out of whatever reasonable proportion considering of those 3 brands,” explained sentry industry veteran Oliver Müller, founder of consulting firm LuxeConsult.
Müller had started to expect what he termed “a stiff correction” when it became apparent that would-be watch owners were facing “a premium on a premium on a premium,” due to numerous intermediaries.
Looking at the broader pic of the loftier-end picket segment, while there was “healthy softening of the marketplace of the glorious three,” there are “a lot of other iconic models that accept very healthy and stable prices,” Stracke noted.
If annihilation, in his opinion it’south “a consolidation of the market” that is seeing prices return to more reasonable, but still high, figures while leaving infinite for other models to climb.
As an example, Chrono24 pointed out the Omega Speedmaster collection, which got a boost in visibility thanks to the Moonswatch collaboration with Swatch, saw its demand and prices rise. The marketplace has besides seen strong demand for watches from Cartier and Breitling.
On Red china-based lookout forum and platform Xbiao, it’s Cartier’s Ballon Bleu model, the Omega Co-Axial Chronometer in the Speedmaster family, the Rolex Oyster Perpetual Datejust or Longines’ Watch Hydroconquest Perpetual that are holding their own.
Wristcheck’s Chu pointed out that “during the aforementioned correction period, other subcategories such every bit vintage watches or contained brands took much less of a hit – with many independent brands still achieving incredible auction results, such as F.P. Journe. Other independent brands such as MB&F, Moser, Urwerk and Akrivia are too steadily rising in secondary pricing.”
If there are more than units on the market, in that location’southward no shortage of buyers, either.
Chrono24 saw its trading volume leap by more than than 50 percent yr-over-twelvemonth in the commencement half of 2022, under the combined effect of rising prices and increasing sales.
French luxury resale platform Vestiaire Collective besides said the watch category was not showing signs of a slowdown. If more of its members are listing timepieces, it also reported a twelvemonth-over-year increase in sales.
The decrease in prices at the very top of the segment has already had a positive effect on other models that trade above retail, like the Rolex Submariner model. “In one case prices came downwards, demand [and] purchasing volume increased,” Stracke said.
In fact, this might be just a short breather before further climbs, if he is to exist believed. “If I wanted to buy ane of these iconic 3 models, I’d probably wait a little bit. Only for other models, I think it’s a expert time to make it,” Stracke remarked.
Given the volume of the global secondary market has grown an average of 10 percent every yr for the past decade, according to Stracke, he expects information technology to go on growing, “especially in an inflationary scenario” and with connected limited supply.
The primary marketplace is too likely to stay under pressure level, even if the recent dip in prices will have eased the pressure on brands — fractionally.
Accept Rolex. Müller estimates that although the watchmaker sold just n of a million units last twelvemonth, “the real natural demand of the market for Rolexes is probably somewhere betwixt 30 and threescore percentage above what the brand supplies today.”
Whether demand will go on to be equally sustained in time to come is anyone’south guess but Müller said he’d “seen the Daytona [be] for 40 years the grail watch for anyone.”
Asked what impact this might take on the primary marketplace, Chrono24’south Stracke had picayune hesitation.
“What we hear is that the waiting lists are as long as they used to be earlier this little marketplace correction,” he said.
With contributions from Denni Hu.
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