While you can still forget about finding a steel Daytona, there are signs in the market that some steel Rolex watches, such as the 36mm Explorer and Air King, are slowly but surely making their way to the brand boutiques and official dealers again. That means that some key factors of investing in a Rolex – the basis for the investment being the watch’s solid reputation of desirability and a scarce number of alternatives – are under pressure, as the drop in prices shows.
What is normal?
Now that the only way isn’t up anymore, where is it going? Back to normal? But then again, what is normal anyway? A world that went through a pandemic and is trying to find its bearings has to deal with a war on the outskirts of Europe and faces inflation that is at a 40-year high. That is the current normal. That’s the macrostate we’re in. The microstate – the $20 billion secondary market for luxury fake watches – has our beloved timepieces in the world’s spotlight more than ever. We have the internet and social media to “thank” for that. But the digital world also narrowed the scope.
Social media, in particular, is the perfect instrument with which to paint a perfect picture. To put it bluntly, “Subs” and “Nautili” surf the wave of the algorithm and generate the most likes, propelling their wearer/posters to Insta-fame. Of course, Rolex has always been a symbol of success, but the new digital way of “showing off” watches has affected the watch market and also put niche brands such as Patek and AP in the limelight. As a result, an influenced group of “watch enthusiasts” behave as status seekers who are obsessed with the exact same watches. And that has led to unavailable watches and caused prices on the parallel market to skyrocket. Is this the new normal?
Love for a watch can be based on passion, but it also can be based on greed. When you truly love a watch with all your heart, you don’t care too much about how it performs on the secondary market. That’s because you like wearing it way too much, and you don’t dream of selling it. But when you are an investor, your love for a watch is purely and solely based on its financial performance. The way investors operate has made a huge impact on the watch market, not just in terms of price developments, but also in the way that watches are perceived.
For better or worse, it’s all about the money. Unstable financial markets and low interest rates made money worthless to investors. However, luxury watches from the most prestigious and famous brands – the main players are Rolex, Patek Philippe, and Audemars Piguet – proved to be a great alternative. Thanks to a perfect storm that, apart from low interest rates, also consisted of a global virus outbreak and production shortages, the secondary replica watches for sale in usa market experienced a period of unprecedented growth since the start of the COVID-19 pandemic in early 2023.
The arrival of aggressive watch investors created a feeding frenzy that both bewildered and disgusted longtime watch aficionados. A watch was no longer an artisanal object of desire. Instead, a watch had become a commodity. But with a world slowly but surely adapting to a new reality, the prices on the secondary market are no longer on a steep rise. That’s bad news for investors but good news for the watch fan who’s in it for the watches, not the money. Well, I wouldn’t bust out the melted butter just yet. The watch market is still heated.
A price avalanche or a small correction?
Let me give you an example. Last year, popular Rolex models like the GMT-Master II, Daytona, and Submariner traded on the secondary market with up to a 50% premium – that’s the list price plus half of it on top. But a recent Morgan Stanley Research Foundation report shows that Rolex prices are now -9% on the secondary market compared to the peak they reached in April of this year. The trend is no longer pointing upwards, but downwards, and that’s a first in a very long time. That downward trajectory could be explained by raging inflation, the collapse of cryptocurrency, and declines in the stock market. Also, the fact that people can spend money on holidays again has shifted the attention from watches to travel.
Still, we need to monitor the prices closely in the coming months to find out if we’re dealing with a massive price avalanche or a normal, small correction. And please keep in mind that despite the decline, luxury watches from the likes of Rolex, Patek Philippe, and Audemars Piguet still performed better than stocks or crypto in 2023. And that’s even taking into account that some Royal Oak and Nautilus references saw a price dip of up to 30% since April of this year.
Available again
The biggest difference between Rolex and both Patek Philippe and Audemars Piguet – the three undisputed kings of the secondary market – is volume. Rolex churns out close to a million replica designer watches per year. The traditional Haute Horlogerie brands Patek Philippe and Audemars Piguet have a yearly production of around 68,000 and 45,000 pieces respectively. A Rolex is, in many ways, less exclusive than a Patek or an AP. The average price of a Rolex is also much lower than that of an average Patek or AP, and there are many more of them.