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Prices falling for Rolex, Audemars Piguet, Omega and Patek Philippe watches

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A period of unprecedented price rises for luxury watches on the secondary market stalled at the end of the first quarter and has gone into reverse for many hot models in the three months since.

As WATCHPRO reported last week, prices for watches being discontinued by Rolex rocketed through the first quarter, but have since seen a slump up to 50% for some references.

We also reported on the early weeks of a reversal for Audemars Piguet and Patek Philippe watches back in April.

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There have been some critics of these reports, suggesting WATCHPRO is being selective and sensationalist by highlighting prices for only the most volatile watches.

It is certainly true that the downturn has not affected all watches equally, but a report by investment bank Morgan Stanley, using data from Watchcharts.com, shows price reversals since the peak at the end of Q1 by four out of the top six brands.

Aggregating prices across all watches in a brand portfolio, the Morgan Stanley report states that Patek Philippe has seen the sharpest correction on the secondary market, with prices down 10% from a peak on April 20 to the end of June.

Rolex prices are down 9% since a peak on April 2.

Omega peaked on March 4 and its prices have slipped by 9% since while Audemars Piguet watches are off by 6% from their zenith on May 6.

Two premium Richemont brands, Vacheron Constantin and A. Lange & Sohne, have not seen any price fall, with Morgan Stanley saying they were at or before their peak on June 28, the end of its data set from Watchcharts.com.

Vacheron Constantin is singled out as a particularly bright spot amid the data, with Morgan Stanley noting that the brand’s watches have seen a turnaround from being discounted by an average of 16% to retail prices at the start of 2021 to being sold at 23% over retail today.

Although the Morgan Stanley describes a sharp correction over the second quarter, it remains upbeat about the investment potential of the luxury watch sector over a longer term.

“Despite experiencing its first sustained downturn since covid, the secondary watch market remains strong relative to equity or crypto markets,” Morgan Stanley describes.

“As per WatchCharts data, second-hand prices of the 30 most traded Rolex watches are still up a cumulated +35% since January 2021 (and up +9% YTD), while the S&P is essentially flat and Bitcoin is down in excess of -30% vs. the US dollar,” the report continues.

Morgan Stanley suggests that the strength of the luxury watch market has been driven by a mismatch between supply and demand, with those brands experiencing the greatest shortages (and longest waiting lists at authorised dealers) performing best from the beginning of 2021 to the end of Q1 2022.

Any ongoing resilience may be down the investors favouring “hard assets” in an inflationary environment, it proposes.

Higher priced watches have been the best performing for investors over the past 18 months. Among the top 30 most highly traded watches tracked by WatchCharts.com and Morgan Stanley, pieces priced at over $100,000 rose by a staggering 105% from January 2021 to the peak. Watches trading between $50,000 and $100,000 were up 79% over the same period while the volume segment for watches priced between $5,000 and $10,000 was up a more modest 13%.

Morgan Stanley advises its well-healed clients that a watchmaker’s ability to retain value in the secondary market is being taken as a proxy for brand equity.

The investment banker provides an overview of which brands have the greatest value retention by comparing prices on the secondary market to retail prices at authorised dealers.

Audemars Piguet tops this list. Its watches were already trading at a 78% premium at the beginning of 2021, and are selling for 186% of retail prices now.

Rolex has not seen prices rise so fast since the beginning of last year. Its range was priced 59% over retail in January 2021 and 68% above RRP today.

If value retention is a proxy for brand equity, as Morgan Stanley suggests, it is Omega that trails its rivals with average prices for its watches at 8% below retail in both January 2021 and June 2022.

Waning confidence in the outlook for the luxury watch industry is reflected in the stock market performance of manufacturers and retailers.

Watches of Switzerland Group shares peaked in December last year at 1600p per share and have since lost more than half their value to trade at under 750p in recent weeks, despite record financial results for its year to the end of April and positive forward-looking forecasts.

Swatch group stock is down from CHF 326 per share at its recent peak last December to CHF 226 today.

Richemont, which has a much broader portfolio of luxury jewellery, watches and other fashion and accessories brands, has seen its stock price drop from €145 to €100 from December last year to today.

Editor’s note: Comparisons from January 2021 to the end of June 2022 in the WatchCharts.com and Morgan Stanley report relate only to prices on the secondary market over the period and not to retail prices for watches at authorised dealers for the brands.

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