December 2024
Investing in Timepieces
Watching Your Portfolio - Identifying Investment-Worthy Timepieces
Luxury timepieces offer a unique blend of functionality, craftsmanship, and investment potential - an opportunity to diversify your portfolio with an asset you can wear and enjoy.
Effectively falling into a subcategory of "non-traditional alternatives", luxury watches provide appealing long-term returns. "More traditional alternatives include hedge funds and commodities like gold or silver exchange traded notes," explains Chantal Marx, Head of Research.
"Within that space, you'll find categories like luxury watches, jewellery, art, and vintage vehicles. These add diversification because they move independently from traditional holdings like stocks or bonds," she says.
The enjoyment factor makes these assets even more attractive. "You're investing in something that appreciates and that you can also wear," Marx adds. "Demand is increasing among younger high-net-worth investors in South Africa."
Defining a valuable timepiece
Jean-Philippe Avenel, founder of L'Atelier Paris and luxury watch retailer at Oceans Mall in Durban, explains that the brand and collection heavily influence a watch's investment appeal. "Brands like Cartier offer great long-term value, with collections like the Santos and Tank leading the pack," he says.
Paperwork and original certificates enhance resale value. "Good condition is key, but watches are meant to be worn," Avenel notes. "Like vintage cars, they need to be used but with care."
There are two main markets: new investment-grade watches for everyday wear, and vintage watches (20-70 years old) that are more delicate and preserved similarly to collectibles.
Approaching your timepiece purchase
Prices can range from R50,000 to millions. "Always buy from authorised retailers to ensure authenticity and after-sales support," Avenel advises. Modified or grey-market watches often lose value.
A key factor for South African investors is the rand's volatility. Timepieces appreciate globally, often in US dollars, making them more resilient than rand-based assets.
"The resale market is global," says Avenel. "You're dealing in a dollar-based market, which adds value for South Africans and offers portability in your investment strategy."
A long-term investment
Luxury watches combine enjoyment with long-term growth. Avenel and Marx agree that time and selection are key.
"Luxury timepieces have a low correlation with traditional assets and add real diversification," says Marx. "Over the last five years, we've seen a 20% compounded annual growth rate outperforming many traditional assets globally."
They also rebound quickly after downturns and depreciate less. Timing your entry during a market dip can prove smart, she says.
"Still, watches aren't highly liquid," Marx cautions. "So, they shouldn't make up a large part of your portfolio." She also warns that brand reputation matters. Scandals even rare can impact value.
With thoughtful selection and expert guidance, luxury timepieces can become a rewarding complement to a broader wealth strategy one that offers both timeless value and timeless style.
Effectively falling into a subcategory of "non-traditional alternatives", luxury watches provide appealing long-term returns. "More traditional alternatives include hedge funds and commodities like gold or silver exchange traded notes," explains Chantal Marx, Head of Research.
"Within that space, you'll find categories like luxury watches, jewellery, art, and vintage vehicles. These add diversification because they move independently from traditional holdings like stocks or bonds," she says.
The enjoyment factor makes these assets even more attractive. "You're investing in something that appreciates and that you can also wear," Marx adds. "Demand is increasing among younger high-net-worth investors in South Africa."
Jean-Philippe Avenel, founder of L'Atelier Paris and luxury watch retailer at Oceans Mall in Durban, explains that the brand and collection heavily influence a watch's investment appeal. "Brands like Cartier offer great long-term value, with collections like the Santos and Tank leading the pack," he says.
Paperwork and original certificates enhance resale value. "Good condition is key, but watches are meant to be worn," Avenel notes. "Like vintage cars, they need to be used but with care."
There are two main markets: new investment-grade watches for everyday wear, and vintage watches (20-70 years old) that are more delicate and preserved similarly to collectibles.
Prices can range from R50,000 to millions. "Always buy from authorised retailers to ensure authenticity and after-sales support," Avenel advises. Modified or grey-market watches often lose value.
A key factor for South African investors is the rand's volatility. Timepieces appreciate globally, often in US dollars, making them more resilient than rand-based assets.
"The resale market is global," says Avenel. "You're dealing in a dollar-based market, which adds value for South Africans and offers portability in your investment strategy."
Luxury watches combine enjoyment with long-term growth. Avenel and Marx agree that time and selection are key.
"Luxury timepieces have a low correlation with traditional assets and add real diversification," says Marx. "Over the last five years, we've seen a 20% compounded annual growth rate outperforming many traditional assets globally."
They also rebound quickly after downturns and depreciate less. Timing your entry during a market dip can prove smart, she says.
"Still, watches aren't highly liquid," Marx cautions. "So, they shouldn't make up a large part of your portfolio." She also warns that brand reputation matters. Scandals even rare can impact value.
With thoughtful selection and expert guidance, luxury timepieces can become a rewarding complement to a broader wealth strategy one that offers both timeless value and timeless style.