Prices for popular pre-owned Rolex, Patek Philippe and Audemars Piguet watches will fall further as the market has been flooded with supply, Morgan Stanley analysts said in a report.
After rising in 2021 and through the first quarter of 2022, an index of the most popular models from Daytona-based chronograph maker Rolex, followed by WatchCharts, has fallen 21 percent since the market’s peak in April. Prices of the most popular references from Nautilus maker Patek Philippe are down an average of 19 percent on the secondary market, while those of Audemars Piguet, the maker of the Royal Oak, are down 15 percent from the point maximum.
Prices are likely to fall further due to a “dramatic” increase in supply, Morgan Stanley analysts including Edouard Aubin said in the report.
“We have seen a significant increase in watch inventory in the secondary watch market to date as a result of pre-owned watch dealers and individual watch investors dumping their stock,” Morgan Stanley said.
“Given the current inventory of watches for sale and the worsening macroeconomic backdrop, we would expect pre-owned prices to contract further quarter over quarter.”
The most in-demand models of the ‘big three’ (Rolex, Patek and Audemars Piguet) account for a significant 71 per cent of the total traded value of the luxury watch secondary market. Prices for the WatchCharts general market index, which includes other brands, fell 9 percent in the third quarter of this year compared to the second quarter.
An example of the decline is the Vacheron Constantin Overseas reference 4500V/110A-B483. The steel sports watch model, made by the Richemont-owned brand with a retail price of $22,500, peaked at $39,900 on the secondary market in April. It can now be purchased for around $30,900, which is still a significant premium over retail.
Secondary market prices for watches have declined less than many other asset classes over the past 18 months, according to the report. While pre-owned prices for the 30 most traded Rolex watches fell 8% this quarter, they are still up 21% since January 2021. This compares favorably with the S&P 500 stock index, which is holding steady, while that Bitcoin is down 34% over the same period.
The report identifies some Swiss watch brands that are bucking the downward price trend. Even as Rolex and Patek prices fell, LVMH-owned Bulgari models rose 1 percent, Richemont’s A. Lange & Sohne rose 3 percent and Girard Perregaux, a brand that was bought in a Kering SA-led buyout. by management this year, it’s up 5 percent. .
by Andy Hoffman
Learn more:
The fashion of luxury watches, in numbers
High-end watches like Rolex, Patek Philippe and Audemars Piguet are flying off shelves as customers outrun their cheaper counterparts.
Source: www.businessoffashion.com