Cover A tray of Rolex watches on a dealer's stand (Photo by Leon Neal/Getty Images)

In light of the decline in prices of popular Rolex, Patek Philippe and Audemars Piguet watches on the secondary market, we speak to watch aficionados on their take

From 2021 up until the first quarter of 2022, prices of some of the most popular Rolex, Patek Philippe and Audemars Piguet watches surged to a high on the secondary market. However, prices have since dropped by about 15 to 20 per cent from their peak and, according to a report by investment bank Morgan Stanley, will continue to fall further. 

It is worth noting that the most sought-after models from Rolex, Patek Philippe and Audemars Piguet account for a whopping 71 per cent of the total traded value of the secondary luxury watch market. 

To demonstrate this drop in prices, indexes of the financial performance of watches on the secondary market by WatchCharts show that popular models like the Rolex Daytona have fallen by about 23 percent from its highest in March 2022. 

Similarly, WatchChart indexes reveal Patek Philippe Nautilus and Audemars Piguet Royal Oak resale prices have dropped by about 18 and 15 per cent respectively. Analysts at Morgan Stanley attribute the drop to a supply glut brought about by secondhand watch dealers and collectors offloading their stocks.

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What does this mean for watch buyers? Dr Bernard Cheong, founder of Lifeline Medical Group and one of Singapore's most prominent watch collectors notes the importance of first considering the nuances when interpreting the ups and downs of the market. In his opinion, the 15 to 20 per cent drop in resale prices is not significant. 

“For one, these numbers are measured on several moving parameters of these brands,” he says. “Statistically, that is not reflective enough to inform. One may need to examine how these trends of up and down were delivered. The grey buying market changes the parameters once there is a small fall in a few highly sought-after models—and it is often cherry-picked—then projected to rarely traded models, mainly diamond Daytonas and diamond GMT Masters. These fell from US$330,000 (SG$467,000) to US$120,000 (SG$171,000) but there are less than six pieces made globally so these are low volume, high risk, no intrinsic value pieces.”

Cheong suggests looking at more commonly traded models to better understand the market. “For the high volume steel or gold pieces—about 10,000 are traded per annum on the secondary market—there was no drop in prices from 2020 to 2022. If I look at a more specific index, like the Rolex Steel Submariner with ceramic bezel, the fall in price is zero. Same with the steel Patek Philippe Nautilus with a white dial made between 2012 and 2019—the fall is also zero.” 

Another well-known name in the watch world, Paxton Wong, says this fall in prices is no cause for alarm yet, but in fact good news for avid collectors like himself. Born in Singapore and based in Sydney, Wong has been collecting watches for over 40 years. 

“This spells better availability of watches and hopefully an adjustment in pricing. For the passionate collector, not having to compete with grey market buyers is a good thing.” He adds that given the current economic downturn and instability in various parts of the world, the strong watch markets are still Hong Kong and Singapore. 

Thomas Perazzi, head of watches, Asia, at auction house Phillips shares the sentiment that there is no cause for concern, and highlights that the market is “not softening at all and is as strong as before.” Having been in the watch auction business for over 15 years, Perazzi says he has observed such changes in the markets many times in the span of his career and expects repeats in future.

He notes two explanations for the current drop in prices: price correction and a change in interest from collectors.

“We were already expecting a price correction this year when the watches fetched really high prices in 2021,” he says, continuing, “Also, collectors who already own all the popular pieces are spending their money on other brands. Interest is moving towards the newer and independent brands.”

This is evidenced by the concurrent hike in prices of other watch brands like Bulgari, A. Lange & Sohne and Girard Perregaux—1, 3 and 5 per cent respectively. 

“Watch collectors are also more educated now, especially because of the Covid-19 pandemic,” adds Perazzi. “It has allowed collectors to spend more time going deeper into their passion, expanding their interests so now they are collecting these other models or brands.”

James Phang, a watch collector of about nine years and founder of whisky club Singapore Liquid Gold Club, echoes Perazzi's views: “I am a huge fan of independent brands, and I feel that many of them are still underrated or undervalued. This rise in prices would merely be market correction among the serious watch collectors and that is a positive thing in my view.

“I own a couple of watches from independent brands, and I buy them because I like the uniqueness of the dial or bezel or how time is being interpreted, as opposed to purely purchasing for the brand equity. It would be great to own timepieces in both classic and new categories, so there is always something appropriate to wear for every occasion. If in a couple of years the independent brand watches I own pick up in value, I'll be even happier as a watch collector too!”

As a result, Perazzi says it is an extremely exciting yet challenging time for auction houses like Phillips, as they have to adapt their watch catalogues to appeal to these changing interests. For watch buyers that are still unsure of how to navigate the market, Perazzi suggests speaking to one of Phillips’ watch specialists. 

Clearly, most watch aficionados are unconcerned by this price decline on the secondary market. In fact, they are optimistic about what this spells for the future. 

“Because of education and transparency, the future of watches is very positive,” says Cheong. “We have not seen the high prices yet—not by one-tenth! For any collector of almost any significant value items, we need to look backwards and forwards; we need to let go of sentiment and yet remain passionate. And I have consistently put my money where my words are.”

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