How to identify opportunities in watch investment?

Luxury investment is different from the traditional investment, and the Knight Frank Luxury Investment index Q4- 2017s data finds such items can provide growth more than 126 per cent in ten years. The investment in luxury watches is able to provide a growth of more than 7 per cent a year and over 129 per cent in 10 year. These are extremely different from the mainstream asset classes and come with considerable costs.

The investment in wines and cars requires expenditure on storage facilities, whereas, jewelleries and watches can be stored in home safe.

Some collectors are buying second hand watches, and investing in newer brands. Second hand gives opportunity to own a luxury item. The sellers of second hand watches claim new clients come through older ones and mostly, the items with excellent reviews are bought by the investors.

Examining risks and options

There are many risks involved in such investments as these are unregulated, expensive and illiquid. The value can fluctuates significantly and one cannot guarantee to achieve as expected. The growth can be higher with upward trend or it may get too low very fast. These assets can become out of fashion, with changing trends. E.g. the product Rolex Daytona was sold for $17.8 million in the last year, but this year, one cannot guarantee to get the same for the same product.

Why to invest?

Most experts recommend making such investments for pleasure. The joy of owning such products can convince, even in condition, when the prices are not rising as desired. Additionally, investment in watch offers opportunities to endorse the product and use it.  

Further, many luxury brands are doing great e.g. art, wine or watches can beat inflation, and investment over decades can get unbelievable growth opportunities. E.g. Classic cars got appreciation up to 334 per cent in 10 years as per Knight Frank Wealth Report.

Identifying the best vintages

To gain through investment in classic, it is important to identify the age, which can be 25 years or 100 years, but, sometimes, even newer models of watches provide great returns.

The product should have all the attachments intact, or get its service history. The watches made up of rare material, or the ones with collectible mechanical movement can provide higher returns.

The ones made up of metals are not the most valuable; instead, the rare ones of platinum and gold watches, with diamonds or gemstone settings, can get higher value due to the additional rates of the metals and stones.

The branded watches such as Omega, Rolex and Hamilton, and ones not found elsewhere, or no more in production are set to get higher values.

Collectors seek watches with originality, having historical values and the ones which are time tested, or have a well known design. Some pieces are based on winner technologies, and some brand items are exceptional. The value of some of the rarest pieces can be greater than £1 million.

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