Tim Stracke, the co-CEO of Chrono24, the online pre-owned watch marketplace, would like to clarify a couple of things about the secondary market for luxury watches: While it’s true that prices on key models are falling, “the demand for watches from our users is higher than ever,” he tells Robb Report.
“We are currently experiencing a consolidation of the market,” Stracke said in a statement released on Tuesday. “At the same time, however, we have seen a significant increase in trading volume of more than 50 percent year-on-year in the first half of the year on Chrono24, resulting from both rising prices for some models and increasing sales.”
The statement came amid increasing uncertainty over the state of the watch market, and speculation that the factors dragging down the wider economy—sky-high inflation, the cryptocurrency collapse, the war in Ukraine and the prospect of a looming recession—may negate the phenomenal growth the watch business has seen since the start of the pandemic.
But Stracke said the reason prices on some models had fallen between 25 percent and 40 percent since April had more to do with basic supply-and-demand principles than with the external factors cited above. “For example, at the beginning of the year we had about 300 Rolex Daytona (Ref. 116500LN),” he wrote in a follow-up email to Robb Report. “Today there are almost 1,000. Until May of this year, prices had risen more and more. Then in mid-May, the ratio tipped, more supply than demand.”
Eugene Tutunikov, CEO and founder of SwissWatchExpo, a pre-owned watch dealer based in Atlanta, said the correction was both healthy and anticipated.
“The Fed just hiked rates for the second time by 0.75 percent, and this hike being expected for some time lead some of the hot air to come out of the prices of the hottest watches,” Tutunikov tells Robb Report.
He cited the white dial Rolex Daytona 116500. “This particular model peaked at $46,000 and currently can be found for under $35,000, about a 25 percent correction in price,” he says. “When interest rates were zero, there was little opportunity cost to parking your savings on your wrist, but as interest rates go up, those with the money available will slowly choose investments that have cash flow.”
“I wouldn’t lose any sleep for Rolex though,” Tutunikov adds. “The retail price of this watch is $14,550 and the estimated wait list is 10 years-plus unless you have a long track record as a customer with hundreds of thousands of spent at a boutique. SwissWatchExpo currently has three in stock at around $35,000. We had to lower prices but have not seen a drop off in demand at the lower prices.”
Earlier this month, Morgan Stanley released a report that echoed the declines in the secondary market for models from Rolex, Patek and Audemars Piguet, but emphasized the industry’s resilience.
“Despite the recent downturn, watches continue to perform well overall on the secondary market, as evidenced by sustained higher-than-retail valuations and strong performance relative to other asset classes, such as equity and cryptocurrency,” said the report, which was produced in partnership with WatchCharts, a research platform for the pre-owned watch market.
Secondhand dealers stressed that even when prices on select models had fallen, the pieces were still trading well above retail value. According to Chrono24, for example, the price of a Patek Philippe Nautilus Ref. 5711A, which retails for $35,000, fell from $240,000 in the first quarter to around $190,000, more than five times the list price.
And some models are actually rising in value on secondary channels. “Based on our data, we see significant price jumps for watches like the Girard-Perregaux Laureato,” Stracke said. “Demand for virtually all models from the Omega Speedmaster collection has risen significantly, as have sales prices, due in part to the enormous publicity success of the Moonswatch, a collaboration between Swatch and Omega. Watches from Cartier and Breitling have also risen significantly in price and demand.”
Given the fluctuations in the secondary market, are primary channels also experiencing less demand? Not so much.
At Wempe, an authorized Rolex dealer located on Fifth Avenue in Manhattan, clients are clamoring for Girard-Perregaux’s Laureato, “which currently has a several-month wait, along with several new models from Tudor, including the Black Bay Pro 79470 and Ranger,” Ruediger Albers, president of Wempe US, tells Robb Report.
And despite the declines for some Rolex models, the Geneva-based brand continues to dominate the sector. “Over the course of my 35 years with Wempe, there has always been a strong demand for Rolex and their key models,” Albers says. “The desire for this premier brand has only risen exponentially and is currently at an all-time high.”