Did you know that pre-owned Rolex watches can offer a great alternative investment opportunity? Not many will be aware, but yes, this is true! Well, at least horology enthusiasts know the names of top luxury watch brands – Rolex, Tudor, Patek Philippe, Audemars Piguet and so on… Of these, Rolex are by far the most known brand in a common Indian household. They are a popular status symbol for HNIs. Cheapest Rolex will cost over Rs 4 lakh in India. And, it is pretty hard to lay your hands on a brand-new Rolex, you need to wait for at least months, even years.
So, why is there so much scarcity? For one, Rolex is said to have capacity to manufacture 8-10 lakh watches per year. Other highly sought after brands like Omega, Cartier are estimated to produce a total of only around 13 lakh watches. That is about 23 lakh new watches globally per year between the three top brands. Patek Philippe produces another 60-65,000. No wonder, their premium models sell like hot cakes.
Brands are looking to expand capacity, but gen Z and millennial’s demand and appetite for luxury watches like Rolex is on the rise too. So, a lot is happening in the luxury watches segment.
In this article, we will focus on the leader – Rolex. [No, this is not a promotion. Our passion for horology led us here!]
Why consider Rolex as an investment?
Rolex is something that HNIs/UHNWIs can afford with price tags starting from Rs 10 lakh. They can use it as well as resale it, provided they purchase a high-demand model. Like a car or gold jewellery, not every Rolex watch depreciates with time. There is, indeed a floor level beyond which a Rolex won’t depreciate as long as it is serviced & functions well. In fact, vintage models can appreciate beautifully since they are no longer in production – 95% of special edition watches are out of production already!
Additionally, since Rolex is so well known, it is easier to sell a Rolex as buyers are already familiar with the models. Plus, there is heavy shortage of brand-new luxury watches as we already noted.
Here is one example: A 1942 Rolex 4113 was recently sold for $3.5 million. (only 9 such timepieces exist.) That may be an extreme case, but it definitely highlights the potential of this investment!
Why pre-owned?
Getting a new Rolex right out of AD (authorised dealer) showroom will take hell lot of time. Buying second-hand is a better option for five reasons:
| 1 | You don’t have to wait forever on the AD’s waiting list. |
| 2 | Original owner has taken maximum hit for the depreciation already. Further depreciation would be significantly low in such a case. If you select the right & rare model, its value can appreciate in the future simply because – it is rare, it has a history and a unique design! |
| 3 | As we noted earlier, Rolex watches are built to last. So, they work just fine provided they are maintained well. |
| 4 | In the pre-owned market, you get more choice, since those models which are no longer in production can also be purchased. |
| 5 | If you are lucky, you can even get a “never worn” watch of your choice. They are common, yes! |
If you can cut a good deal while buying a pre-owned Rolex, chances are that you will make a good money when you flip it. One important point to note here is: Take a moment to listen to experts in this field. Professional services and authorised dealers are important, they save you from getting duped.
Another important thing to note: Now Rolex themselves sell certified pre-owned watches. This is an option worth exploring!
What other aspects to consider while investing in a Rolex?
Investing in a Rolex is definitely a form of alternative investment. Such investments tend to fair well during the period of volatility in the market or market slowdown. In fact, market for pre-owned watches picked up after the dot com bubble burst. This is the market which recovered much faster than stocks after the 2008 meltdown. This is the same market that clocked huge 93% average return in the last 5 years of covid turmoil.
However, not every Rolex or luxury watch will be investment worthy. You need to be careful while taking such bets.
- I can’t stress this enough – take professional help and decide which model you want to buy. Let me warn: counterfeit market is huge, beware of the Rolex replicas!
- Buying from a trustworthy and reputable source is thus, your best bet. Don’t throw your hear earned money at some fraud website, do the background checks instead. There are 25+ official Rolex outlets in India, Ethos – the biggest one also offers servicing. So you have plenty to choose from.
- If you are not comfortable buying online, it is perfectly fine. Select your mode of purchase [online/offline] based on your convenience. Also, in any case, do not forget to read the seller’s return and refund policy, warranty, and terms and conditions.
- Especially in case of a pre-owned Rolex, decide if you want to buy models with Rolex papers. It is not a must, but an added plus point which enhances the value of the watch.
- Once you finalize the model, make sure to ask about the watch’s service history to ensure that it has been properly maintained and serviced. If you have to service it after purchase, that adds to your costs.
- There is a good Rolex community on the internet if you need to discuss some points before purchasing.
- Some financial institutions like Bajaj Finserve also provide no cost EMI for purchasing Rolex. You may want to check that out. (Not a promotion)
- Lastly, don’t buy just for flipping. If you enjoy wearing a fine watch, it is a good way to wear it for some time & then flip it at the right moment.
What is the mood in India?
Indians are warming up to the idea of investing in luxury watches like Rolex as the upper middle class population explodes. From the portfolio perspective, it might be a good diversification for those who can allocate Rs 10-15 lakh to alternative assets. Given that India has just started its journey to becoming a higher income nation, there is a huge potential to this asset class.
In a recent poll on The 1% Club app, 30% of the participants showed significant interest in the idea of investing in a luxury watch. The only bar is high ticket size. Those who can afford it, will most likely test the waters at least once.
A parting word: Indulge into the luxury watch segment if you really love horology. If you have passion, you can build wealth of knowledge, network with fellow enthusiasts and experts. This is the way to make money in the alternative asset class. Only buying a Rolex to flip without actually getting involved into the nitty gritty of the market won’t help. Because – as they say: Knowledge is the ultimate wealth!
Want to learn the art and science of managing your money? The 1% Club can help. Details here
Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
