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How does a Rolex watch's value appreciate?

How does a Rolex watch's value appreciate?

How Does a Rolex Watch's Value Appreciate

In point of fact, this question regards whether or not Rolexes are a good long-term investment. And though there is no simple answer, the most recent observations to the way in which stock works show that second hand, premium watches have indeed become more valuable.

Just remember how Christie’s managed to sell this 1949 Rolex Perpetual model with a cloisonné enamel dial for $1,242,040 in 2014, although in 2005 its worth was just $83,237.

But let’s take a more in depth look at the complicated mechanisms through which a Rolex can appreciate in value.

Are watches a sound investment?

To decide the answer, here are the advantages and disadvantages entailed by investing in watches.

Pros:

  • According to Knight Frank’s 2016 Luxury Investment Index, watches are expected to appreciate 67% over 10 years and 35% over 5 years.
  • A strategy that works great is investing in reputable brands, such as Rolex.
  • Rare historic models have more chances in appreciating in value.

Cons:

  • You need extensive expertise to understand which ones could potentially bring an outstanding return on investment, and which cannot.
  • If vintage watches are all the craze right now, and if they tend to sell so high, that means bargains aren’t so easy to stumble upon. Consequently, you would need to invest a lot to begin with.
  • The 1500% profit Christie’s got for the 1949 Rolex Perpetual is not the norm.

Therefore, it can be better to buy a watch because you like it, and not just because you want to invest in something.

Factors that determine a Rolex’s appreciation

Calculating the potential profit of a Rolex means taking into account objective factors such as:

  • Inflation.
  • Purchasing power.
  • The cost of materials.
  • Technological advancements.

You can compute all the underlying equations that determine the value of a Rolex, but the way in which watches are valued is quite subjective, and that makes future predictions about the watch market pretty difficult:

  • Desirability is basically determined by trends.
  • Exclusivity is key: the more unique a model is, the more valuable it is.
  • Opinion leaders who are role models can influence tastes, trends and values.
  • Pop culture icons like James Bond make people associate Rolex with certain characteristics of power, which in turn make this brand more desirable.

Which Rolexes are the best?

According to the latest trends, the Rolexes with a great retail appreciation value are:

  • Sport watches like the Submariner, the Daytona and the GMT.
  • Vintage watches that have more than 30 years are a sound investment because they are exclusive models which you know aren’t manufactured anymore. Besides, they have notoriety and reputation on their side.
  • Pre-owned watches can also be a good investment. They are less than 30 years of age, but because they are more affordable than the vintage ones they can be considered better deals.

Deciding on the model

  • Choose a renown brand like Rolex, because reputation increases demand.
  • Choose a model with controlled distribution. Exclusivity is key in most cases.
  • Choose a model with consistent pricing. That will help you evaluate better how its value will appreciate in the long run.

The further steps of your investment

After deciding on the model, the following steps should be taken:

  • Try to find that watch for a convenient price.
  • If its condition isn’t quite topnotch, you may need to consider the cost of servicing too.
  • Apart from regular maintenance you can likewise restore the watch, but keep the improvements to a minimum because the original is always better as it gives an historical, vintage sense.

The conclusion

Watches in general aren’t a very good investment, but Rolex is an exception since it has value retention: if you’re not profiting after buying a Rolex, you’re at least sure that you’re not losing money. Additionally, the auction market for vintage Rolexes is pretty decent, and rare historic models can be sold for exquisite prices. Nonetheless, your grandchildren or great-grandchildren are more likely to profit from your investment in a good Rolex.