What asset classes provide a measure of safety for investors – fine art, vintage wine, or luxury watches? finews.asia asks René Beyer, who owns the world's oldest watch business.
By Michael Baumann, freelance author
The volatility in financial markets lay bare that in extreme crises, even traditionally safe assets like precious metals and government bonds suffer. Many investors are selling off in order to meet margin calls on their loans.
What asset classes provide a measure of safety for investors – fine art, vintage wine, or luxury watches?
Ten-Fold Rise in Value
René Beyer, who owns the world's oldest watch and jewelry shop on Zurich's tony Bahnhofstrasse, warns of having high expectations: «Roughly 97 percent of all watches that hit the market in Switzerland won't rise in value,» he tells finews.asia.
To illustrate: China produces 650 million watches annually – Switzerland's paltry 22 million yearly output of mechanical watches pales in comparison. At the same time, only real estate has outperformed a select group of timepieces and jewelry since 1950 – and the value of some pieces has grown as much as ten-fold.
Three Models Rule
Beyer advises clients to decide whether a watch investment is a store of value or a speculative buy. «Just like with stocks, it's advisable to pick blue-chips of watches,» he notes. If those included Eterna and Certina in the past, current blue-chips in the watch industry include Rolex, Patek Philippe, and Audemars Piguet.
In those brands, not all models are equal – in fact, only three truly count: the Rolex Daytona (steel and bicolor), Patek Philippe Nautilus, and Audemars Piguet's Royal Oak. Various models of this triumvirate of brands make for the 20 priciest timepieces ever sold at auction.
With other models and other brands, investors may find themselves waiting as long as 50 years for the timepieces to rise in value. «If a producer phases out a model without a successor, demand, and value immediately rise considerably,» according to Beyer, who operates a private horology museum in Zurich.
Patience Required
In China, which produces roughly 100 new millionaires daily, the demand for luxury goods like high-end timepieces has surged. The coronavirus pandemic is likely to put a damper on demand for now – but further out, China's wealthy will continue to favor Swiss luxury watches.
Speculating on timepieces only became popular in the last 20 years, according to Beyer. Those looking to snap up a rare Rolex Daytona need patience: «the demand far outstrips supply,» he notes. He receives about 50 pieces from Rolex annually to sell – and maintains a waitlist of more than 500 people.