Luxury Watch Depreciation Explained

Feb 2 2019 · Chris MiresBy Chris Mires

If there’s one myth that has permeated the luxury watch space for decades, it is that all Rolex watches appreciate in value. That is simply not true. Yes, there are some Rolex watches that can increase in value over time. And yes, right now there are a handful of highly in-demand Rolex models that are selling above retail prices in the secondary market. However, this phenomenon is not applicable to all Rolex models—or to all luxury watches for that matter.

In fact, similar to expensive cars, plush purses, or fine jewelry, the majority of new timepieces that leave a boutique, depreciate immediately. Let’s have a look at what causes luxury watches to depreciate and explore a few tactics and techniques that can help offset depreciation.

What Are Some Factors That Can Cause Luxury Watches To Depreciate?

Most people want to know right off the bat how much a luxury watch typically depreciates. However, there is no hard and fast rule that determines exactly how much a luxury watch’s value drops once its status changes from new to pre-owned. Estimates vary wildly, ranging from a reasonable 20% value decrease once the watch is purchased (new) to a whopping 75% drop.

Luxury watch depreciation is dependent on a host of elements such as the brand, the specific model, and of course, the existing market demand for the piece. The current supply of the watch is also a factor, and in some cases, whether or not the watch is a limited edition can also influence value. Additionally, if a brand releases a new edition of a watch model, that can also cause the value of the older version to decrease.

Trends in the luxury watch space can also have a big impact on how slowly or how fast a timepiece depreciates. For instance, oversized men’s sports watches were the population choice for a long time, but now we are starting to witness a shift towards smaller more classically sized timepieces. So we may see a noticeable drop in demand for very large (44 mm +) luxury watches in the near future. Furthermore, whether we like it or not, celebrity culture can influence the value of particular watches too. Certain watches sell better in the pre-owned market because they are associated with famous entertainers, top athletes, or prominent personalities.

Also, precious metal versions of watches tend to depreciate faster than stainless steel ones. Due to the notable price difference between gold and/or platinum and steel watches, stainless steel watches will always have a larger audience. Also, watches that are too trendy (heavy on patterns, loaded with gems, bright colors, and unusual designs) can look dated in a few years time, thus a harder sell down the line.

Finally, the current condition of a specific watch plays a significant role in how much value it retains. Naturally, a well-maintained timepiece with accompanying box and papers would command a better price than a similar model that has not been cared for properly. It is also worth mentioning that customizing a watch with gem setting, PVD coating, or personalized engravings can also lead to greater depreciation as the market often favors pieces that are as close to its original design as possible.

Another thing to consider is that women’s luxury watches generally depreciate faster than men’s luxury watches. This is simply because there is greater demand for men’s watches in the pre-owned market right now. But, the women’s segment has been rising recently and is poised to see healthy growth in the future.

Buy Secondhand Luxury Watches To Reduce Depreciation Cost

First and foremost, buying pre-owned is the savvier way to shop for a luxury watch. Not only will you save yourself a pretty penny buying secondhand compared to what you would pay at an authorized retailer, but also the secondary market is a truer reflection of what the watch is currently worth. Remember, something is only worth what someone is willing to pay for it. And the pre-owned market reveals what buyers are ready to pay for a particular watch rather than a (sometimes arbitrary) retail price tagged on by the brands.

Furthermore, a pre-owned watch has already taken the biggest depreciation hit with the first owner. Subsequently, you are already much closer to getting what you paid for the watch if you decide to sell it in the short term—thereby reducing depreciation cost.

At the end of the day, high-end timepieces are built to last a lifetime (or two or three). So, as long as you select a pre-owned watch in good condition, then you have much more to gain buying secondhand over buying brand new at retail.

Opting for Well-Known Brands and Popular Models Can Help Deflect Depreciation

If you want to own a watch that either holds its value or does not drop too much in price over time, selecting a famous watch brand and a popular model can help. This increases the likelihood that there will be buyers waiting once you are ready to sell your watch.

This is where Rolex comes into play—just about everyone on the planet knows Rolex, whether or not they are into watches. That type of global brand recognition can definitely offset regular depreciation. But again, this does not necessarily apply to every Rolex watch. Models like the Submariner, GMT-Master, and the Daytona characteristically fare much better in the pre-owned luxury watch market than models like the Datejust, Day-Date, and Pearlmaster, for instance.

Other brands that can perform well in the secondary market include Patek Philippe, Audemars Piguet, Omega, Cartier, Panerai, and others. Also look into what watch models have been historically popular for a good length of time. For example, the Nautilus, the Royal Oak, and the Speedmaster are iconic luxury watches with a solid track record of healthy demand. A little bit of research into what current retail prices are versus what comparable models are selling for in the secondary market can set you up for better success against dramatic depreciation.

At the end of the day, there is no magic formula for determining how much or how little a luxury watch will depreciate in the long run. However, if you want your watch to retain its value, choosing a historically popular style from a big brand is your safest bet.