The second-hand luxury watch market is witnessing a surge in surplus as the crypto route shrinks the fortunes of its target demographic.
According to Germany-based Chrono24 Karlsruhe, this route has led to a drop in the prices of some watches from luxury watchmakers Patek Philippe and Rolex. The company lists over 500,000 for sale on its website.
Demanded models like the Rolex Daytona and Patek Nautilus 5711A are seeing price drops as new secondary market buyers created in a crypto bull market see bitcoin climb to a peak of $69K in November 2021, fortunes see a steep fall . Jefferies analysts estimate that 25% to 30% of high-end sales in the US in 2021 came from crypto money. Bitcoin, which touched a level close to $17.5K in June 2022, is now exchanging hands at $23980K at press time, representing a 65% drop from its peak.
Stimulus checks and gains in the stock market also helped the second hand market to grow.
Prices consolidate in realistic territory
Chrono24 co-CEO Tim Strak said the price drop brings popular models in line with prices for similar watches. Prices of some models increased during the Covid-19 pandemic, with an annual growth of 10% in the secondary market. The price of Audemars Piguet’s Royal Oak rose to $107K in April 2022, up from $49K a year earlier. At its peak, the normally $35K Nautilus 5711A was selling for $240K. It now sells for around $190K. However, other brands, such as Cie Financier Richemont SA, have fared better.
Trading volume on the platform connecting private sellers and buyers increased by 50% in the first half of 2022. Vendors have raised the price of models such as the Girard-Perregaux Laureato and some pieces from Breitling and Cartier. Chrono24 has also seen a rise in demand for the Omega Speedmaster range after its partnership with Swatch. Investors sometimes invest in timepieces to store value and hedge against inflation. Breitling recently announced that it is accepting bitcoin for payment in partnership with BitPay.
McKinsey forecasts market growth
Cronos 24, which is backed by LVMH founder Bernard Arnault, has floated the idea of an initial public offering within the next three years, Strake told Bloomberg earlier this year. It said it had transactions worth $2.2 billion on its platform last year.
McKinsey predicts that revenue from the secondary market will increase from $29 billion to $32 billion in 2025.
Luxury furnishings RH said its sales on July 1, 2022 were down 2-5% compared to a year ago.
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