Cagau: Asset Value Of Luxury Watches To Rise During Pandemic

“Generally the luxury watch market maintains some interesting demand and supply curves with no equilibrium achieved, at least this is true for the hottest luxury watch brands like Richard Mille, AP and Rolex,” said Jay Barker, general manager of Cagau. “These brands that are always in high demand have limited their supplies for almost a century. They do this as a part of their long-term view that upholds brand reputation and value rather than short-term profits. The exceptional quality and craftsmanship put into these exquisite timepieces, and their limited nature allows these brands to increase the demand for their watches over time. As a result, very often the resale price or asset value of these watches will likely remain stable or even grow for future generations.

“Even in the field of luxury watches customisation, brands such as Richard Mille, Audemars Piguet and Rolex take the lead, as the exceptional details put into these watches offer ample ways to experiment and create unique pieces that will uphold one’s personality and sense of style even better. Apart from the aesthetic look, customers can also easily enhance the overall asset value of these luxury watches, by adding jewels of their choices.”

The average time taken for luxury watchmaking may vary from three to five years, and in exceptional cases, it may take even longer. When the pandemic imposed consistent lockdowns, factories were shut down, further reducing the hours put into luxury watchmaking – narrowing the already limited supply of luxury watches further. Besides, the pandemic-induced import/export bans and the shutdown of luxury watch retail premises also placed extra constraints on the supply of luxury watches.

“We had genuine fears that the luxury watch market was on the brink of a crisis. But not sooner, an interesting shift in the demand and asset value for luxury watches came about and all our  fears were misplaced.”

Upon careful analysis of the luxury watch market, it has become apparent that the increase in demand for luxury watches resulted from the pandemic itself, contrary to what was expected. In fact, it’s the favorable demand and shortage of supply amidst this pandemic that persuades luxury watch specialists to expect the asset value of luxury watches to rise.

Sharing their insights to this analysis, experts at Cagau believe that there are few driving forces that create a high demand for luxury watches amidst the pandemic, which are as follows:

• People are forced to stay indoors due to the pandemic, which has increased the time they spend online and their awareness of concepts such as luxury watches, their asset-value perception, and how they can be an investment over a timepiece.
• Bespoke luxury watches are becoming the new trend within the luxury watch market and the pandemic has given enough spare time for people to expose themselves to these topics. With bespoke luxury watches, customers can add their own personality, style, and individualism into a timepiece and won’t have to settle for something that carries a contrasting style to oneself, after spending a fortune on it. This could have escalated the interest and demand for luxury watches further, especially among curious newcomers.
• High-income earners or bored collectors, who had to cut down their summer vacations and expensive dining as a result of the pandemic, are now directing their interest towards luxury watches.
• Rumours suggest luxury watches have been holding back their supply to fuel demand and increase the asset-value of their existing products even further.

Over the past few months, there has been a huge surge in the demand and increasing asset valuations of the soon-to-be retired luxury watch models such as the Patek Philippe Nautilus Ref. 5711 and the Rolex Explorer II 216570. This is also spiking the demand and value for these models in the secondary market, with investors and collectors wanting to buy these watches that will never be on sale again.

Some watch-conscious analysts also believe that this pattern of market conditions has driven some other iconic watches to achieve market valuations above their original retail prices when bought new. This has resulted in the already increased demand to spike up further as customers are increasingly being drawn towards watches as an investable asset over a mere timepiece.

However, despite the boosting demand, the supply shortage still prevails in the pandemic-induced luxury watch market. In truth, the shortage has reached an infectious point that many luxury watch brands can’t keep up with. Some luxury watch experts say that this demand for luxury watches amidst a pandemic is organic and so it is expected to keep the asset-value of popular luxury watch brands higher for a considerable period, perhaps even post-pandemic.

As a response to this prevailing market condition, Barker said, “Pre-owned luxury watches are one of the best examples of luxury staying in power. More than ever luxury watches are now seen as an asset or financial commodity which can fluctuate in value or increase valuation with skyrocketing demand, especially in the secondary or pre-owned marketplace.

“At Cagau we encourage our customers for utmost enjoyment and not for asset-value or investment purposes. However, it’s commendable to say that a truly exceptional, unique, limited edition or bespoke luxury timepiece does have good incremental asset/resale value. This makes luxury watches almost another possible asset for owners or collectors to own.

“Moreover, at Cagau, we don’t just sell bespoke luxury timepieces that promise a higher asset value; we also make sure customers can customise a watch in their own collection by setting diamonds to upgrade both personality and asset value.”

Cagau is a leading luxury watch customisation company headquartered in Dubai. Its services include selling bespoke luxury timepieces, custom diamond settings into watches already owned by customers, with the recent addition of customising jewellery such as rings, earrings, bracelets, necklace chains and pendants. While Cagau has a strong reputation for Rolex customisations, it also customises other popular luxury watch brands such as Cartier, Audemars Piguet, Richard Mille and Patek Philippe. Cagau’s popularity comes from the exceptional craftsmanship and dedication they invest in creating the most exquisite timepieces for bespoke luxury. It recently announced the launch of a new showroom in Gold & Diamond Park on Sheikh Zayed Road, Dubai.