A Rolex watch is already a product that goes far beyond the boundaries of a mere wristwatch. Over the years, Rolex watches and other luxury timepieces have undergone a remarkable evolution, not only in price, but also in meaning and use. Today, these watches are sought-after investments.
With the help of ChronoPulse, Chrono24’s watch index, this article will examine the financial performance of Rolex in recent years and analyze the decisive factors and models that have contributed to this development.
The Rise
ChronoPulse tracks the market performance of the watch brands and models with the highest transaction volume on Chrono24, making it a useful tool for understanding the price development of Rolex watches. If you take a look at the figures for the brand, you’ll see an impressive appreciation in value over the last five years, which has excited many collectors and investors alike. Since January 2019, the price index of the most popular Rolex models has risen by almost 42%.
Owners of a Rolex Datejust 36 ref. 126234, Rolex Daytona ref. 116500LN, or Rolex Explorer ref. 16750 have especially benefited from this development. All of these models have appreciated by more than 40% according to the index.
Key Factors of Price Development
This naturally begs the question as to which factors played a key role in this rapid rise?
- Brand value: The brand itself plays a decisive role in shaping financial performance. Collaborations with successful personalities serving as brand ambassadors have helped Rolex generate strong demand for its timepieces among the public at large. Synonymous with success, a Rolex is a prestigious object.
- Exclusivity: High demand combined with limited supply ensures exclusivity. Rolex has managed to create an aura of exclusivity across the globe by keeping its production limited, despite or precisely because of the high demand. Discontinuing models to deliberately make Rolex watches rare and thus increase exclusivity is just the tip of the iceberg. As is human nature, watch collectors want what they can’t have, which triggers the cycle of desire all over again. This strategy helps increase demand and stabilize prices, both on the primary and secondary markets.
- Quality: So as not to completely spoil the romance for watch enthusiasts, I would be remiss not to mention that the quality of materials Rolex uses in their timepieces plays a decisive role in their market performance. To ignore the robustness, durability, and hence longevity of Rolex watches would be to misunderstand a key factor in the brand’s price stability and success. Moreover, the lengthy lifespan of a Rolex makes it well-suited for a long-term investment. A Rolex thus offers security in multiple aspects.
- Profitability: A remarkable characteristic of Rolex watches is their exceptional value retention, even in times of economic uncertainty. While other markets can fluctuate, Rolex watches have a reputation for maintaining and even increasing their value over the years. This makes them an attractive investment, especially for those looking for a safe haven for their capital. Even in times of low interest rates and dividends on the stock market, investments in luxury goods remain popular. And, naturally, the “best” of the most sought-after brands in the industry are benefiting the most.
Overall, success is a combination of these and other factors, including brand history and pop culture, as well as pandemic-related restrictions on local shopping and the resulting boom in online sales and shift from experiential to material consumption.
What happens when trends change?
As the ChronoPulse index of the last five years clearly shows, Rolex prices peaked in April 2022. This coincided with the easing of pandemic measures in many countries and the decision by the US Federal Reserve and later by other central banks to raise interest rates for the first time since 2018, a move that made traditional shares and other investments more attractive to investors.
Now, in January 2024, watch prices have fallen to their lowest level since August 2021.
Taking the Rolex Index as a whole, we can see that it has fallen by just under 5% in the past year.
The reasons for this development can not only be found in shifting interest rates and the attractiveness of other types of investments, but also in the geopolitical tensions and economic inflation affecting many countries. These uncertainties and the slowdown in economic growth lead to a general reluctance to purchase luxury watches, and thus to an oversupply and falling prices. In other words, it puts buyers in a better bargaining position.
Is it the right time to buy a Rolex?
Many prospective buyers will be asking themselves: Which of the recently top-performing watches can now be found at more affordable prices?
The top 5 models listed in the ChronoPulse Index with the highest transaction volume and thus the strongest depreciation in value are the Rolex Daytona, Datejust 41, Submariner Date, Sky-Dweller, and GMT-Master II models. Prices for these watches have fallen by more than 3% in the last year.
While these levels are still above list prices, the secondary market has nevertheless seen a price correction for these once highly sought-after models. This means that more models are available on the market and buyers are in a better negotiating position.
Will the downward trend continue?
Recent Rolex price developments offer an exciting journey through the watch industry and the world of financial markets over the last few years. As is always the case with investing, success depends on the timing of entry and exit. The annual price increases in January, Rolex’s own participation in the secondary market with their Certified Pre-Owned program, combined with talks of interest rate cuts in the near future could mean another rise in prices.
Last month, the “loss” of the Rolex index was only -0.36%. Perhaps we’ve reached the market bottom that some experts have predicted. Only time will tell. But two things are certain: With the upcoming watch trade fairs this year, we can look forward to new and discontinued models. If you’ve found a watch you love, it is always a good time to fulfill your dream of owning it. But now, more so than in the previous two years, may be an even better time to make this dream a reality.
