The luxury sports market has finally begun to decline. What impact will price fluctuations have on the entire watch industry?

The luxury sports watch market has seen its first price decline in recent years, with Royal Oaks dropping by around 16% and Nautiluses by around 18% compared to previous years. Rolex's Oyster Perpetual Submariner Date also began to lose value at the end of March 2022.

Sharon Chan, Director of the Watch Department at the long-established auction house Bonhams Hong Kong, examines why the luxury sports watch market has begun to decline.

Luxury watch market is heating up at an all-time high

　Never in the history of watchmaking has the debate surrounding luxury watches been more heated, with them taking center stage in everything from pop songs to social media.

　Popular models such as the Audemars Piguet Royal Oak, Patek Philippe Nautilus, and Rolex Oyster Perpetual Cosmograph Daytona have all seen prices soar on the secondary market. However, now that we've grown accustomed to seeing these skyrocketing prices, the luxury sports watch market has seen its first price decline in recent years. Compared to previous years, the Royal Oak has fallen by approximately 16% and the Nautilus by approximately 18%. Rolex's Oyster Perpetual Submariner Date, commonly known as the "Green Ghost," also began to decline in value at the end of March 2022.

　This time, we will explore the reasons behind this wave of market price declines and how these changes are affecting the watch industry as a whole.

Reasons for the price drop of popular "luxury sports"

　The current global economic climate has led to a slump in stock markets, making investors cautious and less willing to spend large sums on watches. At the same time, global inflation has increased the cost of living around the world, reducing the purchasing power of equivalent currencies. Consumers are becoming more budget-conscious and are more able to distinguish between so-called "needs" and "wants." These two factors have reduced demand for luxury watches, and when certain models no longer fetch high prices, sellers are forced to lower their prices.

　Furthermore, since the COVID-19 pandemic began in 2020, the investment market has become unpredictable, leading investors to turn their attention to new investment targets. At the time, watches were considered profitable, and buyers who didn't care about the value of the watch itself flooded the market. As the number of buyers increased, competition intensified, and some luxury sports watch models, which were already in short supply, began to attract keen interest.

　Therefore, retailers have continued to limit sales to maintain prices and promote the novelty of watches. However, due to the overall financial and economic situation, demand for luxury watches from buyers has recently decreased, causing market prices to fall. Seeing this situation, investors and buyers gradually sold off their inventory to minimize losses, and as supply increased, demand decreased.

　But in the big picture, this isn't a bad thing. Not only has it potentially stabilized the chaos of the past few years, it's also given watch collectors more room to explore beyond the popular models, while also allowing serious buyers to acquire the watches they want at reasonable prices.

　For example, at the Bonhams Hong Kong watch auction held in June 2022, several Patek Philippe Nautilus 5711/1A and 5712 watches, as well as a rare stainless steel and platinum Royal Oak Quantime Perpetual, attracted many watch collectors and achieved impressive results.

　Additionally, Cartier's Mystery Clock "Model A," manufactured in 1928, sold for HK$687 million, more than three times its estimated price. This rare and historically important piece continues to attract the attention of watch collectors around the world, proving that its value is widely recognized.

Author "Sharon Chan" Profile

　Sharon Chan is Director of Bonhams' Watch Department in Asia. Based in Hong Kong, she works closely with offices across the Asia Pacific region and oversees the department's 10 auctions per year.

　He has over 17 years of experience in the jewelry and watch auction business at various international auction houses, and from 2011 to 2016 he oversaw the watch auction in Hong Kong, where he achieved year-on-year growth in sales, achieving the highest price for a watch sale in Asia in 2013. He also oversaw one of the world's largest private watch collections, setting a new record of US$600 million at auction in 2015.