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Luxury watch can be sound investment, financial adviser says
Jagartha Advisors co-founder and chairman Ari Adil says luxury watches may be a good investment, but only with careful consideration for the choice of item.
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Apart from scarcity, factors such as the model, clockwork and emotional value of the previous owner can give a watch high selling. (Shutterstock/File)
The purchase of a luxury product can be seen as a form of investment, but it must be noted that this doesn't apply to any item.
Jagartha Advisors co-founder and chairman Ari Adil said in a statement that luxury watches could a good investment option, but only with careful consideration for the choice of item. Not any watch purchased at a high price could provide high profits later on, Ari said.
According to the 2018 Knight Frank Luxury Investment Index, there is an increasing trend of movement from the middle to upper class globally, which has in turn caused demand for luxury goods and collectables to also go up, such as art, watches and wine.
A luxury object many collectors look for is a watch. Since 2014, a trend of collecting luxury watches had begun to flourish in the upper middle class in various countries, including Indonesia, Ari noted.
Luxury watch collections for the upper class, those of high net worth, were often considered part of fashion and social status. Some collected watches of various well-known brands with unique models as a form of investment.
The factors that built an item's worth included intentionally limited production of certain models to create exclusivity.
Ari said this factor was an opportunity for watch collectors to hunt for products that could have high value in the future. The more limited the products on the market, the higher their value in the eyes of collectors, he said. This was especially true for watches considered vintage, discontinued or special editions.
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Apart from scarcity, other factors, such as the model, clockwork and emotional value of the previous owner, could also give a watch high selling value, he added.
"Watches that have been owned by celebrities, public figures or famous athletes are increasingly sought after by collectors and can be offered at high resale prices," Ari said.
Collecting luxury watches for the purpose of investing requires careful consideration. Through market research, buyers could find out about demand and supply of a particular model as the basis of whether selling luxury watches in the second-hand market could be profitable.
"Luxury watches are one of the things that have good monetization value, because a market in Indonesia has been established among those who also understand the value of a luxury item," Ari said.
With regard to investment, Ari also advised collectors to pay attention to the rupiah exchange rate. Given that luxury watches were imported goods but sold for rupiah in Indonesia, the prices of new luxury watches and second-hand ones could be affected if the rupiah depreciates or appreciates.
Ari cautioned against having luxury goods as the only form of investment.
"The risk of damage to goods if they are in the wrong hands will actually decrease their value. So, it is very important for investors to understand the risks of investment involving valuables that do not generate fixed income," Ari said. (liz/wng)
