Buying a Rolex or Patek Philippe? You Need To Earn S$7,444.38 First
Rolex, Patek Philippe, Tudor… luxury watches.
Luxury watches are often deemed timeless, made with top-grade materials and held strong underlying value due to their history, technology, exclusivity and craftsmanship.
One thing most people would say about these timepieces – they only become more valuable over time.
According to Statista, Singapore ranks 4th globally in generating revenue for luxury watches, which translates to US$2.14 billion in 2022!
In fact, the watch trading business is burgeoning more than ever. Chrono24, a popular platform linking dealers or private sellers with buyers in Singapore saw its trading volume jump more than 50% in the first half of 2022. A reason for this is due to the recent crypto meltdown.
Knowing that a luxury watch may cost an arm and leg, being a curious creature, I’ve done up some calculations just to see how much one has to earn to make a comfortable purchase.
Let’s find out!
Disclaimer: Prices are obtained from Chrono24 as of 5 August 2022 and can be subject to change without prior notice. The Information provided by Seedly does not constitute an offer, affiliation or solicitation to buy or sell any product(s). It does not take into account the specific objectives or particular needs of any person. We strongly advise readers to do their due diligence before making any purchases.
TL;DR: Can You Afford a Luxury Watch Such as Rolex?
Click here to jump:
- Types of luxury watch resellers and how much do they earn?
- Are luxury watches good investment assets?
- How much do you need to earn to afford one?
How Much Does a Dealer Earn From Trading Luxury Watches?
In Singapore, watches are often sold privately, in small auction circles, private & retail resellers or pawnshops.
As there’s no single trade exchange, price comparison becomes difficult and this is especially so if you are not a seasoned trader.
For this reason, one buyer may fork out a much higher or lower price than another.
So, how much does a reseller earn from trading luxury watches?
Watch Dealers in Singapore
For the uninitiated, there’re only a few authorised dealers for Rolex and Patek Philippe in Singapore.
These include Cortina, The Hour Glass, Kee Hing Hung, Watch Palace, Emperor Watch & Jewellery, Swiss Watch Gallery & The Time Place.
Stores that sell brand new, second-hand or pre-owned watches are unauthorised dealers. Some names include:
- Athena
- Chrono24
- Montres
- Watch Capital
- Watch Exchange
- Brightime by Championtime
Unlike authorised dealers who sell branded watches according to retail price, most unauthorised dealers charge their own commission fees for purchases, offer a buyback scheme, or allow you to consign your watches.
Prices will vary greatly based on the valuation of watches, and based on public information, this is how these dealers charge or offer:
| How These Resellers Charge And Offer | |
|---|---|
| Chrono24 | Commission Fee: 6.5% |
| Athena | Rolex Buy Back Guarantee |
| Montres | Offer watch sellers at 90% of the purchase price |
| Watch Exchange | Sell: 5 to 15% below grey market value Consign: 3 to 5% below grey market value |
Store Consignments
If you’ve spotted a store under your block that sells luxury items, there’s a high chance that it’s a non-chain seller.
These sellers are often independent and the stores are places where individuals keep their items on consignment, and sales staff will help you sell your item, and you pay them a commission of 10% to 15%.
Private Resellers
If you’re planning to buy a watch on platforms such as Carousell, you’re really brave.
While there is not much cost incurred to be selling luxury watches online, there are significant risks in doing so. For example, you may not always know the origin of the watch.
Or worse, you’ve been scammed into buying a counterfeit product or not receiving your watch at all!
However, there are ways to prevent yourself from being scammed!
Our Seedly Community member has shared that you can bring an authenticator with you during the meet-up, or meet at shops where authentications can be done (which you will likely have to pay a fee to do so).
If you’re wondering how much private dealers earn as they’ve cut away the middlemen, based on anecdotes from people I know, they’ve earned 1.3 to 1.5 times of original price.
But the profit is not always consistent.
For instance, luxury watch retailer Watch Capital co-founders first started their watch reselling side hustle on Carousell and were earning an average revenue of $80,000.
While it’s unclear how much they profited back then, this goes to show that prices do differ drastically across private resellers.
Pawn Shops
Just a quick read on Moneymax’s website, you will know that the pawnshop buys jewellery and timepieces at a flat rate.
Typically, for older watches, you would lose about 10 to 20% of the purchase price.
More often than not, pawn shops will also buy timepieces outright. For older or vintage items, you would typically lose between 10% and 20% of the purchase price.
However, for newer pieces purchased in the past 10 years or less, you may lose up to 60% of the purchase price as these pieces are often bought from chain stores which have higher markups due to marketing and branding.
For this reason, older pieces are usually sold closer to their actual value and would have appreciated with inflation.
Read more:
- How Do Pawnshops Like MoneyMax and ValueMax Make Money?
- Always Wanted a Rolex or Patek Philippe? It Can Be a Good Investment Too!
- Carousell Vs Facebook Marketplace Vs Shopee vs Lazada, Which Is Best For Me As A Seller?
Should You Invest in Luxury Watches?
When investing in luxury watches, your investment returns are derived from capital appreciation.
Similar to picking stocks, not every luxury watch or stock will give you a tenfold return on investment.
In fact, the legendary watch industry expert René Beyer has remarked that only three watch brands have made the 20 priciest timepieces ever sold at auction.
The three brands are namely Audemars Piguet, Rolex and Patek Philippe and the watches with bonafide investing value are:
- Rolex Daytona (steel and bicolour)
- Patek Philippe Nautilus
- Audemars Piguet’s Royal Oak.
But, just last year, the watch industry had total sales of watches exceeding more than £420 million at auction worldwide, which was a 54% increase since 2020.
The Knight Frank’s 2022 Luxury Investment Index Report (KFLI) also reported that auction houses set new sales records for luxury watches, and as an asset class itself, topped the KFLI Index and had an average growth of 16%.
This goes to show that the demand for luxury watches is still high.
Just a word of caution, if you intend to take up loans to finance luxury watches as investments, you’re essentially incurring debt. In investment terms, that’s considered leveraging.
Read more:
- Are Luxury Branded Watches a Good Investment? Always Wanted a Rolex or Patek Philippe? It Can Be a Good Investment Too!
- Stocks Investing 101 Part 1: How To Read Seedly Chicken Rice Limited’s Income Statement
- REIT Jargon 101: Commonly-Used Terms That REIT Investors Must Know
How Much Do You Need To Earn per Month?
The thing about luxury goods is that they require a high upfront cost.
I’ll be calculating the amount you need to save per month and estimate how long you need to purchase a Rolex Daytona 116500LN, which is one of the most sought-after Rolex watches.
According to KFLI’s 2022 report, Rolex Daytonas continue to increase in value the most overall, closely followed by Explorers and Submariners.
Can You Afford a Rolex Daytona?
Let’s break it down.
The Rolex Daytona Steel 116500LN’s retail price is US$13,500 or EUR12,400 (i.e. S$18,625.88).
However, to get your hands on it in Singapore via an Authorised Dealer, you would probably need to be put on an endless waiting list as these dealers often only have a few pieces of the same model each year.
By the way, rumour has it that the waiting list is at least five years.
This means that you would have to turn to resellers, who might mark up due to value appreciation over the years.
At present, the exact model found on Chrono24 is selling at S$54,799.
For those of you who prefer splitting up your big expenses, you’ll rejoice as some resellers have zero interest instalment plans for Singapore-issued credit cards of up to 36 months.
By working backwards and assuming you’ll take up an instalment tenure of 36 months, this means that for each month, you will need to fork out S$1,522.19.
But, you don’t want to stretch yourself too thinly in the pursuit of a Rolex watch.
For the uninitiated, the average Singaporean household member requires $1,600 a month to meet their needs.
Bearing in mind the 50% expenses, 30% wealth building and 20% savings rule, you should at least have S$3,122.19 solely for Expenses.
Combining everything, your take-home income should be S$6,244.38.
Bearing in mind that the Central Provident Fund Ordinary Wage ceiling is capped at S$6,000 i.e. if a person’s salary is more than S$6,000, his/her CPF contribution would be computed based on S$6,000, and contributions are not required for the remaining amount.
With this, we will derive a gross monthly income of S$7,444.38!
You Might Need To Save Up for Years
As if rubbing salt onto our wounds, you will still take years to save up if your gross monthly income is $5,000.
Assuming you put aside $400 every month for this, here’s a breakdown of the most sought-after brands and models.
| Patek Philippe Nautilus 5712G | Audemars Piguet Royal Oak Offshore 26284RO | Girard Perregaux Laureato Skeleton 81015 | |
|---|---|---|---|
| Average Reseller Price (Brand New) | $162,682 | $101,514 | $59,950 |
| Estimated Time Needed to Save, Assuming You Save $400 Every Month (rounded to nearest) | 34 years | 21 years | 12.5 years |
Afterthoughts
“Watches are luxury commodities, meant to be used, and enjoyed.”
~ Peter Chong, co-founder and editorial director of influential watch blog Deployant
Surely, most luxury watches have great functionality and they look and feel premium, but I personally wouldn’t buy to invest as there are investment alternatives that do not require a high upfront cost.
At Seedly, we strive to help our readers make smarter personal finance decisions, and this includes spending within our means.
It’s better to only make such a purchase only when you have the capacity to do so, and we shouldn’t be incurring any debt unnecessarily.
That said, if you are able to afford to pay in full without incurring debt, I really commend you for that!
Related Articles:
- How To Pick ETFs And Assemble A Portfolio Like A Pro
- Buying A Car? You Need To Be Earning At Least S$8,850 First
- 10 Revelations Which Helped Me Rethink My Finances in My 20s
- Investing Cheat Sheet: How To Pick the Best Technology Stocks To Invest In
- ETFs in Singapore (SGX): What Investors Should Know
Advertisement
