Art vs Luxury Watch Investment: Why Masterpieces May Hold More Value Than Timepieces

Introduction

The alternatives investment market is growing in popularity, fuelled by factors such as portfolio diversification, the volatility of public markets and the desire to seek out investments with low or negative correlation to traditional asset classes. Within the alternative investments sphere, passion investments are proving particularly alluring. Tangible assets that also hold personal or emotional value as treasured possessions, art investment and watch investment, the two subjects explored in this article, fall into this category. 

Consistently outperforming other asset classes over long periods, both are viable options as potential high yield alternative investments. But which offers more value? Do masterpieces hold more value than timepieces, or is it the other way around? 

In this article we will explore the art vs luxury watch investment debate in more detail, examining the advantages and disadvantages of each to help investors make the most informed financial decisions. 

The Swatch Spot Mickey And Mirror Spot Mickey, Designed By Damien Hirst

1. Exploring Luxury Watch Investment

If you’ve ever been tempted to invest in luxury watches, you will be familiar with the names Rolex and Patek Philippe. Timepieces by these brands have long been regarded as among the best watches to invest in, with the potential to grow in value over time. There are, however, significant pros and cons to luxury watch investment that it is important to weigh up if you are considering adding a timepiece to your portfolio. Let’s take a closer look at them.  

Advantages of Luxury Watch Ownership

In high demand globally, iconic watch marques like Rolex, Patek Philippe, Vacheron Constantin and Omega have a great deal of brand prestige. As creators of some of the top watches worth investing in, they have more than proved their mettle. These are the watch brands that hold value, we are told, but not all timepieces are made equal. Only certain models offer long-term value and strong resale potential. 

With a lower entry point, luxury watch investment usually requires less upfront capital. This makes watch ownership typically more accessible than fine art, an important consideration if you are just starting out on your investment journey. 

Like art, watches have a low correlation with other asset classes, such as stocks and bonds. This can make them a valuable addition to a diversified investment portfolio. 

As highly portable stores of wealth, a luxury watch is compact, wearable and can be enjoyed for decades to come. The fact that a watch will only grow in sentimental value is a big plus point for investors. 

Many people who invest in watches are also enthusiastic collectors who are emotionally connected to their assets. For them, luxury watch investment is much more than a money-making exercise—it is a passion that brings them just as much pleasure as the potential remuneration. This can be a strong motivating factor when weighing up art vs luxury watch investment. 

Hublot Mp-15 Takashi Murakami - Tourbillon Sapphire

Disadvantages of Luxury Watch Ownership

Setting aside the difficulties of getting your hands on the most collectible models, the returns on luxury watches can fluctuate because they are often tied to market trends. Factors beyond their intrinsic value, such as brand hype and collector preferences, have in the past caused significant volatility in the watch market, increasing depreciation risks.

Just because a watch is expensive, it doesn’t mean it will hold its value. It is very important to thoroughly research different watches to buy for investment and look for timepieces with a known and documented history.

When asking yourself, are luxury watches a good investment, it is important to bear in mind that timepieces are not a mainstream asset class. Watch investment is relatively niche, limiting the pool of potential buyers. Timepieces also come with higher liquidity risks compared to stocks and bonds. Selling a watch can be a time-consuming process, and investors may face challenges finding buyers willing to pay close to market value.

Theft is one of the number-one concerns for investors. According to The Watch Register, the value of stolen luxury watches has surged in the past year to $1.9bn (£1.5bn). Counterfeits are also an increasing problem in the watch industry, with a recent report from Watchfinder & Co. stating that there are a staggering 1,010,572 fake watches circulating within the UK market alone. Notably, Rolex imitations constitute at least half of those counterfeits.

Something that is often forgotten: luxury timepieces require insurance and periodic servicing and, to keep them safe and protected, investing in a specialised storage solution is recommended. 

Finally, most collectors are proud to wear their watches, however they best hold their value when in pristine condition. Be aware that signs of wear and tear, or significant repairs, can impact any potential return on investment.  

2. Exploring Fine Art Investment

Out-performing all other luxury collectibles, fine art is currently the number-one passion investment. Bringing great joy to its owner, it also has a steady track record of long-term appreciation. A work of art, hung in your home, provides an endless source of conversation and contemplation. However, just like the world of watches, there are advantages and disadvantages to fine art investment. Let’s explore them in more detail.

Benefits of Investing in Art

The second-largest alternative investment category after gold, the benefits of investing in art can be divided into those that appeal to the head, and those that appeal to the heart. Offering enormous aesthetic pleasure, significant cultural value and impressive returns over time, many collectors view art as the perfect amalgamation of all three.

From a purely financial perspective, the global art market has proven its resilience through the years. Bouncing back even after major disruptions and economic downturns, fine art has consistently retained or increased its value, with opportunities for impressive value growth, particularly for those investing in emerging artists and historically significant works. 

Like watches, buying art as an investment has a low correlation with traditional financial markets. Offering stability and resilience in turbulent times, historical records suggest that the global art market has stayed somewhat insulated from prolonged periods of economic downturn and recovered faster than standard asset classes.

Long considered a leading inflation hedge, art has become an increasingly popular way of diversifying and fortifying a traditional investment portfolio. And wIth its historical appreciation rates and potential for long-term value growth, many collectors view art as not just an asset but also a legacy with which to preserve wealth for future generations.

Other advantages appeal squarely to the heart, primarily the great emotional and aesthetic value art holds. Providing continual visual enjoyment and cultural enrichment, owning significant works of art comes with a level of prestige that is unmatched, connecting owners with cultural and historical narratives and preserving artistic legacies.

Discover Contemporary Artists to Invest In

Disadvantages of Investing in Art

Acquiring fine art often requires a substantial injection of capital—considerably more than the average investment timepiece for high-calibre works. For new investors who are making their first foray into the art world, the costs can be daunting. 

The complexity of the art market is another major disadvantage, with art investment requiring careful planning, consideration and due diligence. The challenges of understanding art valuations, how to spot the most valuable prints and paintings, the authentication process and how important provenance is to the worth of an artwork can have a big impact on investor confidence.

Another potential downside to investing in art is its lack of liquidity. Unlike stocks or bonds, art, like watches, is considered an illiquid asset. This means that it is not easy to convert it into cash, especially if that cash is needed quickly. Finding the right buyer can take time, particularly during economic downturns. 

Finally, just like watch investment, owners must factor in the storage and maintenance costs associated with art ownership. These include specialist storage, proper preservation and insurance, which add to an investor’s expenses.

3. Comparative Analysis: Fine Art vs. Watches

The market performance of fine art consistently surpasses that of watches, with art investments appreciating by an incredible 50% since 2019—the most of all alternative assets. Unlike other assets tied closely to economic cycles, art’s value benefits from the kind of cultural and historical appeal that is timeless, making it a distinct investment with considerable growth potential.

In the same period, watches experienced an impressive 44% rise, fuelled by high demand post-pandemic. However, recent declines highlight ongoing volatility in the luxury watch market. Influenced by trends and resale values, watches are subject to rapid price changes based on brand perception and consumer interest. As market saturation occurs, especially with brands that expanded rapidly during the luxury boom, watch values are likely to continue to fluctuate.

While both asset classes are classified as illiquid, art offers more accessibility, with a variety of sales channels, including commercial galleries, auctions and private sales. By comparison, the secondary market for watches tends to be much narrower and more reliant on niche buyers.

Finally, one of the main pulls of art investment is something that can’t be measured: the enjoyment. Its universal appeal is deeply connected to the rich tapestry of human culture, with art saying so much about its owner. Watch investors would argue that their assets also bring them great pleasure. Aside from those watches with famous owners, such as Paul Newman’s Rolex Daytona and Buzz Aldrin's Omega Speedmaster, it’s a fact that timepieces have nowhere near the same cultural clout.

Conclusion: Why Maddox Gallery Recommends Fine Art Investment

In the art vs luxury watch investment debate, it’s clear that art has the most potential in the long term. With its enduring value, cultural significance and historic market stability, there are few limitations when it comes to investing in fine art. The luxury watches market, on the other hand, is in the midst of significant turmoil. With secondary market prices for luxury Swiss watches continuing to fall, according to a 2024 report from Morgan Stanley, in collaboration with WatchCharts, depreciation is a valid concern for investors.

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The Maddox Gallery Advantage

Maddox Gallery was founded to help clients overcome the challenges of fine art investment, such as authentication, staying at the forefront of analysing art trends, and identifying the artists with the highest potential for substantial returns. A global market leader in art market analysis, our goal is to assist investors in making the most profitable and satisfying decisions when navigating the multi-billion-dollar art industry.

Maddox Art Advisory is designed as a space to discover the joy of owning and collecting art, guided by expert advisors. With unrivalled access to the Contemporary art world, our bespoke services are carefully tailored according to your risk tolerance and return objectives, taking into consideration asset protection, capital preservation, diversification and your personal taste. 

Experts in portfolio management, we are dedicated to sourcing the highest-quality investment art for our clients, with a certificate of authentication provided with every piece of art for sale. We also oversee the delivery of art to a client’s home or can arrange specialist storage in a temperature-controlled facility, depending on their preference.

To learn more about the benefits of contemporary art investment and begin building your art portfolio. Book your private consultation with a Maddox Gallery Art Advisor.

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The value of investments can go down as well as up. Past performance is not a guarantee of future performance. Fees, Terms and Conditions apply. Please seek your own financial advice before purchasing.