Don't Buy the Wrong One! The Difference Between Investment-Grade Luxury Goods and Mere Trends

The public is increasingly turning to alternative investment instruments by collecting premium watches, branded bags, and classic cars. Once synonymous with social status, some luxury goods are now being positioned as safe-haven assets. This is reflected in global market dynamics, with various economic reports projecting the international preloved luxury market to reach a value of 60.55 billion US dollars by 2029. The trend is driven by growing interest among the upper class in utilising items like luxury bags and watches as highly liquid assets. Economist and lecturer at Universitas Muhammadiyah Yogyakarta, Susilo Nur Aji Cokro Darsono, stated that this trend indicates increasing public literacy regarding the importance of investment diversification. ‘In the past, investment was synonymous with stocks, bonds, gold, or property. Now there is growing interest in alternative assets such as luxury watches, premium bags, artworks, and classic cars,’ he said in a written statement over the weekend. However, Susilo cautioned that not all luxury goods can be categorised as investment instruments. From an economic perspective, an asset can only be called an investment if it can maintain or increase its value over the long term. According to Susilo, an item’s value appreciation is fundamentally influenced by the law of supply and demand. When demand increases while the quantity of goods is limited, the potential for price appreciation becomes greater. ‘The main influencing factors are scarcity, brand reputation, authenticity and ownership history, secondary market liquidity, and historical and cultural value,’ Susilo said. Global investors are no longer solely considering brand names but are also paying attention to the level of scarcity and cultural value. According to Susilo, this is what allows certain brands to maintain their value over time. For example, the brands Rolex, Patek Philippe, and Hermès are considered to have successfully built a competitive advantage. ‘Rolex, Patek Philippe, and Hermès have succeeded in creating an economic moat through high quality, limited production, and a strong secondary market,’ he said. Data from WatchCharts shows the luxury watch market index increased by approximately 5.1 per cent over the past year. Rolex recorded an increase of around 4.6 per cent, while Patek Philippe rose by up to 12.1 per cent. Meanwhile, Hermès Birkin and Kelly bags continue to demonstrate value resilience with very minimal depreciation of around 0.2 per cent.