In recent years, the rise of smart and digital watches has reshaped the watch market, with more people opting for these modern timepieces due to their convenience and ability to track health metrics beyond just telling time. As a result, traditional luxury watches like Rolex, once prized for their status and craftsmanship, are losing their value and appeal. This shift has seen many owners more keen to pawn or borrow against their once-coveted luxury watch heirlooms, seeing them as less essential in the age of wearable technology.
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Lamna Financial, an asset-based lending company in South Africa, has recently reported a significant rise in the number of individuals taking out loans using their luxury watches as collateral. This type of lending, which functions similarly to pawnbroking, has seen a 20% increase compared to the same period last year, the company reports. The company attributes this growth to the global decline in luxury watch prices, which has paradoxically enhanced the appeal of these timepieces as a means to secure quick cash.
Drop in value of watches
Charles Meyerowitz, the CEO of Lamna Financial, offered insight into this development, stating, “Even though luxury watch prices are dropping, they remain valuable assets. People are leveraging these items to obtain quick loans.” He explained that the luxury watch market has been facing a downturn, with prices falling across various brands and models. Despite this, or perhaps because of it, watches have become more attractive as collateral, allowing owners to access funds swiftly.
In addition to the 20% increase in loans secured by luxury watches, Meyerowitz highlighted that Lamna Financial has also observed an 8% rise in first-time clients. The overall value of loans issued has grown by 14% compared to last year. This indicates a broader trend of individuals turning to asset-based lending as a financial strategy in uncertain times.
Big brands
Rolex, Audemars Piguet, and Patek Philippe are among the most popular luxury watch brands used as collateral at Lamna Financial. These high-value items continue to be seen as reliable assets that can be converted into cash when needed.
This phenomenon of using luxury watches for loans is not unique to South Africa. Globally, individuals are increasingly utilizing valuable items to manage their finances in a more flexible and efficient manner. Lamna Financial’s record increase in loans against luxury watches reflects this broader global trend.
