Due to the real estate crisis, Chinese millionaires buy luxury watches before properties
With China's economic growth slowing and President Xi Jinping's campaign against real estate speculation intensifying, Chinese investors are increasingly turning to other ways to secure their capital.
If the purchase of properties has been since the Chinese real estate market was liberalized in the 90s a source of safe capital reserve and more resistant to market fluctuations than other investment options, in recent times this has changed. significantly. The collapse of Chinese real estate giant Evergrande and other property developers, coupled with Xi Jinping's active campaign to redistribute property from large landlords to those without access to housing, has led to a sharp drop in property prices. real estate market in recent months .
And while analysts and investors estimate that the fall will continue to deepen, at least until the uncertainty subsides, capital holders are looking for other ways to protect their money. In this way, many have turned to the purchase of luxury watches .
The American newspaper Financial Times has spoken with resellers of this product and they have confirmed the flood of new buyers they have had this last year, which meant an increase in Swiss watch exports of 40% in the first 10 months of 2021 .
An October survey by Hong Kong -based consultancy CSG Intage found that 88% of seniors with an income of $80,000 a year plan to continue to buy more and more luxury watches , which are priced on average of 12 thousand dollars. " The high end of the watch market is very strong ," says Simon Tye , author of the study, to the Financial Times. “ If you go to a Rolex store right now, they won't have enough [watches] to sell to customers ,” he added.
And this is so since these watches are increasingly seen as an investment and not as a way to demonstrate social status, as they were historically, and also as a way to guard against inflation. Sam Yu , owner of an electric heater factory and owner of two apartments, also had talks with the FT and explained why he now prefers to buy watches instead of continuing to buy real estate: “ After two years I can sell the watch for a small profit. Yu says, “ I won't be able to do it with an apartment. Given the political uncertainty, it may take me many months to find a buyer, unless I offer a deep discount .”
A third reason to choose to buy watches of this style is their portability . This allows those who own them to be able to transfer large amounts of money abroad without going through the same controls as a bank money transaction . David Wang , a Shanghai - based high - end watch seller , tells the FT that several of his clients spent tens of thousands of dollars on one or more models in order to evade capital controls that impose a cap of $ 50,000 a year . to move out of the country. “ Customs officials won't notice your watch or how much it's worth ,” says Wang. “ That creates a safe and efficient way to get your money abroad .”
As uncertainty surrounding the Chinese real estate market continues to rise and Xi Jinping's government persists in its intention to regulate for-profit properties - the Chinese Communist Party 's politburo recently reiterated Xi Jinping's assertion that " houses are to live in, not to speculate ”-, private companies will continue looking for ways to protect their money and looking for investments that mean a higher income.
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