La Rue du Rhône in Geneva, named after the river that runs through the heart of the city, is described as a “luxury shopping paradise” by Geneva's Office of Tourism. “The biggest names in the worlds of watchmaking, jewellery and fashion all converge there.”
Rolex on Oct. 27 bought a building for no less than 120 million Swiss francs on the Rue du Rhône, as reported by the county's official notice. But the purchase has little to do with opening new Rolex shops in the luxury paradise of the fourth most expensive city in the world.
The Rue du Rhône acquisition comes on the heels of another purchase: A CHF200-million building near the University of Geneva.
This past year, the Crown also bought three hotels, the latest one a four-star hotel in downtown Geneva worth 35 million Swiss francs. Rolex seems to acquire property as a way to park money, not necessarily to exploit its value: The 200-million building will be turned to the University of Geneva; the hotels to a group of charities to help the homeless.
In a rare comment from the Hans Wilsdorf Foundation, General Secretary Marc Maugué told Swiss newspaper Le Courrier: “We bought these hotels so social institutions could operate perennially.”
Investment in real estates are not new for the watchmaker, which has to find creative ways to balance record earnings, nearing 10 billions, with its non-profit status. By 2019, Rolex through its real-estate investment arm, Marconi Investment SA, was already the owner of CHF734 million's worth of real estate with over 100 different addresses in Geneva, according to a news story that year in Radio Television Suisse.
Determining how much Rolex is really owning through its investment firm has proven to be difficult when it comes to tallying up acreage of land.
But a recent debate inside the Geneva County government about climate change and how to legislate energy usage among big property owners has provided a clue: From the United Nations to Geneva airport, an official document reprinted by Swiss daily Le Temps ranks the top 100 owners by square meter in Geneva County potentially affected by legislation.
Rolex and Marconi, when added together, would rank first in surface-area ownership by a company in Geneva County, a total of 370,899 square meters, or 92 acres. The document was published before the Crown's two recent deals — by the University of Geneva and on the Rue du Rhône.
Rolex's investments have expanded outside of Switzerland, more documents reveal, the watchmaker being listed as the second biggest shareholder of Luxembourg-based Almacantar, a property company that owns prestigious buildings in London's most sought-after areas.
The planned acquisition of the largest Swiss watch retailer in the world, Bucherer, announced in August will have further reach still.
Taking control of the distribution process through the acquisition of the largest retail network of Swiss watches seemed like an obvious reason. The brand acknowledges the growing frustrations of potential clients who can't buy Rolex timepieces.
“Rolex's biggest problem is not to sell watches, as it sells every watch,” a public relations official for the brand in Geneva told me. “Rolex's problem is to find the right clients for those watches.” The watchmaker wants to introduce more people to the so-called world of Rolex but relies on the vagaries of its independently run authorized dealers.
Still, a former executive at Rolex who spoke on the condition of anonymity claims the unofficial reason for buying Bucherer was “to strengthen its real estate pole.” Returns on real estate investments in recent years have outstripped the sale of watches, he pointed out, and Rolex found the ideal solution “to get rid of its huge mountain of cash.”
It's clear Rolex could have done worse than choosing Bucherer. Founded in 1888, Bucherer owns most of the locations from which it operates and bought century-old Tourneau in 2018, the largest luxury watch retailer in the U.S. with 28 retail locations across 10 states.
Rolex’s next acquisition could be legendary Beyer Watches & Jewellery, in Zurich, the oldest watch retailer in the world, founded in 1760 and run by René Beyer, eighth generation Beyer. Like Jörg Bucherer, Mr. Beyer has a succession challenge and could sell to Rolex.
Industry insiders also say Patek Philippe could sell itself to Rolex after the elder Stern passes away. Philippe Stern will turn 85 this month. Thierry Stern, his son, has denied rumors Patek is currently for sale. But there is no rush for Rolex to make a move, as the Crown first has to clear regulatory hurdles for its Bucherer acquisition.
Still, investing in real estate makes business sense for a brand like Rolex, which is arguably the most likely maison to still be in existence a century from now. As Mark Twain once quipped: “Buy land, they're not making it anymore.”