There is no denying that the luxury sector is experiencing a sharp slowdown in discretionary spending as the global credit crisis deepens. And yet, the picture of the market for high-end watches is somewhat different. In fact, autumn watch auctions in Dubai, Geneva, Hong Kong and New York witnessed competitive bidding and achieved reassuring results with an average of 90% of watches offered sold. Here in Hong Kong, Christie’s December auction of important watches totalled HK$61.3 million—exceeding its pre-sale estimate. These results are particularly noteworthy considering the backdrop of uncertainty in the financial markets, and underscore that the demand for exceptional quality watches remains sturdy even in today’s challenging environment.
The relative buoyancy of the luxury timepieces market is not surprising given that collectors are driven by passion and desire, and as such they are driven by opportunity. Watch collectors are a dedicated bunch and the most devoted are constantly looking for rare models to add to their collection. Often, when something exceptional comes to auction, collectors understand they may be facing a singular opportunity.
Although in theory a watch is merely a functional device for telling the time, in reality the finest examples in what has become an increasingly sophisticated, international market represent an extraordinary blend of aesthetics and high technology. Like the manufacturers of classic cars, the world’s greatest watchmakers have become recognizable global brands. But where do new collectors start today and what should they buy? What makes one watch so much more valuable than another?
In short, the rarer the item the better; and more than ever before condition is paramount. In general terms, however, collectors should buy watches that they personally find interesting and new collectors should start slowly, building up their knowledge through reading, studying websites and talking to experts in the field. Becoming knowledgeable on specific type of watch is a less intimidating prospect than it might appear. Many of the newer makers have comparatively small production runs—Richard Mille, for example, has produced 14 different models over the past eight years—so once you find a brand that suits your taste the research should be manageable.
The principal factors affecting the value of a watch are complexity, rarity, condition and brand name while, in contrast to many other collectors’ items, age is much less of an issue. Though older watches do not generally command higher prices (partly because wristwatches are a relatively modern phenomenon), provenance is also key. Many high-end makers keep detailed records allowing you to literally follow a watch from the time of its production to its first owner, even showing information on when it was serviced. This ‘DNA’ of a watch is highly desirable information that can add significantly to the value of a piece.
The general rule of thumb regarding complexity is that the more complications— functions in addition to telling of the time— that a watch has then the more valuable it is. Complications can include displaying the date, day and month, and if there is stopwatch then the timepiece is known as a chronograph. Additional functions add to the value since greater workmanship is involved and fewer watches are produced—and rarity is something that has always attracted collectors, whether it is paintings, porcelain, jewellery or watches.
Buyers are prepared to pay a premium for rarity, and limited editions and ‘boutique specials’ are fiercely sought after at auction. One example of the rare ‘Panerai Luminor 1950 8 days’ recently fetched US$109,000, five times its original 2005 retail price.
Condition is also crucial and a watch in a good, original state will always command a better price than one which is damaged or has been repaired or altered. For example, a watch with no wear and in mint condition with its box and papers can in some cases be worth triple that of a regular example.
Blue-chip brands remain solid investments, and the Rolls Royce of the watch world is Patek Philippe. Limited production and controlled availability mean that when they appear at auction they command top prices. Other brands to watch include A. Lange & Söhne, whose watches have perhaps stood up the best in terms of prices over recent months. FP Journe, for its uniqueness and quality, is also a good brand to follow. New collectors should look to attain an example of popular models from these makers in platinum or white gold as they are generally produced in few numbers, making them rarer.
With personal tastes changing and technical innovations resulting in ever-more sophisticated timepieces, this is a fascinating market on the move—even in today’s economy. But the essentials will remain the same—quality, rarity, complexity, condition and, of course, perfect timekeeping.
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