s the New York Times recently noted in an article about the exploding value of certain collectibles, from Air Jordans to Porsche 911s, “rich people who shopped too much used to be called collectors; now they are all investors.”
This expression obviously also applies to the watch industry, where we are seeing increasing use of the concept of “investment value”, as the prices of certain horological grail watches spike.
But what exactly are we talking about? Is the collectors’ watch market really as dynamic as we think it is? This is the question that consultant Thierry Huron (The Mercury Project) has sought to answer, by mapping watch auctions in 2020.
We are seeing increasing use of the concept of “investment value”, as the prices of certain horological grail watches spike.
- Patek Philippe Ref. 5002P- 001 Sky Moon Tourbillon, an extremely rare platinum double-dialled wristwatch with 12 complications offered at Christie’s in 2021
In his study, the expert estimates that the main auction houses (Phillips, Christie’s, Sotheby’s, Antiquorum, Bonhams) sold collectible timepieces worth 316 million francs last year, including buyer’s premium. This figure is 19% lower than the previous year, due to the pandemic.
Average auction price: 33,600 francs
These sales covered 9,400 collectors’ watches, representing an average lot price of 33,600 francs. Their total value may still seem modest compared to contemporary sales figures of the Swiss watch industry (with exports of 17 billion francs in the crisis year of 2020 – a wholesale figure that is lower than the final sale price) or to the Boston Consulting Group’s estimate of 16 billion euros for the second-hand watch market as a whole.
However, it should be noted that only a few brands account for the bulk of these sales, according to Thierry Huron’s study. Of the 22 lots that exceeded one million francs in value last year, thirteen were Patek Philippe models, four were Rolexes and two were F.P. Journe, a table completed by a Heuer, a Breguet and a Philippe Dufour (see list below).
- Watches auctioned in 2020 with a value of over one million francs
- Source: HammerTrack 2020, The Mercury Project
The growing polarisation between brand value in both the vintage and contemporary markets is also the result of the frenzy over certain particularly sought-after models, whether they date from 1961 or 2021. “Auction results have become a very important temperature indicator of the Swiss watch market and have proved their worth year after year for some of the most established watch brands,” notes Thierry Huron in his HammerTrack 2020 study.
The effect of transparency
The symbolic value of certain collectors’ models actually far exceeds their sale or resale price. They mobilise huge online communities of enthusiasts, and debates are raging on new discussion platforms such as Clubhouse, a social network particularly popular with horophiles, where people argue over the colour of the next Nautilus or the dimensions of the Daytona.
The real value of contemporary brands is increasingly underpinned by their resale price on the secondary market.
The real value of contemporary brands is increasingly underpinned by their resale price on the secondary market. “Rolex solid as a rock” was a headline in Morgan Stanley’s latest watch study with LuxeConsult, as it estimates that the market share of the brand with the crown (including Tudor) now exceeds that of the entire Swatch Group.
- Estimated in excess of CHF 3.5 million, this rare Patek Philippe yellow gold reference 2523 with cloisonné enamel dial, representing the Eurasian landmass, is a highlight of 2021’s Phillips’ Geneva Watch Auction XIII.
The transparency effect of digital technology has come to the fore, brazenly highlighting differences in value that watch brands used to hide. Most current press releases still struggle to give more information on the pricing of new models – a detail generally omitted, even though it is the first question future customers have.
This new context comes as quite a shock for an industry that, historically, has been anything but transparent. It is thus easier to understand both the discomfort of brands faced with the emergence of the secondary market, including collectibles, and price transparency (what brand would be happy to see its previous lots flagged with a big red “discount” tag on a second-hand site?), but also the rush to bring what is still largely a unregulated digital jungle, where authentic vintage collectibles rub shoulders with unsold or depreciated items, under more control.
Some brands face an overheating market that is diverting all the attention towards some of their most popular models. Patek Philippe, for example, has decided to discontinue its most popular Nautilus series and replace it with a new line (read here), while others are struggling with a climate where their models lose value once sold and resold, damaging the value of their more contemporary output.
- Rolex ref 1804 in Platinum with Hindi numerals. Watches with regional relevance are also prized. This timepiece was part of an online watch auction organized from Dubai by Christie’s in the spring of 2021.
We are seeing an acceleration of events in the secondary market. Consolidation is under way: Richemont has bought Watchfinder, Bucherer has bought Tourneau, Hodinkee has bought Crowne & Caliber, Watches of Switzerland has bought Analog Shift, and Chrono24 has recently hired an IPO specialist as its new CFO... This reflects both the dynamism of some highly sought-after collectors’ models and, more generally, the long lifespan of any mechanical watch model, even one of low “investment value”. The situation can always reverse: asymmetrical models that were not very popular in the past are now experiencing a strong revival of interest.
Yesterday’s and tomorrow’s brand value
“There is a real community of enthusiasts in the secondary market, but at the end of the day we are not the ones who decide what happens there,” Raynald Aeschlimann, CEO of Omega, told us. “We cannot target this market with the precision of a fighter pilot, as we would be able to do in our own retail network. All we can do is carry out the day-to-day work of enhancing and streamlining our contemporary collections and highlighting our heritage to help sales in general.”
“We cannot targets the secondary market with the precision of a fighter pilot, as we would be able to do in our own retail network.”
The iconic brand, which has not ventured into the pre-owned business, as other watch houses have, also has its waiting lists, including the 15,000 people (!) who have registered to receive the Speedmaster Silver Snoopy Award anniversary model.
- Launched last year by Omega, the Speedmaster “Silver Snoopy Award” 50th Anniversary is only available through long waiting lists.
“The objective, of course, was not to create a waiting list,” continues Raynald Aeschlimann. “I actually prefer to see the rating of some of our models increase gradually rather than experience sudden ups and downs. Above all, we have to maintain the desirability of our brand for the next generation. For example, we were among the first to launch NATO bracelets: younger people like to buy them for their vintage Omegas and one day they will buy them for the new version!”
The watchmaking community goes global
The question remains: what, today, is the main fuel driving the popularity of collectors’ watches? Is it the “sincere” motives of purists, the search for investment value, or just pure speculation?
One of our interviewees, a collector, has an interesting formula. She laments the arrival of people who are too interested in the purely speculative, almost mystical aura surrounding certain models. However, she also admits that the ability to retain value over time is one of her own purchasing criteria. It’s just not her main driver. That is exactly where the line between collection and investment lies.
A huge digital market has expanded the playing field for collectors, investors and speculators alike. All have access to more information and more contacts.
- Watch start-up Furlan Marri recently raised over a million francs on Kickstarter by reviving designs from the 1940s and 1950s at a very affordable price. An initiative that paradoxically speaks volumes about the state of the collection market.
Thanks to the greater transparency brought about the inter-et, whether in terms of pricing, origin or technical details (not to overlook the corresponding negative influence of fake news!), collectors have access to a much wider range of information than in the past. This allows them to make better-informed choices, including around whether their watch is likely to go up or down in value.
A huge digital market has expanded the playing field for collectors, investors and speculators alike. All have access to more information and more contacts, and therefore more potential opportunities with fellow collectors. Watch brands were already largely globalised. Now, the watchmaking community itself is going global.
The rise of the end customer
The buyers’ community is becoming more vocal, giving brands (which are also experiencing “digital bashing”) sleepless nights, along with a desire to win over new customers and grow.
The era of speculation that we are experiencing reveals above all the rising power of the end customer, who is finally claiming his place at the “horological table”, where brands and retailers had hitherto reserved most of the dialogue for themselves.
- On November 8, 2020, Phillips offered for sale the first model of a new edition of twenty Simplicity watches to be made by the great master watchmaker of the Vallée de Joux, Philippe Dufour. The watch sold for $1.5 million.
Now we are even seeing alliances between iconic collectors and iconic watchmakers, as is the case with the recent collaboration between Claude Sfeir and Philippe Dufour. Horological exchanges between private individuals are multiplying, with a rising number of collectors even founding their own “brands”.
Watch brands were already largely globalised. Now, the watchmaking community itself is going global.
They have all entered the dance, forming a highly eclectic group: wealthy collectors of long standing, penniless beginners, punters on rising values, simple enthusiasts. It is no longer a problem to collect both Casio and F.P. Journe, quite the contrary. The creation of a truly global community of enthusiasts is under way, thanks to the new digital tools we all have access to. The flaws that come with it, such as the casino effect surrounding certain timepieces, should not detract from the genuine dynamism of this new and fundamentally passionate scene.
A new watchmaking constituency
With the help of social networks, this new constituency is expressing itself ever more loudly, particularly when iconic brands launch new collections. Audemars Piguet saw this effect play out in 2019 when they launched the Code 11.59 collection, which was heavily criticised online, with notable sarcasm and irony regarding the aesthetics of its dial. The brand stood its ground, and is releasing new variations of the collection this year.
Paradoxically, a community of brand enthusiasts can be more conservative and purist – even fundamentalist! – than the brand itself. Any new initiative will now be scrutinised by the networks. Just as in the great game of democracy, politics is a cruel exercise and the ancien régime was certainly a more comfortable environment for brands that still wielded absolute power.
- Criticised on social networks when it was launched in 2019, Audemars Piguet’s Code 11.59 has stood its ground and is available in new models this year.
A community of brand enthusiasts can be more conservative than the brand itself. Any new initiative will now be scrutinised by the networks.
Certain communities of enthusiasts have contributed greatly to the popularity of the brands they follow. One of the most emblematic and long-standing cases, which dates back to well before the advent of social networks, is that of the Paneristi, the Panerai aficionados: a community of over 30,000 members brought together via more than 30 hubs around the world, with whom the brand maintains a permanent dialogue and produces limited series such as last year’s Radiomir Venti. They are, in a way, the “guardians of the temple”.
- Jean-Marc Pontroué, CEO of Panerai, maintains a close dialogue with the 30,000-strong Paneristi community of Panerai enthusiasts around the world. A special edition, the Radiomir Venti 45 mm, was created last year to celebrate the 20th anniversary of this community.
Panerai CEO Jean-Marc Pontroué continues to be amazed by the “ever-renewed passion” of the Paneristi. “They have a very accurate view of the brand, that of purists with a strong historical knowledge,” he told us. “With them, Panerai has an important, genuine and spontaneous visibility on the horological circuit, because they express themselves completely freely. We are an emotional brand. I prefer to manage a brand that is followed by enthusiasts who scrutinise all its develop- ments, even if it means being critical on certain points, rather than not provoking any reaction. With the strength of the networks, the community is even stronger.”
“Collectors are no longer ashamed to sell”
This eclectic community of enthusiasts is actually not content with simply commenting, but is becoming more and more a direct trading player in the watchmaking economy, by buying and selling their holdings at an increasingly rapid rate – whether we’re talking about 100-franc models or complicated timepieces worth hundreds of thousands of francs.
Having arrived seven years ago as head of Christie’s watch department in Dubai, after several years with Vacheron Constantin, Remy Julia has had a front row seat from which to observe this sea change in mentality. “In the Middle East, the local culture was one of buying, not reselling, which was associated with a notion of financial ‘need’”, he explains. “Historically, there have been major collectors here, but the majority of watches sold were sourced from other parts of the world.”
This has all changed in recent years, Julia stresses: “Now, half of our sales are made up of models from local customers, who have come to terms with the idea of selling watches at auction. They are no longer afraid of the neighbour’s gaze, so to speak.”
- Remy Julia, Head of Watches Middle East/India/Africa/Russia at Christie’s, organized a digital auction this year.
Here too, media coverage of iconic sales and models, the deepening of watchmaking culture with events such as Dubai Watch Week, and social networks have legitimised the idea of watches as investments, which can be bought and resold in a logic of financial diversification, among other things, on a much more fluid and fast-moving market.
“Our customers have come to terms with the idea of selling watches at auction. They are no longer afraid of the neighbour’s gaze, so to speak.”
More fundamentally, the process of buying and reselling watches has become far more natural, and is increasingly facilitated by online communication and the emergence of e-commerce platforms such as WatchBox, which has joined forces with the region’s leading retailer, Ahmed Seddiqi & Sons. Due to Covid, Christie’s also launched an online watch auction between late March and early April 2021. “The vintage watch market is now more important than the classic car market,” says Remy Julia. “There is a real demographic of enthusiasts, a quantity of transactions that has become phenomenal.”
Collectors have always been instrumental to the good health of the watch market. The mere act of collecting is probably almost as old as the first clepsydra. But enthusiasts have a more powerful megaphone than ever: from now on, they are largely in charge of an industry that has been forced to open up and listen to the sweet music coming at an ever greater volume from the community.