Back in my days as a watch retailer, as the client proffered their credit card, I would often be asked ‘Is this watch a good investment?’ Maybe I was too honest but despite the pressure to sell I would try to explain the complex answer that this question demands. Contemporary watches, bought at retail – with some notable exceptions such as high-end Patek Philippe pieces – do not make good short or medium term investments. The VAT and initial hit of depreciation in going from the new to the pre-owned market whether selling privately, through an auction house or a dealer can make for an eye-watering loss, even when buying from a prestige brand. This loss may be balanced out in the very long term but once you have factored in inflation you are still out of pocket. The only investment you are making when buying from new, in most cases, is in the ownership of a quality timepiece that you will keep, wear and enjoy.
For serious watch investing you have to go vintage. By definition, such watches are no longer produced and so are limited in availability. Personal objects such as watches rarely stay in pristine condition so to find an early example in its original state will be even rarer. Not everything rare is valuable though, selecting the right pieces for investment requires a profound level of knowledge and a little luck.
The twin titans of the auction world are Patek Philippe and Rolex. The level of recognition that these brands command, the longevity of their styling and the landmark status of many of their watches drive prices upwards. Rarity is key and the early decades of wristwatch production by both brands saw short production runs and unique pieces, often specially ordered by important clients. While prices seem to climb year on year, this is not always the case. A Patek Philippe Ref.2499 in platinum, one of only two ever made sold at auction in 1989 for $253,000. Twenty three years later, having passed through the hands of Eric Clapton, this watch showed a healthy increase in value, selling for $3.6 million. By contrast, the most expensive Rolex ever sold at auction, a stainless steel split chronograph Ref. 4113 from 1942 reached $1.16 million in 2011. Two years later the same watch sold for exactly the same price. It could be that it was offered too soon, but the auction market is an unpredictable place based on emotion as much as merit so final prices are always hard to predict.
Of course the basic principle of investment is ‘buy cheap – sell dear’ and so paying for one of these stellar watches with a proven auction history may show a good return over time, but it demands a huge amount of money up front. There is always the remote possibility of stumbling across an important piece in a junk shop – early this year a missing James Bond prop watch, a modified Breitling Top Time used in ‘Thunderball’ sold for $160,000 after allegedly resurfacing at a car boot sale. Unfortunately, the ease of internet research means the chance of finding someone who doesn’t know the value of what they have is getting more and more remote.
If picking up a rare vintage gem for peanuts is as likely as winning the lottery, maybe you can get ahead of the curve and spot the next big trend. Vintage Heuers, especially the first examples of such renowned models as the Autavia, Carrera and Monaco are strongly tipped to rise. This is largely on the back of a result achieved in September this year when a first-execution Autavia achieved $25,000 up from a mere $3500 when it sold two years previously. This result shocked many commentators and it may be one of those aberrations that the auction world throws up now and again, but the headlines won’t hurt future prices, even if the rises are more modest.
Plenty of potential for growth exists in the back catalogues of other big name brands. Omega’s marketing efforts and themed auctions have attracted the attention of collectors but they are nowhere near Rolex values yet. Early Longines watches, especially their chronographs are collectable but don’t make prices that reflect their quality. Some early Breitlings house beautiful and complex movements but don’t receive the love they should. Even their Chronomatics, identical under the dial to the Heuer equivalents, are undervalued.
If investing in watches is for you and you are not an expert, the first step is to get some good advice. The internet forums dedicated to each brand are a good source of knowledge and guidance, and you will need it. Vintage watches are prone to being faked, built from incorrect parts or badly restored. This is harder to identify as you go back in time and watch company records become sketchier. True watch experts will have the experience and contacts to ensure what you have is genuine and the best example possible. After that it is just a question of patience and a little luck that the market agrees with your choices.
As featured in the November edition of Square Mile.