November 14, 2013

The Perfect Time for Watch Buying?

Some modern collectibles are selling well, as are certain models of older pieces, according to one watch expert

What goes tick-tock and costs more than $5 million? The Patek Philippe 1943 watch, which sold at a Christie’s auction in early 2010.

If you or your clients find that price a bit steep, there’s the 1969 stainless-steel Paul Newman-model Rolex Daytona chronograph. One of these timepieces sold for $1.1 million—a record for a Daytona—at a Christie’s International auction in Geneva in early November of this year.

We’re in the fall season of wristwatch and pocket watch sales at the major auction houses.

If you or your clients enjoy collecting watches or are looking for a new alternative asset, now’s the time to peruse online catalogs and get a sense of trends in the market.

Heritage Auctions in Dallas is the third-largest auction house in the world. Its watch specialty division is relatively new, according to Jim Wolf, the firm’s director of watches and timepieces.

Prior to 2008, watch sales were part of the jewelry department’s auctions.

Watch sales at the auction house have grown substantially since the split, however, and Wolf estimates the division will sell $7 million to $8 million of timepieces this year.

On Thursday, Heritage Auctions will host its Signature Auction in New York. The auction’s theme is “Time Pieces from a Distinguished Gentleman.”

“There’s an excess of 500 lots that will be auctioned, and [the event] features a gentleman’s collection that is pretty astounding in terms of the variety and the sheer quantity that he collected,” said Wolf, in an interview with ThinkAdvisor. “There are over 200 Rolex watches in the sale, numerous high-end Audemars Piguet, Vacheron Constantin, Blancpain and Panerai--just a terrific variety of very fine names.”

Classic Collections

Headlines focus on the market’s high end, in which watches sell for $500,000 and up.

Realistically, of course, most collectors can’t afford such prices. But an appealing feature of the watch market is that it’s possible to build a valuable collection without spending a fortune.

The Heritage’s Nov. 21 auction lists numerous watches under $10,000, for example.

Wolf reports that some of the strongest sellers in the current market include the major brands (Rolex, Patek Philippe, etc.) made between 1995 and 2005.

The reason? Manufacturers have discontinued many of the models from that period. “When they come up for auction in good condition, they get a lot of attention, because they’re already being looked at as future investments --even though they’re not that old,” he explained. They’re “still old enough that they’re starting to appreciate in the fair market arena and people take note of that.”

Vintage watches, such as those made from 1950 to 1975, are selling like hotcakes.

Wolf calls this period “the golden age of wristwatches” and cites some of the rare Rolex sport watches from that era as being strong sellers.

Vintage pocket watches made between 1880 and 1910, including those with “complications” are also in demand. Complications are functions added to the watch: date, dual time zones, moon phases, etc.

Those timepieces attract a different set of collectors than wristwatches, and their collectors tend to bid aggressively, says Wolf.

Not all segments of the collectibles market are showing strength, though.

Prices for American pocket watches, for instance, are soft right now, Wolf maintains. Americans aren’t buying them and international demand has fallen off, as well. “There are very fine, some very rare examples, but they’re very soft at this point,” he said.

The usual caveats to collecting high-priced objects apply to watches, of course.  

As in any collectible field, knowledge and patience is the key to earning a profit.

“To think that you’re going to buy a watch and make a handsome profit five years later really is not going to happen,” Wolf shared.

“In very, very rare cases it could happen. But if you’re buying it and you’re buying it for a 20-30 year period and you’re enjoying it while you’re doing it, it can be very gratifying and financially it can be very profitable,” he stressed.

 

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