How To Invest In Watches

The spring of 2020 transformed the luxury watch industry in unprecedented ways. Right at the beginning of the pandemic, as other industries came to a grinding halt, Switzerland’s leading watch brands and auction houses started exploring newer ways to connect with their clients amidst a global crisis. While most brands took a massive digital leap with e-stores and special online editions, auction houses attracted a huge number of new bidders with a wide array of online events. As sales for vintage watches picked up steam, thanks to first-time bidders mostly under 40, brands realized the potential and soon the market for new watches also started to explode. 

Amidst all this, collecting watches also acquired a newer meaning, especially for the younger audience, who wanted to dip in and out of the market at will. Collecting watches doesn’t necessarily mean ‘forever’ anymore. There’s a whole new demographic of watch enthusiasts, who want to build a flexible collection on their own terms. Thanks to the Crypto Bros, watches are the new asset class but that’s not stopping anyone from keeping their collection untouched by market fluctuations. 

Here’s what our experts have to say: 

What makes a watch investment-worthy?

Austen Chu, Founder & CEO, Wristcheck: There are three types of collectors — the first type is someone who buys just to invest. This category only started to come up over the past few years. The second type are purists like me, people who have always bought out of passion. When I started buying Royal Oaks, most 15202s were selling well under retail. And then there's the third type, which is a mix of the first two, which in my opinion, covers most collectors today.

In today's market, I think watches that are good investments are the ones that fall extremely under the radar and are not hyped at all, although those should be hyped. For example, 39 mm Audemars Piguet Grand Sonneries that are under 10 mm thin — perfect size! These are watches that I think are extremely undervalued and I'm looking at more stuff like this.

Also looking at some vintage and neo vintage Pateks. If you look at the market correction over the past year, the prices went down around 50 to 60% for some modern pieces. It was only the rare, super rare and exclusive pieces that kind of stayed up for every brand be it Audemars Piguet, Patek Philippe or Rolex. The more general stuff took the hardest hit. So, at the end of the day, exclusivity and rarity of the model matters the most. If you are buying a limited edition modern watch, go for one that has been made in really small quantities.

John Reardon, Founder, Collectability: In my opinion, buyers should not purchase timepieces as investments. Of course, there are many who consider the words ‘ investing’ and ‘collecting’ interchangeable but this is a dangerous way of thinking. For true collectors, the value of the watch is secondary to scholarship, appreciation, rarity and understanding of their treasured acquisitions. For investors, the value of the watch on a given day is literally the bottom line. These two ways of thinking are quite different but I’m quite confident that the true collectors always win. The investors can often lose.

What are the top five essentials to determine the ‘best” value for a watch before putting it up for sale?

John Reardon: The top consideration for deciding to sell for a collector all comes down to this – sell watches that you can easily replace tomorrow and keep the watches that you will never have a chance to replace. For example, if one has a modern watch that was made in multiples that is easily purchased again tomorrow, that is the watch to let go. But if you have a watch that is unique in any way (or have a personal connection) that is the watch to keep. Often once you sell, your watch is gone forever. 

Alexandre Bigler, Vice President and Head of Watches, Christie’s Asia Pacific: The most important factors to determine the value of a watch are authenticity, traceability, condition, provenance and paperwork. It’s very important for a watch to have all of its original parts in place. The change of hands or other dial details get noticed in the condition report of a watch and can have a significant effect on its valuation.

Investment-worthy brands currently flying under the radar…

Dillon Bhatt, Watch Collector and Founder of Luxe Forte: I think there's been a considerable shift from, let's say, the top three brands – Patek Philippe, Audemars Piguet and Rolex to the independent brands. I'm a massive fan of De Bethune and independents in general. In the last two-three years, we've seen a large increase in attention towards brands like F.P. Journe and Greubel Forsey and as a result, the long term appreciation value for these brands has also increased. I think we're going to see more and more independents like MB&F and even smaller brands like Akrivia and Raul Pages do phenomenally well. Some of these individuals produce very small quantities, anywhere between 30 and 75 watches per year. So I wouldn't even call them independent, I would call them micro brands. Those are the watches that true collectors are going to be more aware of. They are not going to attract a large market but their demand will far outweigh the supply and therefore the value of these watches will continue to rise in the future.

Alexandre Bigler: I would like to talk about “period watches” and not brands here. Pocket watches in general are flying under the radar. Watches made between 1900 and 1980s have so much more to offer in terms of craftsmanship, complications, innovation, style, beauty and value than most modern watches! They are certainly flying under the radar.

How has “collecting” watches acquired a new meaning in recent years?

Oliver R. Müller, Founder, LuxeConsult: These days the younger clients are much more inclined to resell their watches and monetize their collection from time to time. The market has therefore become more fluid and has been rewarding the trendsetters. The previous generation was about true collecting, people would buy watches to complete a lifetime of collection and they avoided reselling a piece as it would send out a negative message. More recently – and unfortunately, I must add – the speculative element has taken over the emotional aspect of buying watches. Just as it did previously in the art market.

I’d rather differentiate between a “true” collector and a “speculator”: one acts with his guts, the other with his wallet. But it doesn’t mean that buying with your heart should stop you from financing the next acquisition with a smart investment.

John Reardon: In recent years, the very definition of collecting has been challenged as a new class of 'investment' buyers has entered the market. These are the buyers I call M&M buyers (money and millimeters). They only care about the price and their scholarship is limited to discussing how many millimeters a particular watch is sized. The true collectors still exist and this market downturn is a welcome correction after the insanity in watch buying over the past few years.  

How has the landscape for the secondary market changed over the last couple of years vis-a-vis vintage watches?

Austen Chu: Modern watches are volatile to trends and economic cycles whereas vintage is more stable. Over the past couple of years, particularly during the big market boom post COVID, modern watches benefited a lot, especially those from AP, Patek Philippe and Rolex. The prices for vintage watches also went up during the same time but they were nowhere close to the levels that modern watches were selling at. During the downturn, however, a lot of vintage either stayed at the same price point or went down a little bit. Some super rare ones even went up in pricing. I think that explains how resilient the vintage watch market is.

John Reardon: With modern watches, it has been a competitive sport between buyers to acquire watches. Retailers have become professional order takers and the art of selling has been minimized to telling buyers either 'no chance' or 'I will put you on the list'. With vintage watches, not much has changed except an increased focus on education and acquisition of knowledge by more and more collectors. Prices have been stable and even now there are signs there is a continued upward trend as the supply is low and the demand for best in class specimens keeps going up.

Oliver R. Müller: First of all, let’s differentiate the segments under the secondary market: there are vintage watches (pre-1990), youngtimers, recent second-hand and the gray market. Gray market –  basically watches sold outside of official retail channels – represents 25% of the total value of the secondary market. Vintage watches will continue to set the trends in terms of iconic brands and timepieces. But the main transaction values are being made on the pre-owned and new watches sold on the secondary market. Interestingly, we can see that independents such F.P. Journe, De Bethune and Philippe Dufour are picking up a lot of value at auctions and also on the secondary market for their more recent watches.

Do you think the steel sports watch category will always be hot?

Dillon Bhatt: I think things will change. If you look at it, these trends are cyclical. The 60s were all about tool watches. In the 70s, things got more classical, especially with brands like Vacheron Constantin and Audemars Piguet producing watches in classical styles. And then in the late 70s and early 80s, we saw the rise of what are now considered to be the icons of modern watchmaking –  the AP Royal Oak and the Patek Philippe Nautilus. I think, with this whole cyclical pattern we're now going to move towards smaller watches that aren’t loud and flashy. Understated, classical watches are going to make a huge comeback and we will see watches get more dressier over the next 10-15 years.

Austen Chu: I think steel sports watches will be hot for a long time, at least another 5-10 years. The good thing is the market is growing right now and the demographic of buyers has expanded so much more as compared to what it was three years ago, thanks mostly to Gen Z buyers from Asia. Over the past two years, it was basically luxury sports watches that shot through the roof while a lot of everything else kind of plateaued or just went up slightly. There were some sports watches that went up 300% in the same period. In the future, luxury steel sports watches probably won't experience as big of a boom as we have seen recently but a more healthier growth.

At the same time, as the demographic is so much bigger now, other categories like independent sports watches and vintage timepieces will also see growth along with this category.

Five watches that will hold value over the next five years...

Dillon Bhatt: I would say something like a gem-set Rolex, not necessarily a rainbow but maybe like a Saru (sapphire and ruby). I think it's a phenomenal watch and people will start to really appreciate it again soon. Vintage watches like a Vacheron Constantin skeleton perpetual calendar from the 90s would do phenomenally well. 

I think Neo-vintage as a whole category is going to do very well. It's already started to come back as a standalone collectible category and we'll see more and more watches do really well. Watches like the Rexhep Rexhepi Chronomètre Contemporain and Patek Philippe Cloisonné Enamel dials will be in demand for the level of technique and craftsmanship that is required to produce these pieces.

Some early models from Cartier’s CPCP, especially the Crash. We could also see all-time highs for models like the Cloche,Tank Asymétrique and the Cintrée.

Alexandre Bigler: Vintage will hold its value and will continue to grow. Modern and contemporary watches will continue to grow as well also but some models will see softening. If I had to name five watches that will hold value over the next five years, I would go with – the Philippe Dufour Duality, Patek Philippe 2523, A. Lange & Söhne Datograph, Rolex 6263 in gold and Richard Mille 56 Sapphire.

John Reardon: In terms of holding value, I see a rise in interest in vintage Patek Philippe over the next five years. The best of the best examples will continue to break records even in a downward market. This will be true with basic time-only examples, pocket watches, and even clocks. For collectors committed to buying the best examples money can buy, there is only blue sky in the future. And the good news for modern collectors is that their watches too will be vintage someday... so my advice is buy for now as much as the future and always think long term. Will you want to wear the watch you are buying today in 20 years? Maybe that question is more telling than asking how much your watch will be worth tomorrow.