The sky is falling in on the watch market – true or false? It’s a good question and one that has occupied conversation and dominated the watch narrative more than ever over the past six months. In truth, it’s an impossible question to answer for a number of reasons. What is certain is that the secondary market for modern watches is getting more important and more powerful. Why? Well, with the demand for luxury watches at an all-time high and the top tier brands are simply unable to supply enough watches to meet this phenomenal demand. What this has done is create a rising force of secondary market players, primarily auction houses and watch dealers, who can supply you that steel Daytona, Royal Oak or Nautilus immediately or pretty quickly. But you’re going to have to pay a premium. So far so good. Everybody is happy. The brands are selling as many watches as they physically can manufacture. The auction houses and dealers make a living supplying the watches people want to those that are willing to buy them and the end consumer gets that watch of their dreams without having to wait for a decade on a waiting list. But all this comes at a price and this where the uncertainty begins. The retail price is the retail, but the phenomenon that we have been witnessing over the past two years is a skyrocketing of the market price. This is what auction houses and dealers can sell a watch for and this is what is causing the concern. Steel sports watches that retail for 20k have been selling for $200k on the market and it’s this performance that is starting to wobble. But more on that later.
The other main character in this story is vintage. Seen as many as a safe port in a storm, what is certain is that it has been a lot less volatile than the modern watch market. In fact, classic vintage pieces have been seeing a steady increase in value. In comparison to modern, however, it has looked less impressive. And here is the crux of the matter and a point that I don’t need to state really, but I will anyway: It depends where you got into the watch. Let’s take the steel Daytona, as it’s the “popular” (see, I didn’t use “hype”) watch that I am most familiar with. Rolex unveiled its in-house caliber steel Daytona in 2000, the reference 116520. For many years, from around 2012, these watches languished unloved in dealers’ inventory and did well to make $5k. If you bought a nice one of these at that price, now you can sell that watch for $25k. These watches have never been more than $25k, unless an early white dial example with colour change cream dial, so I guess losing money up until now on this would be hard. In 2016, Rolex unveiled reference 116500, a steel Daytona with ceramic bezel. Everyone went nuts and a watch that cost $11k (now closer to $13k) had a decade long waiting list and the market value soared to its high of $50k in 2021. They now seemed to have settled at closer to $25k. So, is the sky falling in? Well, if you bought at retail, then you are still well up on your money. If you paid $50k…well, I’m sorry to hear that! It’s a point that Wristcheck’s founder and fixture of the international watch scene, Austen Chu, is very clear about. Says Chu, “In my experience, across the board, prices fell about 50 percent from the peak for all three big brands – Rolex, Patek and AP. Regular Patek Nautilus 5711s were $200k+ at peak, now they’re at 100k. Steel Daytona was $50k, now its $25k. But even after falling 50%, a lot of them are still selling well above retail, not that that should be the only factor when buying a watch of course!”
Did passionate watch collectors pay these prices or was it just late-arriving speculators, hoping to make a quick buck, Crypto style? I can’t answer that, but I don’t personally know people paying these prices.
Quality and Rarity
What we have seen is good results for watches that are either rare or of especially high quality. Again, this isn’t rocket science, but the issue has been amplified in these times. We first saw this Monaco in October, when rare and incredible quality pieces sold well. Says Chairman Davide Parmegiani, “We were delighted with the result of €17 million, especially in these uncertain times! I believe that it is now quite clear that short-term speculators are now out of the market. This is now a market for connoisseurs, collectors and those with a passion for rare and high quality watches. What we have demonstrated is that when rarity and quality collide, the market speaks and, in fact, speaks very loudly.”
In Monaco, the highest performing timepiece was a possibly unique Patek Philippe dual crown world time in yellow gold signed Tiffany & Co that sold for €2.88 million. Another possibly unique Tiffany & Co signed watch was an astonishing yellow gold Rolex Daytona reference 6265 that sold for €825,000. Another yellow gold Rolex Daytona that achieved an outstanding result was a reference 6264 Paul Newman dial so-called “John Player Special” that sold for €1.42 million. In fact, the Rolex Daytona performed generally well across all three sessions, especillay post-1988 automatic examples.
This isn’t just true about vintage. Rare examples of more modern pieces are also highly desirable. Phillips Watches’ New York watch Auction SEVEN witnessed a unique Patek Philppe reference 5070 in yellow gold with unique brown dial with Breguet numeral at 12 and a monogram on the dial. This isn’t a rare reference, but this unique configuration pushed this yellow gold watch to $441k – a massive result. One important thing to note here, is that generally, the autumn season has seen Lemania 2310 powered watches doing quite well. You can read Wei Koh’s breakdown of this legendary movement here.
Parmegiani’s view about speculators is shared by Geneva-based watch dealers Roy and Sacha Davidoff: “Context is always important before delving into auction results. Besides the obvious price corrections occurring across the boards, the decreasing euphoria for auctions since the two-year covid auction bull run and the mass exodus of speculators from the watch market, some more intricate rivalries are often also at play. Christie’s outperformed Phillips in Hong Kong and Geneva in the second half of this year, meaning they are ahead in the watch auction category overall. A position that has not been threatened since Aurel Bacs and Livia russo relaunched the Phillips watch department in 2015 after leaving Christie’s together. Phillips in association with Bacs & Russo have dominated the watch auction space ever since. This year was different.”
Wulf Schuetz, of Rare and Fine watches spends a lot of time analysing the auction market and his analysis shows that despite a not having the strongest results in Geneva and Hong Kong in the second half of the year, overall the house’s performance has been strong. He says: “After two years of a covid-influenced auction market and one year after a record-breaking year 2021 with sales totaling around $650m USD the market consensus was pessimistic for 2022. The results however show a different picture. Between them, Phillips, Christie’s, Sotheby’s and Antiqourum achieved a stunning result of roughly $690m USD in total, demonstrating growth of around 14 percent year-on-year. The critical reader will argue that the total number doesn’t say a lot which I agree with, but it proves that the market is healthy and there is enough liquidity and interest for watches sold at auctions. Phillips, Bacs and Russo defended their number one position in 2022 with around $225m USD in total reported sales and for the first time tapped into online-only auctions. A move no one was expecting. Christie’s went in at second place with roughly $214m USD which was however predominantly driven by some single owner collections they strategically acquired, Sotheby’s watch department delivered around $175m USD even with the departure of Sam Hines in the summer. Antiquorum was the real surprise, which delivered a record year, growing over 20% year on year growth in total reported sales of around $77m USD and delivering the highest ever sales results in the history of Antiquorum.”
So, let’s take a closer look at a more granular level at different sectors of the market…
Integrated Bracelets and Integrated Prices
I believe there would be very few arguments against the claim that the Vacheron 222 was the revival launch of 2022. Vacheron Constantin launched the reference 222, right in the middle of the integrated sports watch craze…the first time round. With a dial by Stern, movement by JLC and Gay Freres bracelet, the 222 was the perfect illustration of the power of horizontal watchmaking of the 1970s inline with watches such as the Royal Oak and Nautilus. The original 222 was made in three sizes, with the most collectible being what collectors term the Jumbo size at 38mm. It is understood that approximately 500 Jumbo examples were made and one of them sold at Phillips New York for $69,300. The watch is now a regular fixture on the auction scene and is holding firm and inline with its contemporary Audemars Piguet Royal Oak 5402.
On the topic of AP, there has been a lot of online discussion about the results and a talk of current watches hammering under their retail value. This would be a huge shift in the sands for the iconic watch, although on the back of a reasonably soft thematic auction in May at Phillips, maybe the writing was on the wall. It’s not quite that simple though, according to Austen Chu of Wristcheck and Royal Oak aficionado: “All of the Royal Oaks in the latest Phillips auction hammered for above retail and with buyer’s premium, sold for much higher than retail. I saw that there was some fake news of a 15407 hammering for retail (Lot 177). To be clear, retail is $73,000 and it hammered for $110,000, so with buyer’s premium at 26 percent; do the math! It’s almost two times above retail. It’s a wider issue, look at Patek, Richard Mille and Rolex; quite a few models are also hammering around retail. Last year or even at the peak, they would have been way above retail and so this is a phenomenon that we’re seeing across most modern sports watches. However, in the same time period we’ve noticed that a lot of discontinued historically significant watches from the same three brands, have either weathered the storm extremely well or are actually doing better now, than they were a year ago and I think that was also quite clear from the auctions.”
The Speedmaster has seemingly truly come of age in the past few years. Where once in languished in the long shadows of its nemesis the Daytona, it has now positioned itself as a truly investment-worthy sports chrono. Phillips New York sale saw some results that were, on the surface of it, quite soft. However, as we have learnt, its not always a simple as it seems and some detailed scrutiny and deeper understanding is vital. Passionate Speedie aficionados Roy and Sasha Davidoff are the pre-eminent experts and dealers in this field and have a very clear view on this: Say the bros, “Lot 29, a Speedmaster CK 2998-1 from 1960 sold at $34,020 all-in and is coincidentally the same result as Lot 101, a Snoopy Speedmaster from last year, which makes no sense considering the rarity. The only explanation I have would be that this particular reference would be more desirable with a lollipop chronograph seconds hand and its original braclet, neither of which this example has. Regardless, the buyer messaged me after the sale saying he was happy he got this one very reasonably!” This is a point that mustn’t be overlooked. This market is presenting some great opportunities for collectors who have kept their “powder dry” in preparation for this correction and have cash ready to hoover up the bargains.
Keeping with the Speedmasters, the Davidoffs saw the issue with one surprising Speedy result: “Lot 149, a Speedmaster 145.012-67 Racing, with two-line dila, sold for $63,000 all-in. Now, this is the one that many people messaged me to ask why it sold so low. The explanation for me is simple. Firstly, if you look at all the results for these at Phillips, it was not a bad result. Only one result was 90K all-in and all the others, in various states of condition, were between $32K and $72.5K. This example, besides being a two-line configuration, which is a bit less desirable by purists because it doesn’t have the mention of Professional on the dial and it is a Professional case, is missing almost all the tritium lume off the dial. Very faint remains of the luminous tritium material are left. This would be a no go on any special watch or even a regular Speedmaster to be honest. So, configuration and condition weren’t ideal, the sale mood wasn’t stellar and lastly the archives extract left a lot of collectors puzzled. These racing dial 145.012-67 caliber 321 Speedmasters were predominantly delivered between late 1967 and late 1968. This archives extract says the watch was delivered in 1975. That alone would make me a bit suspicious. I personally think it may be a typo because the serial number 26.5 million is in the exact late 1968 range it should be. However, to the outside buyer looking in, it may have been reason enough to stay away.”
It wasn’t all bad news though. There was a very special Speedy that commanded a very special price. “Lot 169, a NASA issued 145.012-67 (unflown) sold for $327,600 all-in. This was a great result for an incredibly rare and otherwise impossible to find/own watch. I don’t have much to say as it was not a world record $3.4 million result nor did it undersell (presale estimate 75-150K) so it was just where it should be. In this market, I would even say it did very well!”
Revisiting modern watches briefly, one sector that has continued to generally show steady growth is independent watches. The undisputed king is FP Journe, with his early watches attracting strong bidding and impressive results. Phillips had two particularly strong results. The first was Lot 13, an Octa Calendrier from 2004 in a rare 38mm platinum case with an early brass automatic movement and vibrant yellow gold dial. The watch hammered above estimate at $264.6k, which shows the enduring strength of these early pieces. In a similar vein, Lot 48 was also an early piece dating to 1999, a souscription tourbillon. This watch was one of six known with pink gold dials and sold for an impressive $1.24 million.
One independent brand that routinely performs well and hammers over retail is DeBethune. The brand has gone from strength to strength in recent times and results like this would have been unthinkable three years ago. Lot 134 was a DB25 “Starry Varius” from 2021, numbered No.6, a 42mm titanium watch featuring heavenly dial with dark blue center dial made of polished blued titanium and decorated with the milky way on the dial via scattered white gold and 24K gold flaked stars.
Another strong brand is Voutilainen. As Phillips catalogue essay states, “Kari Voutilainen is one of the most talented living watchmakers of our time, his signature talents being complex mechanisms with superlative hand finishing – no easy feat. Every component within his watches, from the bridges to the tiniest of screws, involves manual labor, may it be adjusted tolerances, polishing, angling and so on. His talent is not limited to the mechanics that power his watches, however. “Handmade” is not a term that Kari Voutilainen takes lightly. Even each set of hands takes almost two full days to make, and the sublime guilloché dials are also made in-house.” The market truly appreciates this artisanal approach and Lot 15 was a real demonstration of his art form. A unique piece in platinum from 2017, the watch features a vibrant guilloché enamel dial and sold for a terrific $189k.
A Deeper Dive
There are of course many different reasons, factors and context that lead to auction houses’ results and annual performance. Christie’s out performed Phillips in Geneva last month (November) due to the special sale of Jean Todt’s watch collection. Online auctions, post Covid, delclined in 2022. According to Shuetz: “Analyzing the results in more detail one can see that the share of only-online auction fell from around 21% to around 14%, mainly due to Christie’s move back to live auctions.”
Let’s talk about value per lot and numbers of lots sold. “The overall number of lots sold went down when compared to 2021, mainly because the online sales weren’t as strong as last year. Therefore, the value of lots reported as sold went up. My gut feeling tells me that can’t be true, as there was a massive correction of the prices of most contemporary or in production time pieces. That’s true but on the other hand vintage watches and rare independent pieces have been stable or growing in price and compensated the weak contemporary / in production prices. To be fair, not all big brands contemporary or in production watches fell. If you look deeper, you will find that really rare pieces (sorry but 300-500 pieces made isn’t rare at all) predominantly did well in 2022. This is also a proof that real collectors are less price sensitive as they look for quality and rarity – most modern watches offered in auctions don’t offer this. As soon as the availability increases, which per definition rarely if at all happens to rare vintage or independent pieces, prices fell – and will continue to do so. What we have seen throughout 2020 and 2021 is that the market – especially for modern and independent watches – was driven a lot by new to the market collectors and predominantly financially driven buyers. Even if only a fraction of the later is converting into collectors than this is a good basis for the market next year.”
Looking to 2023
So, what does the future hold? Obviously, it’s like looking into “crystal ball” to predict any 2023 developments and if we all knew what would grow eachyear then we’d all be able to retire and live on our yachts in Monaco. “Generally, I foresee a further decline of contemporary or in-production watches,” claims Shuetz. “Basically, none of them are really rare and latest in 2023 the Covid induced backlog will be gone, waiting lists will go down and the so called “flippers” (or speculators) might have burned themselves and will be out of the market. However, the economic factors are potentially in favor as global inflation is easing and the last remaining Covid restriction are expected to fall. I believe we will see a strong market also in 2023 if the auction houses manage to acquire attractive pieces for the collector market, which they had a difficult time doing in 2022. The “rules of the game” won’t change: Collector pieces that are rare and in prestigious condition will generate high prices and should lead to strong results. Vintage in general should be stable and growing with special pieces realizing great results.”
Looking back a few years we never saw dramatic growth rates like the ones we have seen in 2020-2021. If all goes well and the market environment is attractive, we shall see similar total results like in 2022 and maybe we will see 700m USD in totals sales. In any case the watch auction market has relevance today and going forward, where it was basically a very niche market some years ago. Here’s to ’23!