Buying Time

by Victoria Gomelsky

TO UNDERSTAND how an industry transforms itself in the face of an existential crisis, look no further than the world of Swiss watches. In the 1970s, the trade teetered on the brink of collapse when the advent of cheap Japanese quartz technology made 60,000 mechanical-watch makers in Switzerland obsolete. What the Swiss could not have foreseen is that two decades later, the quartz crisis would set the stage for a mechanical-watch-making renaissance that seems poised to last in perpetuity. (In 2022, Swiss watch exports totaled 24.8 billion Swiss francs, or $26.9 billion—their best year ever.)

Best-selling author Gary Shteyngart (Our Country Friends, Lake Success), a budding watch collector, says the appeal of traditional timepieces is a rejection of the digital world. Yet the triumph of analog is just one part of the equation. “A mechanical watch is a legacy object, something that far outlives us if properly taken care of,” says vintage watch dealer Eric Wind, owner of Wind Vintage in Palm Beach, Florida. “There’s also a fashion/ design element to wearing watches; it’s part of how you’re conveying yourself to the world. And, over the last couple of years, there’s been this investment element.”

The late 1990s were an inflection point. That’s when the first generation of wristwatch collectors were raised on early internet forums. At the time, Kelly Yoch was just starting out as a salesperson at Hamilton Jewelers in Princeton, New Jersey. “I was introduced to collecting when I met the Paneristis,” says Yoch, now the director of client relations at the retail chain Watches of Switzerland. She’s referring to devotees of the Italian brand Panerai. “These guys had 20 of them. This was passion I’d never seen before.”

In the decades since, and especially within the past five years, luxury watches have become bona fide collectibles—especially coveted timepieces by the “Big Four” brands (Audemars Piguet, Patek Philippe, Richard Mille, and Rolex) or a few venerated independent watchmakers, including F.P. Journe, MB&F, De Bethune, and Kari Voutilainen. In secondary channels, their watches regularly fetch two, three, even four times retail value. Many industry insiders point to Phillips’ October 2017 sale of Paul Newman’s Rolex Daytona for $17.8 million (buyer’s premium included) as the event that sparked the frenzy.

The pandemic supercharged the phenomenon. Take the recently discontinued Patek Philippe Nautilus 5711/1a, a steel sport watch introduced in 1976 and widely considered one of the most sought-after wristwatches in the world (retail price: $33,710). In 2017, “it was trading around $30,000 on the secondary market,” says Wind. “By February 2020, it was trading at $62,000. And by February 2022, it was $200,000.”

Since then, prices on the Ref. 5711 and other socalled “hype watches”—such as the Audemars Piguet Royal Oak and steel Rolex Daytona—have fallen (blame the crypto collapse of spring 2022), but demand continues to outpace supply. Why? In a word: Instagram. “Production has remained exclusive, but the information surrounding these timepieces is not because of social media,” says Austen Chu, founder of Wristcheck, a pre-owned watch retailer in Hong Kong.

Another sea change that’s reshaped the industry: the spectacular growth of the pre-owned market, projected to total around $30 billion by 2025. “Even as recently as six years ago, there seemed to be a stigma to buying pre-owned luxury goods, not just watches,” says Eugene Tutunikov, CEO of SwissWatchExpo, an online pre-owned watch dealer based in Atlanta. “Now that stigma has really gone away.” Case in point: Rolex just introduced its own certified pre-owned program.

Whether you’re looking for a modern watch fresh to retail or a classic 20th-century timepiece with remarkable provenance, the best way to learn about the marketplace is to talk to other watch lovers. The explosion of interest in the category has given rise to scores of collector groups, including the Neighborhood Watch Club in Los Angeles, the Classic Watch Club in New York, and RedBar Group, a New York–based organization with 85 chapters around the world.

At meetups, talk may shift to the future of watch collecting, and the viability of watches as an asset class, to be traded like stocks. Many think that future is inevitable, but longtime collectors sour on the notion of a market governed by speculators. “There has been a lot of mainstream media attention on the resale market for watches lately, but resale value should only be one data point in your decision factor,” says Kathleen McGivney, CEO of RedBar Group. “Buy a watch that puts a smile on your face every time you wear it, not something that sits in a safe as part of your retirement fund.”

Consider shifting your focus from the Big Four brands to less hyped makers, such as sport watch specialists Breitling, IWC, and Omega; masters of complications such as A. Lange & Söhne, Breguet, and Vacheron Constantin; and small but well-regarded direct-to-consumer brands like Baltic or Ming. “They are handmade works of art and there is no natural depreciation,” says Tutunikov. “You can tell the time just as well with your iPhone, but in five years your iPhone will be worthless, whereas the luxury watch will likely be worth more than what you paid for it. And they don’t ever go out of style.”

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