if you love watches, and the dynamics of auction markets you are in the right place.

2016 Watch Auction Trends

2016 Watch Auction Trends

2016 was a historic year for vintage watches in auction. Despite economic woes in some markets around the world, and a general slow-down in luxury products, vintage watches continued to perform well. Most notable, was a couple of world record prices for very rare and beautiful watches in different brands. However, it was not all rosy. While the general vintage market strengthen, modern watches struggled and in particular those that still in current production. So as they say, it was a tale of two stories.

In terms of vintage, there were two notable trends in the market. One was collectors paying record prices for ultra rare pieces, which brought record high prices for many brands such as Patek and Rolex , and the other was an explosion in lesser known brands such as Heuer or Universal Geneve, which in many cases, also achieved world record prices. Both of these trends had a common denominator and that was the condition of the watch. Just like in Real Estate everything is about “location, location, location”, for watches the mantra is “condition, condition, condition”.

Before diving into the details, I thought it would be useful to share some general statistics to get a sense of the market as a whole. Between four of the biggest Auction Houses in the world; Phillips, Christie’s, Sotheby’s and Antiquorum, a combined total of almost USD 270mm was sold through out the year, in over 8 thousand lots. The market leader was once again Phillips, followed by Christie’s and then Sotheby’s and Antiquorum respectively. 

Screen Shot 2017-09-24 at 11.13.14 AM.png

It is interesting to note, that Phillips not only was the House with the highest sales, but also the one with fewer auctions, and thus the fewer watches sold. In that same note, Antiqourum took a different route, and sold the most watches yet it achieved the lower sales.

To get a sense power of the first vintage trend I mentioned, the top 10 lots sold for a bit over USD 28 million, perhaps an astonishing number to many considering these are only wrist watches. If you make a simple average, this means collectors paid almost USD 3mm for each of these vintage watches! Think for a second on what you could buy with this kind of money, or rather what makes them so special that collectors are paying this kind of money?

First of all, I can say with almost all certainty that some of the very best watches from Patek Philippe and Rolex were auctioned this year, and not surprisingly, both achieved record prices in Auction markets. For Patek the record breaker was the ultra-rare Ref. 1518 in steel, one of only four examples known. And for Rolex, it was the highly coveted Ref. 4113, also in steel, and one out twelve known. Yes, world’s most expensive wristwatches are not in precious metals! Let’s explore a bit more on these, and their performance throughout the years: 

Photo credit: Phillips Watches

Photo credit: Phillips Watches

Patek Phillippe Ref. 1518 in steel: Sold for CHF 11 million in November 2016.

To many collectors, this watch is the grail of grails, and the highest prized asset in watch collecting. Ref. 1518 was the first-ever Perpetual Calendar Chronograph produced in series, with only 281 examples made from 1941 to 1952. Out these 281 the majority were cased in gold, with only 4 known in steel.

In the words of Mr. Aurel Bacs, the head of the Watch Department at Philips, the steel version is the “perfect storm in terms of vintage watches.... It has all the attributes collectors seek: rarity, size, complication, condition, provenance, even wearability, this watch is the absolute outperformer in every of these disciplines”.

As you can imagine, the watch community was up in arms when it was announced it was for sale, and Phillips placed this watch with an estimate of “over CHF 3 million”. The general market consensus was that it would sell past it’s estimate, but very few people expected such strong result of CHF 11 million which broke the record for the highest price ever paid for a wrist watch.

The last time another Ref. 1518 appeared in auction back in 2004, and it sold for EUR 1.3 million. However, it has been reported that it sold privately a few times before. Hodinkee, a leading online magazine for watches, reported that one of largest dealers in the world had bought the watch in the late 1990s for 700 thousand (currency?). Then, another private sale occurred in 2007, where the same watch that had sold in auction in 2004 for EUR 1.3 million, exchanged hands again for Euro 2.2 million. Allegedly not other sales occurred until late 2016 when it sold in auction for impressive CHF 11 million! 

Rolex ref. 4113 in steel: Sold for CHF 2,405,000 in May 2016.

Just like the Patek Ref. 1518 in steel is the King of all Patek Philippe wrist-watches, this Rolex Ref. 4113 is the King of all Rolex watches, and it was made in the early 1940s.

The story goes that at the time Rolex was very much involved in racing events, and this watch was presented to a select group of drivers, and thus was never offered for sale. The watch has a split-seconds chronograph complication, and an astonishing size of 44mm, which was huge for the era, and the largest Rolex watch ever made.

Research suggests that out twelve made, the whereabouts of only nine are known. According to our records, Ref. 4113 has appeared in in auction six times since 1999. The last time was in May 2016 for CHF 2.4mm, breaking a world record for a Rolex watch. 

Screen Shot 2017-09-24 at 11.18.34 AM.png
Screen Shot 2017-09-24 at 11.18.45 AM.png

What about other notable sales outside Rolex and Patek Philippe?

Heuer:

As mentioned, in the beginning of the article, some lesser-known brands had a tremendous year. In particular, the brand that is today known as Tag Heuer had a tremendous year, although it used to be known just as Heuer, and another world record was broken.

To Heuer enthusiasts, the “First Execution” Autavia Ref. 2466 is the Holy Grail. For years, this brand has had a group of hard-core following collectors, but in recent years, that group has grown quite a bit which has increased demand and therefore prices. 

Photo credit: Christie's

Photo credit: Christie's

The watch dates to 1962, and it was created with motor sports in mind as correctly described by Chritie’s who sold the watch. The watch is characterized by its large sub registers, and this particular one was to be in exceptional condition (again, condition, condition, condition), and it was appearing in auction for the first time. Christie’s placed this watch with an estimate of USD 35,000-60,000, but it went way past it, and sold for an incredible USD 125,000.

This model was not the only vintage Heuer to perform well this year but actually, the performance was great across the board. 

Omega:

It is no secret that Omega is a great brand with a rich history, but after the “Omegamania” phenomenon in the mid 2000s, the enthusiasm faded away, and Rolex took the driver’s seat with the Paul Newman craze.

Photo credit: Christie's

Photo credit: Christie's

For the next few years, Speedmaster’s (which by the way, was the first watch on the moon!) flew largely under the radar. I guess you could say to the joy of Omega enthusiasts, because they were buying them at very reasonable prices. But in late 2015, Christie’s hosted a very successful Speedmaster themed auction, and the trend changed. Speedmaster’s were cool again.

During 2016, a very cool and rare Speedy surfaced to the market, the so-called “Ed White”. But this was no ordinary Ed White, which by itself is a rare model, but this one had a very special and rare metallic dial.

According to the Omega Archives, this watch was produced in 1967, and delivered to the United Kingdom. It is said that these dials were made as “prototype” and thus a very limited amount were made, and even a lowered number exist till this day.

This example came to market with an estimate of USD 25,000-35,000, however the rarity, and the condition brought the watch to a final price of USD 60,000. 

According to the Omega Archives, this watch was produced in 1967, and delivered to the United Kingdom. It is said that these dials were made as “prototype” and thus a very limited amount were made, and even a lowered number exist till this day.

This example came to market with an estimate of USD 25,000-35,000, however the rarity, and the condition brought the watch to a final price of USD 60,000. 

A quick take on modern watches:

Modern watches had a tough year in auction markets, and that can be attributed to a couple of factors. First, and perhaps the most prominent, was due to slower demand from countries such as China that saw a slow down in their economies. As a result, luxury watches dropped in sales significantly in Asian countries.

This was coupled with some brands increasing their production significantly, which brought the perfect storm for lower prices, increased supply with a notable decrease in demand. Modern discontinued models faired a little better than watches in current production, particularly those that were produced in limited numbers, however, they still fell about 30% from their Auction peaks in about 3 years a go. Modern watches in current production from high-end brands such as Patek fell as much as 50% in auction from retail prices. A tough pill to swallow for loyal clients that like to purchase watches from Patek boutiques.

Outlook for 2017:

As collectors we often wonder what is the future value of our watches. What is the next for vintage watches? They have gone up so much, do they still have upside? What about modern? They have fallen so much, is there any value there? These are hard questions to answer and the truth is that nobody has a crystal ball, but if we’ve learned anything from the past, these are the few conclusions I can draw:

  1. Condition trumps everything, even rarity. A watch is easier to sell at a high price in great condition, than that exact same watch in bad shape but at half the price. When condition is “mint” price can become irrelevant.

  2. Prices can continue to go higher but collectors are becoming more and more demanding. Thanks to Internet, information is becoming readily available to everybody. More and more the focus will be towards the rare watches in great condition. A good friend once told me, 80% of vintage watches are not in great shape, but we are all chasing after that 20% that is in great condition...

  3. The future of modern watches is a little harder to predict, but safer choices are discontinued watches that are highly regarded by the collecting community.

Time will tell what happens next, whatever happens, if you are a watch lover like me, always remember the number one rule of collecting, buy what you like, and enjoy your watches, but always remember, condition, condition, condition. 

The Evolution of What's "Collectible"...

The Evolution of What's "Collectible"...