Is it real? How much is it worth? These are the two questions I am asked most frequently as a watch specialist. Twenty years ago, I would never have been asked seriously whether a watch was genuine or counterfeit. Fake watches were bought cheaply on a foreign beach, and by the end of your holiday, had turned your wrist green. Even 10 years ago, the difference between a genuine watch and a counterfeit was great enough to pose little challenge to the authenticator. Today, the position is very different. Luxury watches are now copied to an extent that only the most experienced eye can spot the external differences, and an inspection of the movement is often the only way to be 100% certain of the authenticity. Fake watches are sold complete with boxes, booklets and warranty cards that match the serial numbers engraved on the watch. While the first buyer of a fake watch knows exactly what they are getting, serious problems arise when these fakes are traded in the secondary market, especially via online marketplaces and social media platforms where the opportunity for pre-purchase inspection is limited.
Authentication is not always as black and white as the identification of a Chinese-made Fauxlex. Watches can have colourful backstories, with the addition of custom dials and gem-setting, or independent servicing leading to swapped movements. In the worst-case scenarios, vintage watches can be revealed as having been completely assembled from parts, none of which started life together. That’s fine if you are considering a DIY project, but not if the watch purports to be a rare example with impeccable provenance, as in the case of the Omega Speedmaster sold a Phillips in Geneva in November 2021 for an eye-watering $3.4 million. Now the subject of a criminal investigation, the watch was found to have a dial, case, movement, and bezel, all sourced from different watches, and a part of the movement had been replaced to match an archive serial number. For those for whom watches are a passion, it is vitally important to know that what you are adding to your collection is what you have been told it is, rather than a reworked confection. Originality and restoration will always be rivals when it comes to value, but transparency and full disclosure is the key.
The mention of value brings up the next most frequently asked question. What is it worth? The collecting of watches used to be a low-key slightly nerdy pursuit, with historic pocket watches attracting the big money. Over the last 25 years, this has changed to the point that watches are now touted as investment vehicles, and collections referred to as portfolios. Watches used to behave like any other consumer product. A new one cost more than an old one, and depreciation was a fact of life. This changed in 1988 with the launch of Rolex’s automatic Daytona Chronograph ref. 16520. Since its first appearance in stores, and through all its later iterations, there has been more demand than supply. This led to both waiting lists and secondary market premiums. The initial RRP at launch for the steel model was £2750, but if you wanted to skip the waiting list, it would cost you £4500+.
As the new Century dawned, watch collecting started to gather momentum. Watchfinder, the UK’s largest online watch dealer, launched in 2002, with Chrono24, the global watch marketplace, arriving a year later. In 2008, the watch website Hodinkee appeared to comment on the fledgling scene – now a multi-million-dollar company.
The arrival of the ceramic-bezel Rolex Daytona launched in 2016, saw the supply/demand imbalance spreading to other Rolex steel sports models and brands such as Patek Philippe and Audemars Piguet. For an increasing number of watches, the retail price was now the cheaper option, but lack of availability forced more buyers to pay a premium in the secondary market.
As the watch market heated up, mass media attention was focused on the collecting hobby through the sale of Paul Newman’s ‘Paul Newman’ Rolex Daytona at auction in 2017. This watch, which would have cost less than $300 when new, through a cocktail of Hollywood glamour, rarity and iconic status, became the world’s highest-priced wristwatch sold at auction at an incredible $17.8 million. Just three years later, COVID hit, and the watch world went crazy.
The impact of COVID-19 was multifaceted. The shuttering of watch factories reduced supply to an already booming market. While many struggled economically, others saw their disposable income rise due to a lack of travel opportunities, furlough schemes, government loans, and pandemic-related business opportunities. As pre-owned values started to rise, a self-sustaining bubble grew as more buyers would see opportunities for profit from watches, buying to resell a few weeks later. Add to this the vast sums of money made from other bubbles, such as cryptocurrencies and NFTs, ploughed into watches as more tangible assets and a perfect storm watch was created. At the peak, watches sold in the secondary market for between 4 and 5 times their retail price. Anyone who became aware of watch collecting as a hobby during this time would think that all watches went up in value rather than depreciating.
This article was written by one of AAG’s panel of experts, a leading watch specialist with over thirty years’ experience in the watch industry.
