Inside The Booming World Of Vintage Watches

How the billion dollar pre-owned watch market got so big

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On Manhattan's Upper East Side, I'm waiting to watch the watchmen. I'm here for Sotheby's Important Watches sale, where up for grabs are more than 200 Patek Philippes, Rolexes, Audemars Piguets, Hublots and Richard Milles, as well as other assorted horological curiosities. Guide prices start in the low thousands and reach seven figures.

Although I am excited to be here, the cavernous saleroom is not completely inspiring. It is decorated in, if not 50, then perhaps 10 shades of grey: grey walls, grey floor, grey chairs, grey screens. Tim Bourne, the auctioneer and Sotheby's worldwide head of watches, is wearing a grey tie. I wonder if this is a deliberate ploy, installing in the bidders a growing desperation to look at something with at least some colour to it.

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The crowd doesn't help. If you've never been to an auction, you could be forgiven for imagining a noisy throng of mink-clad women and chuckling robber barons. But here it's a predominantly male group — a mixture of easily affluent Jewish guys (they are wearing kippahs, before you write in) and immaculate European men. In a gallery high above, obscured by a translucent screen, mysterious viewers shuffle around; those who want to see without being seen.

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At the edges of the room, raised on a kind of dais (also grey), sharply dressed women answer phones from international buyers. "I don't know why; maybe women are just better at it," Bourne tells me later. By "it", I assume he means persuading billionaires to spend more than they meant to when they set out.

In addition to the phone women, there are online bidders with whom Bourne communicates via a camera and a screen mounted high on a wall. Sotheby's and eBay have recently partnered to give online bidders comprehensive access to sales. The role of the auctioneer has therefore expanded. With his hammer in the air, Bourne looks a little like the conductor of some international orchestra of money.

The centrepieces of this sale are a set of 22 jewelled Swiss automata: in effect, amazingly intricate music boxes from the 18th century. They are not, strictly speaking, watches, but they are exquisite nonetheless. A hush falls over the crowd as images of these timepieces flash up on the screen. At the back of the room, one of the immaculate Europeans raises his paddle. "One million," he says. My heart shifts up a gear.

"One million," confirms Bourne, looking around at us, looking up at the internet camera, looking to the banks of phone girls. "One million, one million, one million... Any more?" Everyone is paying attention.  

***

Watches, or wristwatches at least, are a relatively new phenomenon as an international collectible. For most of the 20th century, they were the preserve of a small band of enthusiasts, and most of the trade was in old pocket watches or clocks.

Then, towards the end of the Eighties and Nineties, as the Asian markets — especially the Chinese — got into luxury goods, watch collecting got serious. The field has seen a constant expansion, of up to 20 per cent a year in some areas. With no industry regulator, there are no official statistics on the size of the pre-owned market, but it is in the billions annually worldwide. Sotheby's alone has annual watch sales of around £100m, up from around £20m–£30m five years ago.

Rolex, Patek Philippe and Audemars Piguet dominate the market, between them representing more than 70 per cent of total sales. Increasingly, "modern" watches — those from the past 10 years or even more recently — have taken off, too. The prices at auction are almost invariably lower than the retail price; as with cars, it's hard to tell at once what will become a collectible, and most values fall off a cliff as soon as they leave the salesroom.

Do the brands mind this? Bourne chuckles. "We have a pretty good relationship with them. Tensions do sometimes arise. But we like to think ours is a pretty efficient market."
As far as collectability goes, it's hard to predict what will do well. Bourne tells me that the specialised watch brands are usually a better bet than those that are jewellery brands that also make watches, like Cartier or Piaget.

Pateks and Rolexes tend to lead the resale market, the former because it only makes a finite number of pieces, with each edition limited. Some of its models, such as the 2526, are acknowledged classics, the E-type Jaguars of the watch world. With Rolexes, the reason is less clear.

They may not be the fanciest timepieces, but they are probably the label that most non-watch nuts believe is the fanciest. It is the largest luxury wristwatch brand, producing some 600,000 pieces each year. That might make it sound like a bad investment, but it's often been said you can't go wrong with a Rolex. Old Daytonas and Submariners tend to put on money more steadily than almost anything else. But both brands have been helped along by the auction houses, who have held dedicated sales for them, and the media, who've added to the sense of fetishisation.

The rise of the pre-owned industry has dovetailed neatly with Bourne's career. He has a calm, wry manner; the kind of Englishman you can imagine holding a similarly senior role in any field.

"I started just as the houses were starting to focus on watches," he says. "Sotheby's had a horology department, but it was mainly clocks and pocket watches, then it was realised that wristwatches were a much bigger market. They are almost a universal — cutting across every social and cultural boundary. You can have the most aristocratic lord bidding against a bus driver from Guatemala; these watches have similar values all over the world."

Bourne moved to Hong Kong around the time of the handover, and stayed there as the Asian market grew and grew, before heading back to London earlier this year.

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Even if there is a universal language of "watch", there's no disputing that the industry is overwhelmingly male. Ninety per cent of the people I talk to are men, on both sides of the trade. Senior figures insist that women are getting more serious, particularly in Asia, and have the added advantage of a culture where women wear and collect both men's and women's pieces — but there's a whiff of over-protestation about it.

Watches remain a man's world. Men's watches hold their value better than women's, perhaps because men have traditionally been more inclined to wax lyrical over the nuances of dials, bezels and crown guards.

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Evan Zimmermann is the chief executive of Antiquorum, a specialist watch auction house founded in the Seventies. "There aren't as many things men can wear," he says. "They can buy cars or art, but they can't pick them up and take them with them. If you're a young guy just starting out in his first job, you can buy an Omega or a Rolex and make a statement about who you are."

A simple statement of Wall Street bravado might work at the lower end of the market. But in the upper echelons it's more than that. You are paying for artistry and often history, too. The big prices go to watches that have some narrative flesh around their intricate golden bones. Antiquorum's most talked about sale was Gandhi's watch, which they sold (as part of a collection) in March 2009 for $1.8m.

"The watch itself was probably worth $50," says Zimmermann. "All of the value is in the story behind it and the associations — you know that he held it, that he looked at it every day, that it touched his skin. There's a real personal connection."

Not all of the personal connections are so historic. At the Sotheby's New York sale, one of the lots was a yellow, green and black Richard Mille special-edition tourbillon for Yohan Blake, the Jamaican sprinter ranked the second-fastest man in the world.

***

Back at Sotheby's head office on Bond Street, London, I find the watch team preparing keenly for the next auction, to be held in September. It's simply called "Watches". They haven't held one here since 2011, and it represents an opportunity to put London back on the watch-auction map. Joanne Lewis, the London head of watches, began preparing for this in May, "sweeping" around Europe.

This involves making contact with previous or potential clients. But they also offer free valuations, so members of the public can come forward, in response to adverts placed in local newspapers. Great watches can come from anywhere. Zimmermann recounts the story of a man in Florida, who was "really down on his luck financially", who found a Patek that had been made for his grandfather. "He thought it might be worth a few hundred dollars. We sold it for $500,000."

Not everything that glisters, sadly, is gold. Sotheby's maintains a walk-in counter on Bond Street where people can pop in and see if they have anything of value. As I am peering over the lots for sale in September, an assistant comes in with a diamond-encrusted Rolex. Sadly, it's not one for them; the dial and the bezel are not original. They don't offer a value if they're not going to sell the watch. "It can be a real shame," says the woman who works behind the desk.

"You get people coming in here expecting that their watch will help them put down a deposit on a flat or buy a car for their kid, and you have to send them away empty-handed."

Authentication is a huge part of the game. As with all fine art, where there is an incomplete ownership record, the matter of authenticity is about a consensus of expert opinion. Patek and most of the other high-end brands keep records of what they sell, and each watch can be matched to its constituent parts. Rolex, on the other hand, doesn't do that.

That means that whether a Rolex is "real" is a matter of whether the right people say it is. In plenty of cases there is a unanimous agreement, but Rolex themselves never confirm anything. (They are notoriously secretive — which only adds to their mystique.) Mistakes do happen, and each one damages an auction house's reputation.

To help authenticate the lots for sale and make repairs, Sotheby's employ a full-time watchmaker, Loic Regolatti. He is an appealing character, with a direct manner and a stubbly beard. Watchmaking remains highly specialised, with only a handful of graduates each year from the few available courses in Geneva, the US and the UK.

"In Switzerland we call it golden hands," Regolatti says. "It's similar to being an engineer or a surgeon, and you either have it or you don't. Swiss watchmaking survives because a machine cannot do this work. Maybe in 100 years, yes. But that's why the Chinese can't make watches like this. And even between two of the same watches, the difference is the quality of the finish; that's what separates the iconic pieces.

"In watchmaking, you are part of a tradition," he says. "We do it in exactly the same way as it was done in the 19th century. If one of these watches breaks, it's good to know you could rebuild it without a computer."

As well as working on watches, Regolatti collects them, too. For him, the most exciting of the new lots is a Patek Philippe pocket watch. It has a world-time complication (a complication is any feature beyond the display of the hours and minutes). World time was the signature of the master watchmaker Louis Cottier. He made around 1,200 of these himself. The rest of the team agree that this is the most exciting lot. Not just because of the mechanism, but the story behind the watch: it belonged to Sir Winston Churchill.

"At the end of the war, a group of Genevan citizens wanted to give a gift to the four Allied leaders, so they gave what the Swiss do best," says Joanne Lewis. "There was one for Churchill, Charles de Gaulle, Joseph Stalin and Harry S Truman, each with a personalised dial." Churchill's watch has an enamel illustration of St George slaying a dragon, while De Gaulle's has Joan of Arc.

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"We have been saying for years that we'd love to have a Churchill sale, so it's an exciting piece for us," she says. "It's the perfect time to sell it: the 50th anniversary of his death and the 70th anniversary of the end of the war." It came to them from a man who bought it from Sotheby's in 1998 for £20,000, as part of a sale of the leader's political artefacts. (At the auction on 22 September, the watch achieved a price of £485,000.) Other highlights include a Cartier desk clock and a Rolex Submariner that was made for the SAS — it's the epitome of the tool watch, designed to be used, rather than kept in a museum.

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Not surprisingly, the mood at Sotheby's is one of relaxed optimism. Still, there are signs that the traditional auction houses are experiencing a slightly slower wind than they have previously. Partly this is due to online disruption: the big houses are being challenged by smaller businesses, who charge lower fees and can offer a more personal service.

With lower overheads, they can buy or sell watches below the big houses' minimum prices, which are usually around $1,000. The US-based Crown & Caliber was founded in 2012 to encourage people to sell or consign their watches, and to help them get the best deal.

In the UK, Watchfinder & Co turned over £25m in 2014, and is forecast to hit £70m by 2016. Last year, it sold £130m worth of watches. It website gets almost five million unique visitors a year. There are plenty of others: watches.co.uk, secondtimeround.com and fitzroviawatches.co.uk among them.

So what about your own personal nest egg? The big houses might be fine if you have a truly amazing piece in the attic, but they only really deal in four figures and above. They also add a buyer's fee of up to 20 per cent on each sale price, meaning that you might not be getting the best price as a seller. If you have a nice Tag Heuer or an Omega, for example, brands that the big houses don't tend to be so concerned with, you might head to one of the specialist e-tailers instead.

"I wouldn't be surprised if one of the established names goes out of business within the next few years," says James Lamdin, who three years ago, started Analog/Shift, an online shop that specialises in vintage timepieces. His is one of many smaller business causing a headache for the traditional market.

"What we've seen recently is a huge amount of new money pouring into the sector, from Wall Street and Silicon Valley, not only in terms of buyers, but also infrastructure: there are new online commerce platforms and new auction houses are springing up all the time. There's an ever-growing market that wants a more personal service. It doesn't help that the big houses are not infallible — there are a lot of fakes and Frankenstein watches out there. Even the big names can be fooled."

Understandably, given how small the industry is, Lamdin won't be drawn on which of the big auction houses he thinks need a shake up. "Christie's have assembled a stellar team, and Phillips have come out of nowhere." But there's a general perception that some of the old names have been slow to catch on to the possibilities the internet offers.

Broader economic factors have affected business, too. The cooling of the Chinese economy over the past year has had wide-reaching implications for the luxury-goods sector, and their recent stock-market crash will do even more damage. The falling euro against a resurgent dollar and pound has not helped the big watch brands, which are all European.

One luxury conglomerate saw a 34 per cent drop in sales in the first quarter of 2015. Some big Swiss names even had to drop their prices; something they long shied away from because of the perceived damage it would do to their brand.

Then there's the question of wrist space. Technology is not only helping new companies pop up, it is also producing new sorts of watch. Will we continue to fetishise Swiss mechanical marvels when we can have a digital product that tells us how fat we are, how far we've run and when our cab is arriving, as well as telling the (more accurate) time? Few are keen on "double-wristing" — the industry term for wearing two devices.

"I actually think it could be helpful," says Zimmermann. "People said the same thing when quartz watches came out in the Seventies. But the Swiss watch business has continued to thrive. The fact that Apple is spending all this money on their Watch, on getting people to think about wearing something on their wrist again, is great for us."

He is not the only one to draw a connection between out-there new technology and a retreat into simpler mechanical joys. William Gibson, the science-fiction writer who coined the word "cyberspace", wrote a 1999 essay for tech magazine Wired called "My Obsession", in which he detailed his passion for finding old watches on eBay. He was drawn to function, particularly watches made for the military. I asked him to update his thoughts.

He pointed me to a recent interview in which he expanded on the subject: "The fundamental difference between a watch and a smartwatch is that a watch's central functionality is to tell time in isolation," he says. "That's the core goal of the science of horology. The Apple Watch will, I imagine, be a dead platform in a few years. Because it's nothing, really, without access to a system, and the system constantly outgrows it."

This sense of anachronism, Gibson concedes, is partly what makes watches so appealing. "The wristwatch has become a piece of archaic, though still functional, jewellery. You don't absolutely need one. You do, probably, absolutely need your smartphone, and it also tells the time. Eventually, virtually everything will also tell the time."

***

Back in New York, one of the key automata, by 18th-century Swiss watchmaker Pierre Jaquet-Droz, goes for $2.53m. The Richard Mille for $478,000. But in among these monster sales are much more affordable pieces. A Jaeger-LeCoultre goes for $3,500, the "cheapest" wristwatch, but an art deco Cyma/Tavannes pocket watch sells for $1,375.

The thought crosses my mind that I could, just about, buy one. It could be done: I could raise my hand, feel the fear. It's hard not to think that this accessibility is part of the charm of the watch auction. There are two tiers of buyer; the billionaire collectors vying for the truly iconic pieces, and the rest of us. There are dealers here, too, looking for value in the lower end of the market. But we are all in the same room, at least. You could never say that at a fine-art auction.

Right at the end, the final lot, a Patek World Time — not dissimilar to Churchill's piece — sells for $982,000. The smartly dressed women congregate excitedly around the dais, their professionalism temporarily dissolving into excited chatter. For the first time the sale total has hit $10m. There are cheers and a little round of applause. The punters and I wander towards the exit.

I ask a man in the lift if he got what he came for?
"No. There were a couple I liked, but I got outbid. I didn't have enough money."
Maybe next time?
"Maybe next time."

What do you think?

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