Time is Money
December 2012

Time is Money

by Aurel Bacs

In every field there's the acknowledged 'go-to' expert, and in collectors watches his name is Aurel Bacs,  International Head of Christie's Watch Department and co-holder of the current record for a wristwatch sold at auction: $5.7 million. Fresh off the ‘plane from another record-breaking sale in New York, this is his take on parallels in our two markets and what lies ahead.

Having been born into a family of petrol-heads, with a father who was in his younger years active in car racing and later collecting vintage cars, I was always interested in the market for collectible automobiles.

For some reason (but that's another story!) I ended up in the field of collectors' watches. Thanks to a large number of my clients being not just passionate about fine masterpieces of horology made by the most distinguished manufacturers from Geneva but also avid collectors of the finest products ever handbuilt in Modena, Sant' Agata, Molsheim and Crewe, I have the privilege of having access to both markets, allowing me to see where there are parallels but also differences.

To begin with, I am pleased to confirm that despite the crisis (or shall I say thanks to?), we have seen since 2008 every year record auction totals and numerous world records broken. In fact Christie's International Watch Department turnover soared from US $70 million in 2008 to nearly US $130 million in 2012, a new all-time record for any auction house worldwide.

This increase is impressive but becomes even more remarkable when considering that during this period the number of watches sold has only moved from some 2,000 to just over 2,200, consequently the average lot value jumped by over 50 %. This simple looking equation however raises more questions than providing answers so we need to look more closely at the market if we want to understand it.

Ferrari SWB equivalent in a handier format: $5.7m Patek Ferrari SWB equivalent in a handier format: $5.7m Patek
Lucky Eric Clapton has both Lucky Eric Clapton has both

I think only a dreamer will now conclude that today every watch is worth 50% more than it was five years ago. Remarkably, the truth is even more extreme: what we are seeing is that the top quality pieces are being chased by the world's most ambitious and liquid collectors, established or novice, but the average watch without relevance to collectors is barely going anywhere. And so it happens that those trophies "ticking all the boxes" have easily doubled or tripled their values since 2008.

When speaking about top quality it must be stressed that I am not just talking about Grand Complications by Patek Philippe - the horological cousins of Ferrari's 250 family - but also about smaller treasures which, in their own right, deserve to enter a world class collection.

Consequently we also see outperformance in the four- and five- digit dollar categories including names such as Omega, Longines, Zenith, Heuer, IWC, just to name a few. Their finest and rarest examples are reaching new record levels, possibly comparable to a Monte Carlo-Rally winning Mini Cooper in unmolested condition or a more or less regular Porsche 911 2.2S, which happened to be driven by the King of Cool and featured in one of the most memorable opening film scenes....

Every player in our market is always talking about quality but only few ever define it. In watches, quality is the sum of several parameters and a combination of the maker's name and model, its rarity, the mechanical complexity, its condition without compromising originality and its provenance. Once you hold a wristwatch in your hands worthy of a high score in each of these criteria, record results are likely to be expected- as long as the seller was not too greedy and killed the watch with an unreasonable pre sale estimate.

Examples to beautifully illustrate this analysis include the only Patek Philippe reference 2499 in platinum in private hands, coming from the collection of Eric Clapton (see above my third sentence) selling this November at Christie's Geneva for $3,600,000, a world record for this reference. Since this is our "short wheel base", let's also look at our Porsches, Aston Martins and Maseratis.

Clapton's ref. 2499 again: he won't be singing the blues Clapton's ref. 2499 again: he won't be singing the blues
Record Rolex last week: sold to an online bidder for $630,000 Record Rolex last week: sold to an online bidder for $630,000

Just a few days ago we have seen at Christie's New York a new world record set for a Rolex Dato-Compax in steel (aka Jean-Claude Killy) for over $630,000, more than doubling the previous record. Fresh to the market, in close to perfect and all original condition, it came directly from the celebrated Gordon Bethune collection and consequently met every conceivable demand a savvy collector could possibly have. Average examples of this model can easily be found for less than $100,000.

To complete the picture, I should also mention the brand new world record established for any Panerai ever sold at auction: an ultra rare reference 6154 "small egiziano". Coming directly from a private gentleman who owned it for several decades, the watch was in totally original condition. Of this model only 8 examples are known today and it was never available to the public but only to elite divers of the Egyptian Navy. There might have been more recruits for the job if they'd known their watches would one day be worth over $320,000...

Today's market is night and day to what it used to be 10 or 20 years ago: thanks to the internet, any conceivably relevant piece of information is now available to everyone, creating on one hand a very high degree of knowledge but also a large number of new-comers believing themselves to be specialists. Furthermore, our best guesstimates lead us to conclude that the worldwide audience of watch collectors (let us define a watch collector in one of my future columns...) has grown from a few thousands to a number north of 100,000 thanks to the opening of new markets such as the Middle East, Central and South America and most notably Greater China.

All in all I remain optimistic for 2013 thanks to the depth of the market, continued appetite and ever increasing demand meeting a considerable shortage of quality supply. My only worry, not so much for the market but rather for me as an auctioneer, is the following dilemma: if every client follows the rule "buy the best, forget the rest", then what will I be selling once that every horological "matching numbers, Pebble Beach-winning, V12 Ferramaserghini" equivalent has entered a long-term collection?

Editors note: the answer is a modern steel Jumbo Nautilus if, like me, you're wondering what Mr Bacs wears to actually tell the time.

$320,000 Egyptian divers watch was picked up by vendor in a 1970s Cairo flea market...for $30 (not a misprint) $320,000 Egyptian divers watch was picked up by vendor in a 1970s Cairo flea market...for $30 (not a misprint)