The measure of time has always been one of humanity's holy grails for obvious reasons. Modern man developed multiple systems for measuring time, and he definitively achieved that goal when he created rechargeable and transportable mechanical systems called watches. The meaning of the “watch” changed drastically since the term’s inception. Today, there are many ways to read time, so when we talk about mechanical timepieces, we probably mean valuable and collectible watches.
Since the beginning of the 20th century, all the major luxury brands began to conceive watches as fine works of excellence containing mechanical, aesthetic, and status-lending value. Some brands focused on technical research and extreme duty performance, others focused on supreme design concepts, durability, extreme complications, or exotic materials. Each manufacturer tried to distinguish itself and conquer a niche of true enthusiasts willing to buy the latest model back-to-back, not because they needed it or because of its upgraded performance, but simply out of passion, for the pleasure of owning it, wearing it, flaunting it and sometimes keeping it, knowing that handmade mechanical timepieces are necessarily produced in limited numbers.
Today, a handmade mechanical watch is considered not only an instrument, but the last jewel for men, a form of investment, and sometimes a safe-haven asset alongside art, precious metals, stocks, cars, real estate, and diamonds.
During the last 30 years, the watch market has grown rapidly, but only in the past 5 years did we witness a massive rise in valuations and numbers of new collectors approaching the field with huge capital yet without in-depth knowledge. As a result, some models exploded on the market, becoming a must for the big audience, while others rose to incredibly high prices on the international auction world, sometimes reaching and surpassing prestigious vintage cars, important jewels, historically relevant objects, and even works of art made by blue-chip artists.
Then, over the past two years, prices have taken off to unprecedented and unpredictable levels, in part due to an inflow of huge sums from crypto investors who sold part of their tokens in order to purchase real assets. Buyers focused mainly on the three major brands, but even minor ones enjoyed some upside. The difficulty of finding raw materials during Covid forced several watchmakers to reduce output. Some timepieces became impossible to find through official marketplaces and this phenomenon pushed speculators to inflate the market massively. Some models saw annual price increases of 100% for two or three consecutive years, and some unofficial retailers demanded up to five or six times the retail price for specific watches.
The value of a watch is not only affected by complications, precious metals, gemstones, hypes or design – there is a combination of factors that transform a watch into a desirable and highly-valuated object. The best recommendation to spot future models that will become hot on the market sooner or later is to always buy according to taste, consider the current price, the design and characteristics of an object, as well as its comparative positioning on the market. It often happens that an object is undervalued today because it is too futuristic in terms of size or design and it takes years or sometimes decades to be fully appreciated and understood by the public.
Currently, we are experiencing the biggest price drop the modern watch market has ever seen. Requests are dropping to zero, brands are beginning to consign watches to official retailers again, and unofficial retailers are no longer stocking up. In contrast, vintage watches in general and top-quality vintage watches particularly are sought out, and requests and prices for them are on the rise. The bursting of this bubble was predictable, and all major experts suggested to their clients early on to sell in 2021, because we experienced a similar situation in 2008/2009. How does such a huge market crash within months? Surely the combination of the situation in Russia and other uncertainties about the future are not working in support of the luxury goods market. But my personal guess about the price drop is more related to the common sense of investors, collectors, and enthusiasts who cannot fathom paying five to six times the retail price for a contemporary watch (especially for models still in production). Obviously, compared to the crypto market the watch market is still at high levels, and there are many indications that speak for a slow recovery in less than 2 years.
How could such a recovery look? Like in 2009, the contemporary market could slowly return with some watches coming back to official retailers’ displays, so millions of novel enthusiasts will be able to finally purchase them at retail price, whereas the vintage market would continue to serve a niche of seasoned collectors who don't care about the latest trends, looking instead for quality, rarity, originality, and historical importance.
Ultimately, when new references will be introduced and contemporary watches won't be easily available for order or purchase within a short period, the cycle will be reignited. Young buyers will focus on the latest models, fueling the parallel, unofficial reseller market, while skilled enthusiasts will fulfill their desires by purchasing the models currently undervalued by the market, and real collectors will continue to focus on finding and purchasing top quality vintage timepieces.
Giovanni Varesi is the Head of Antiquorum Italy. He is a worldwide class vintage watch expert & safe haven assets’ mastermind. He can be found on Instagram under @giovannivaresiofficial.