The next generation of investors is moving past traditional nest eggs such as gold, jewellery and art, and into the world of horology. We spoke with Dillon Bhatt, a global trading specialist, about decoding the best way to invest in time in today’s market.
Watch collections are a truly intimate affair. Watches at auctions and online trading zones can fetch fortunes if you play your chips right and wait for the right spring day. Exclusivity and timing, along with making key decisions in buying and selling, are prime factors to weigh in.
To understand the jargon better, we had a chat with Dillon Bhatt, Head of International Business Development, Millwood Kane International. A watch collector and investor himself, Bhatt dabbles in Rolex icons and niche novelties from De Bethune. More so, he’s an expert in factoring right and making wise decisions in the affairs of watch trading.
What are the core factors that need to be taken into consideration before buying a watch as an investment?
Research has always been the key pillar in any form of investing. The depth of research in terms of market, model, make, and unique features all constitute towards better understanding your nest egg. After which, you need to understand the dynamics of the supply and demand of that particular market. Trends and speculation heavily influence market values.
I’ve always seen it work in one of two ways – First, the value of specific models increase due to massive demand, or second, due to stringent supply. I believe it is essential to understand what makes a watch desirable within the marketplace. Additionally, several factors can significantly influence the value, mainly the condition and completeness, but others such as provenance and history of the piece also play a part.
Given everything that is happening due to COVID-19, would you say now is a good time to look at watches as an investment? Has COVID-19 affected this investment opportunity?
Due to the pandemic, the asking prices of a majority of models has taken a hit. However, there are good deals out there. The watch trading market can certainly enrich while the global economy goes through a downturn. Simply because it serves as a market for physical assets instead of direct monetary. Overall, it is looking more desirable for investors.
What would be the five top determinants when putting up a watch for sale today, to ensure that it gets the best possible price?
In today’s market, I believe these are the top five determinants for maximising on an investment.
1. Condition. The watch must appear healthy and as close to mint condition. If possible, look to invest in watches that have had little to no cosmetic work, such as being polished, or required replacement parts. When listing, you can highlight these points.
2. Documentation. List the watch with all the original documentation, ensuring completeness of the product. For instance, the original box and papers, the original sales receipt, the credit card receipt, the original bags, any tag and stickers on the watch, etc.
3. Identifying a buying market when selling or exit on your investment. It’s always a good idea to look for collectors and other end users of the watch. This will allow you to maximise profits without paying fees to brokers or selling at a lower rate to dealers.
4. Using heritage and history as a point of value. When buying and selling a watch, highlight the history, stories, and provenance of the specific piece. For instance, if the watch was once owned or worn by a famous or influential individual or even a heart-warming story of the watch’s past. This can substantially increase the value of the watch.
5. Investing in high-quality imagery. It’s a hallmark of a serious investor to have high-quality images of the watch. These images can be shared on social media and forums to help you to reach potential buyers.
What are the brands and models that command the most value as investment pieces?
Over the past decade, there has been a substantial shift in considerably desirable watches. Many brands and models remain hugely sought after and investable. However, as the watch industry has evolved, and with the addition of social media, there have been many changes. With the likes of Rolex, Patek Philippe, and Audemars Piguet still holding the titles of perhaps the most desirable brands, specific models within their lineups have performed better in recent times.
In the past, there was a high demand for gold, gem-set, and complicated pieces such as Patek Philippe Perpetual calendars with Enamel Dials and rare and unique Rolex Day-Date models. These watches have commanded a high premium and continue to increase in value, due to the rarity and desirability. While recently, the watch market has seen growth in steel sports models; these watches were considered functional tool watches, rather than a symbol of wealth or status. However, that has now changed as we see the Rolex Daytona and Patek Philippe Nautilus Models fetching more than 200% over retail value as soon as it becomes available on the open market.
If someone were to buy a watch today for investment purposes, to sell off at a later date, which brands/models would you recommend to them?
It’s best to stick to well-known and investable brands such as Rolex, Audemars Piguet, and Patek Phillipe. Simply because their market is broader with consistently high demand and lower risk. When it comes to vintage watches, Zenith-made Daytonas or dial’s with exotic dials like the Day-Date with lapis lazuli or Malachite, and even enamel Stella Dials are interesting. There’s also has been increasing demand over the years for watches that have signed dials. Signed Dials usually comes about through a long-term relationship between the brand and an influential individual/client or retailer.
A few prime examples of this would be when the late Sultan of Oman commissioned several pieces for his friends and family. Those watches would eventually have the opportunity to wear the Omani Khanjar crest on the dial. In recent times the State of Qatar has also commissioned a few pieces from Tudor, where on the dial it reads “State of Qatar,” these watches were typically gifted from the royal family to influential individuals. In some cases, we also see the name of the retailer engraved on the watch or in some instances on the dial, a famous and sought-after example of this is Tiffany & Co. retailing Patek Philippe. These watches are increasingly challenging to find and are typically only sold to high profile and long term clients. These pieces command high premiums in the open market. An example of this would be a Patek Phillipe 5712a Tiffany & Co. signed dial where the market value is over 500-600% than the retail price.
Are there any underrated watch brands that you consider great as investment buys?
There’s one brand I’ve always seen an underrated, Tudor. Even though they’re Rolex’s sister brand with a similar visual appeal, they’re far lesser-known. However, they’ve been getting a lot of attention of late. Recently, they have released a few pieces that are considered rare, such as the Black Bay State of Qatar and the Harrods limited editions. These watches are considered to be fantastic value and won’t break the bank while providing long-term appreciation.
In your experience, do Indians look at watches as investments? Why? Is the scenario changing?
Investing in alternative assets is not a new phenomenon for Indians. Art, wine, jewellery are common investment pieces for Indians, and they’ve been doing this for decades. And so, it’s only natural for them to look at watches as another opportunity for investment.
The surplus of information on digital media and other channels have proven to be a boon in understanding markets better and what makes a timepiece so investable. Overall, Indians are generally more educated about watches; in the past, they were buying bulkier gold pieces. However, the landscape is changing. I have personally seen a segment in the market look at different options. Apart from vintage novelties, they’ve also started investing in understated pieces and independent watch brands like FP Journe, MB&F, and De Bethune.
In your opinion, can investing in watches replace conventional investment options?
I think the demand for watches is increasing, and the amount of investable stock remains low, so prices will continue to grow in the long term. However, I don’t believe watches should replace or substitute other investments. One significant difference is that watches are something that people can wear and enjoy, whereas you can’t do the same with other investments such as stocks or bonds.
What are the best platforms where one can trade in watches?
Platforms like Chrono24 and eBay are the two big fish in the industry today. However, there are more niche platforms such as A collected Man and WatchFinder. But for those who prefer in-person trading, there are two leading auction houses to keep an eye out for – Sotheby’s and Christie’s. Additionally, many people trade watches through auctions. Watches go for significant premiums, and mostly rare novelties come up on the auction block.
What are the most common mistakes one makes when investing in a watch today?
Even though we stumble here and there while investing in the right timepiece, I’ve always believed that research can help us overcome that. Firstly, ensure you buy from a reputable retailer or source that provides you with every bit of information and documentation regarding that piece. This is vital. Secondly, market speculation is a rabbit hole, it’s never-ending with tons of loops. We usually forget to consider expert opinions while making important decisions. It may seem tiny, but it’s a crucial part of the research phase.
When would be the right time to sell-off an investment?
Keep a close eye on market trends and emerging spikes in popularity. Although, given the current market, I don’t think now is the best time to sell. On the other hand, it is an excellent time to look for deals. Ideally, you want to hold for the next 18 months until the market starts going up and levels out again.
All images: Courtesy Instagram/dillonbhatt