How to start a watch collection: A beginner’s guide

Although wearable devices such as smartphones and fitness bands can accurately tell time, many people still prefer to use traditional watches for reasons such as convenience, aesthetics, or appreciation of well-constructed analog devices. In fact, although the luxury goods market is in a bit of a slump, watches are a large industry with a global market worth more than $135 billion and an annual growth forecast of more than 5.6%, according to data aggregator Statista.

Watches can be used to convey status or as an accessory to an outfit, but they are also popular as collectibles. For beginners, it’s best to treat watch collecting as a hobby first. Most watches depreciate in value, but identifying valuable watches and purchasing them at retail can be difficult.

CNBC recently spoke with industry experts to find out what beginners should consider when starting a watch collection.

Start collecting for the love, not the investment return.

First and foremost, you get satisfaction from building your collection by enjoying the look, mechanical details, and history of the watches. Collectibles are also gaining acceptance as an alternative investment asset class. However, experts advise that you cannot expect them to outperform traditional investments.

Charles Tian, ​​founder and CEO of WatchChart, a market research platform that tracks used watch prices, explained that while it is possible to make money buying and selling watches, collectors are unlikely to outperform investments such as the S&P 500 index in the long term. “I don’t want to get into watch collecting purely from a financial standpoint,” Tian said.

But he noted that desirable watches can appreciate in value over time, noting that the value of the Rolex Submariner, a diving-style watch that starts at about $10,000 new, has tripled on the secondary market since 2010, reaching its peak price in 2022 during the coronavirus-era collectibles boom.

“As a collector and watch enthusiast, you might expect me to say that watches are great investments, but watches are rarely that,” says Mike Johnson, founder of WatchPatrol, a site that aggregates data on the secondary watch market. “The vast majority of watches have declined in value, and it’s difficult to discern which new models will rise into the realm of ‘modern classics.'”

Over the past year, the index has seen significant declines in the value of luxury watches such as the Breitling Superocean 42 and the Panerai Luminor GMT.

“These are luxury watches that are coming down in price, and this is the norm rather than the exception,” Johnson said.

Of course there are exceptions. In special (and very rare) cases, watches can be valued dramatically. For example, actor Paul Newman’s Rolex Daytona, a watch that originally sold for as low as $210 in 1972, sold at auction in 2017 for a then-record $17.8 million.

What makes a watch desirable and what keeps it valuable?

Many factors influence the attractiveness of a watch.

According to Morgan Stanley and Luxconsult’s annual report on watch manufacturers, there are about 450 watch brands in Switzerland, but sales are concentrated in top brands such as Rolex, Cartier, Patek Philippe, Audemars Piguet, Omega and Richard Mille.

“Brand reputation is usually the most important factor, but rarity, where it was made, and documented ownership history are also important factors,” said Sean Makovsky, luxury department manager at Max Pawn, a Las Vegas-based pawn shop that sells watches and other valuables. “Watches that are limited editions, retired models, or associated with important events tend to attract collectors,” he added.

The brands most often cited by watch brand experts as highly valued (or at least held) are Rolex, Audemars Piguet, and Patek Philippe. Recent prices for new watches from these brands started at $6,200, $11,300, and $18,000, respectively, but market prices are always subject to change and the luxury market can be volatile.

If you can buy a new watch from one of these brands at retail price from an authorized dealer, you could quickly sell it on the secondary market for a profit, Tian said.

But it may not be easy.

Johnson said it can be difficult to get top-selling watches from dealers. “You’re on a waiting list and the boutique decides if and when you can buy,” he explained.

Robert-Jan Broer, founder of Fratello Watches, an online watch magazine based in the Netherlands, said: “In general, prices on the second-hand market are slightly lower than new watches, especially if they are still available.” “However, this is not the case for watches that are in such high demand that they cannot easily be purchased new.Many Rolex sports models, as well as Patek Philippe and Audemars Piguet watches, are not available new due to the frenzy in the market.”

Other collectible watch brands

The Swiss brand Vacheron Constantin is also collectible, but generally not as valuable on the secondary market as Audemars Piguet, Patek Philippe, or Rolex. With new Vacheron Constantin prices starting at $14,300, the brand appeals to collectors for the beauty and craftsmanship of its watches. The brand also has a historical charm. Founded in 1755, it is the oldest watch manufacturer still in operation.

Some inexpensive watches also attract collectors’ interest.

Johnson cited vintage Seiko diver watches, Omega sports watches and modern Tudor watches as suitable collectibles. “The discontinued Seiko SKX007 diver’s watch costs about $257, and although it goes up a little each year, it’s about as reliable as you get in a watch for that price,” Johnson said. He cited Hamilton Khaki Fields and Tissot PRXs, with used prices in the $400 range, as popular entry points for new collectors.

Makovsky also cited automatic Hamilton watches and vintage Bulova Accutrons as offering value and long-term collectability without requiring a large investment.

At the other end of the affordable spectrum, MB&F (Maximilian Büsser & Friends), FP Journe and Richard Mille are also collectible brands that hold their value, Tian said. New watches from these brands cost $3,300, $15,000, and $120,000, respectively.

Aside from the examples above, most watches can be expected to lose value over time. That doesn’t mean you can’t collect them, just that it might be wiser to buy second-hand. “For most brands, you can get 40-50% off used watches in good condition on the second-hand market,” Tian said.

Is it new or used?

Whether you buy a new or used watch depends on your situation and personal preference.

“It’s easy to buy new ones,” Johnson said. “You get the satisfaction of knowing it’s guaranteed, brand new and you’re the only one wearing it.”

“The secondary market is a little more nuanced,” Johnson said. “Anything on the used market already has depreciation factored into its retail price, and if you look hard enough you can find all the discontinued references somewhere. But the trade-offs are real: there are no warranties, mysterious service histories, and you have to do your own homework on both the watch and the seller. The money you save by buying second-hand can easily be lost in surprise service or repair bills.”

You need to be more careful when buying second-hand items. Makovsky said, “Condition is very important. An unpolished case, original dial, matching serial number, original bracelet, and complete box and documentation can add substantial value. In many cases, two seemingly identical watches can differ in value by thousands of dollars simply because one is completely original and the other has replacement parts or has been overly restored.”

Additional costs, mechanical issues, scammers

While there are some digital watches that people collect and trade, such as the Casio G-Shock, which ranges in price from $40 to $80,000, most collectible luxury watches are mechanical, powered by a complex interplay of tiny gears, forks, levers, and springs. These will wear out from normal use. According to experts, mechanical watches typically require maintenance every 7 to 10 years, and the cost varies depending on the brand, type, and model of the watch. This can be as low as $200 to $300, but for more expensive watches or those with mechanical complications such as dials for power reserve, date, and moon phases, a single service or repair can cost thousands of dollars.

“The repair costs themselves are difficult to predict,” Bloor said. “If you need a new crystal, crown, etc., the price can be quite low. But if there is a problem with the internal mechanism, or if the special dial is cracked or damaged, it can become very expensive.”

Proper storage is essential to protect and preserve your luxury watch collection. “Watches should be stored in a dry, safe environment, away from magnets, excessive humidity, and extreme temperatures, all of which can negatively impact a watch’s performance and long-term condition,” Makovsky said. “A high-quality safe provides both security and a stable environment for most collections. For particularly valuable collections, professionally managed safe storage may be appropriate, providing an additional layer of protection against theft, damage, and environmental risks.”

Equally important is to save everything that came with the watch. “Original boxes, warranties, certificates, manuals, hang tags, receipts, and service records should be kept in good condition and stored safely,” Makovsky said, noting that a watch can significantly increase its value if the original packaging and documentation are intact.

Finally, when buying or selling watches, be wary of shady business practices and outright scams.

“Where there’s money, there’s scammers,” Bloor said. He said it’s important to do business with trusted sources, such as authorized dealers and branded boutiques. He pointed out that collectors can research the reputation of the companies they do business with through word of mouth, or on watch market sites like Chrono24 to see if those companies have good reviews.

“Outright fakes are a well-known problem, but even more despicable is ‘Frankenwatch,'” Johnson said.

He explained that some dishonest sellers try to combine parts from different watches and sell them as completely original. Other issues include scratched, damaged or overly polished watches being sold as new, disappearing after the seller receives payment, and fraudulent bids in online auctions.

“Even a completely genuine watch can be subject to dishonest trading,” Johnson said. “The defense is to use common sense and buy the seller before you buy the watch.”

He also encouraged watch enthusiasts to use paid payment methods, insist on original photos and serial numbers, and have all expensive items authenticated by independent watch manufacturers.