More than $200,000 for a stainless steel Patek Philippe Nautilus, $17 million for Paul Newman’s old Rolex Daytona, thousands for rare vintage watches from manufacturers no one had even heard of up until recently: Prices for coveted modern luxury watches and rare vintage models skyrocketed over the past few years. In some cases, this has led to almost absurd prices that are far from rational and really hard to wrap your head around.
In these times of ever faster moving markets, emotionally charged marketing strategies, and artificial scarcity tactics, desire for certain luxury watches is high. Whether it comes down to passion, an interest in investing, or wanting to keep up with the Joneses, a surprising number of people around the world are willing to spend a large amount of cash on luxury watches. In this article, we’ll be taking a look at what determines the price of rare and/or highly-coveted watches. Exactly what are the tangible reasons for buying a watch, and the ones that are harder to put your finger on?
1. The Law of Supply and Demand
On the free market, demand determines the so-called equilibrium price. Roughly speaking, this is the point at which the price, quantity supplied, and quantity demanded meet. A bit too abstract? Here’s an example: Let’s say TAG Heuer is willing to sell their new Aquaracer Professional 200 Date for $2,750, and you are willing to pay that price. The model is readily available; perhaps there is even an oversupply. If this is the case, the market price for the Aquaracer will fall, undermining the official list price.
It’s a completely different story if you’re looking for a rare 1960s TAG Heuer Autavia GMT ref. 2446C in good condition. The equilibrium price here is somewhat out of whack because these watches are so rare and sought-after. If you are the happy owner of one of these watches, you can take full advantage of the market scarcity. While the watch only cost a few hundred dollars when it was first released, the going rate is closer to $12,500 today. You can’t explain this rise in price rationally; after all, we are talking about a used watch with outdated technology. The purchase of a watch such as this one is driven more by emotion and passion, similar to the rationale behind buying a vintage car.
Equilibrium prices can also spiral out of control when manufacturers are unwilling or unable to meet demand for a product and end up just taking it off the market altogether. A prime example of this – as you may have already guessed – is the recently discontinued Patek Philippe Nautilus ref. 5711/1A-010. This watch, which is nearly impossible to get your hands on today, was already trading for around double its official list price of roughly $32,000 before the announcement of its discontinuation. As of mid-April 2022, the watch costs an (inflated) average of $218,000 on Chrono24.
The watch is made of stainless steel and features nothing more than hours, minutes, seconds, and a date display. It seems utterly bizarre that the market price for the Patek Philippe Nautilus ref. 5712/1A with a moon phase is more than $6,000 cheaper. Even so, when you consider the official list price of this latter model is around $45,000, you have to shake your head. I’m doubtful that we will ever see a true equilibrium price here.
In short: High demand, low supply, and extreme levels of desire are major determinants of the price of luxury watches. That’s why simple three-hand models from some popular manufacturers often cost considerably more than highly-complicated timepieces from less popular brands.
2. Seeking Out Alternative Investments and Artificial Scarcity
Low interest rates, rising real estate prices, the COVID-19 pandemic, the climate crisis, and now the war in Ukraine… Humanity is once again at a major turning point. If you already own property and have some gold set aside, you’re probably tearing your hair out trying to stay on top of the volatile stock market. Perhaps you’re looking for alternative forms of investment like art or jewelry. High-quality luxury watches are ideal because they fit into both of these categories. A quality watch is a piece of art and jewelry for your wrist. Best of all, some watches make great investments that hold their value well.
More and more people seem to be recognizing this potential around the world, and are thus investing their money in rare timepieces. The mass rush on the luxury watch market means that even models that were once easily attainable are now hard to find. Above all, young Chinese consumers with considerable buying power seem to have discovered an interest in luxury timepieces. This is particularly the case with brands like Rolex, Patek Philippe, and Audemars Piguet, among others. While watches from these brands aren’t necessarily rare in the truest sense of the word, i.e., they are produced in relatively high numbers, you still have a slim chance of buying one at the official list price.
Of course, the watch industry has long recognized the uptick in global demand and has not left it unanswered. One way watchmakers have profited is by releasing limited editions of popular model lines. Omega has got the art of limited editions down to a T. There are now countless limited editions of the popular Speedmaster Professional Moonwatch, some of which trade at incredible premiums.
An obvious example is the Omega Speedmaster Silver Snoopy Award ref. 311.32.42.30.04.003 from 2015. This watch commemorates 1970’s Apollo 13 mission; as such, it has a limited run of 1,970 pieces. The dial features NASA’s mascot Snoopy, the beloved beagle from the Peanuts comic strip. While the watch was originally available for around $6,000, you should expect prices north of $32,000 today. It’s a similar situation with the Speedmaster Speedy Tuesday 2 “Ultraman,” which is limited to just 2,012 pieces. This watch features a hidden silhouette of Ultraman’s head on the 9 o’clock subdial that is only visible in UV light. The seconds hand on the same subdial is also shaped like Ultraman’s “Beta Capsule.”
The original list price has doubled over the past five years. Let’s not forget that this limited edition is technically identical to the standard model, which is available at the comparatively low price of $4,800.
In short: The flight to alternative investments, strictly limited editions, artificial scarcity, and unique visual additions are major price determinants for rare watches.
3. History and Previous Owners – The Watch’s Story
In the 1960s, it was considered an ugly duckling, cost pennies compared to today’s prices, and remained untouched in shop windows – which watch are we talking about? The Rolex Cosmograph Daytona, of course. Rolex was even considering removing the model from their lineup until a certain Paul Newman discovered the timepiece. The Hollywood star and amateur racing driver readily held up his Daytona ref. 6239 with a so-called exotic dial in front of the cameras. The case back of Newman’s watch featured a custom inscription commissioned by his wife that reads, “DRIVE CAREFULLY ME.” In 1980, Newman gave his Daytona to his daughter’s then-boyfriend. At the time, the watch was worth some $200.
In 2017, the Newman family dug the old watch out of a drawer and put it up for auction – and the rest is history. In October 2017, Paul Newman’s Daytona was auctioned off for a whopping $17.8 million – that’s a pretty good return on a couple hundred dollar investment!
This is, of course, an extreme example that doesn’t happen every day. However, the auction results boosted the prices of all other Daytonas that could be called “Paul Newmans.” One example is the Daytona Paul Newman ref. 6264, which has been valued around $318,000 for more than two years now.
This isn’t something specific to Rolexes either. In Francis Ford Coppola’s anti-war film Apocalypse Now, Martin Sheen, playing Captain Willard, wore a Seiko diving watch with the reference number 6105-8110. Of course, the watch world took note of this, and a serious hype quickly followed. Vintage copies of this timepiece are priced just over $2,100 on Chrono24, which is many times more than the original value. Seiko recognized the attention the watch was getting and has since introduced several new variants with the designation “Captain Willard.” You can purchase these newer watches for just over $1,000.
There are a number of other prominent watch wearers who have made their mark. Steve McQueen, for example, is known for his whole range of timepieces. First and foremost, he is associated with the TAG Heuer Monaco ref. 1133, which we wore in the 1971 film Le Mans. Watches from this era cost around $15,400 today. TAG Heuer has continued to release new Monaco models, some of which are limited editions. However, none come close to the current market price of the original.
Eric Clapton’s golden Rolex Daytona ref. 6239 will incidentally go up for sale at Phillips in Geneva, Switzerland between May 7th and 8th of this year. It’s estimated that the watch will sell for some $1.45 million. If that’s the case, it’s quite likely that market prices for this reference will rise on Chrono24.
In short: The value of rare watches or models are largely determined by their stories. If the watch has had a well-known previous owner, the sky’s the limit on prices.
4. Origin and Prestige – “Swiss Made”
Switzerland is considered the hub of modern watchmaking. No other country comes close to the reputation of quality and precision that the Alpine country has earned over the past few centuries. To this day, the Swiss watch is the epitome of tradition and devotion. In the 1980s, however, the Swiss watchmaking industry was thrown into turmoil by the so-called quartz crisis when the market was flooded by Japanese quartz watches. As a result, countless manufacturers had to shut their doors. Years later, passionate watch enthusiasts and businessmen like Jean-Claude Biver and Nicolas Hayek managed to revive the most important brands and unite them under the umbrella of today’s Swatch Group.
These new Swiss watch pioneers had a clear mantra: Switzerland produces the best watches in the world and they are built to last forever. This message is present in the marketing campaigns of nearly every Swiss watchmaker today, and it’s clearly working.
Of course, we all know there are also great watchmakers in Germany, France, and Japan, but the “Swiss Made” label has a near-mystical effect on buyers. This, despite the fact that most people are aware that very few Swiss brands actually have top-to-bottom supply chains in Switzerland.
That’s one of the reasons why Grand Seiko watches retain their value rather poorly, even though they can easily hold their own with many of the big Swiss brands. It could, however, also come down to the fact that Japanese watchmakers employ pretty low-key marketing measures outside of their home market.
A Grand Seiko GMT ref. SBGJ237, complete with a top-quality automatic Hi-Beat caliber, has a market price of around $5,500, while the official list price is upwards of $7,000. Things look pretty different for the Rolex GMT-Master II ref. 126710BLNR, which has an official list price of $9,700, but sells for more than $25,000 on the secondary market.
An interesting side note: While I was writing this article, I noticed there were 487 listings for the Rolex Batman on Chrono24, and just 44 for the Grand Seiko Batman. You could endlessly compare Swiss and non-Swiss watches, but with very few exceptions, Swiss timepieces almost always outperform their competitors from other countries.
In short: Brand and origin are major determinants of the market price of watches. Most manufacturers from other countries have a hard time with value retention compared to the Swiss watch industry. “Swiss Made” is simply a powerful label, regardless of how Swiss the watch actually is.
