Charlie Morgan, editorial director of “Watch The Story” the iPad watch magazine shares his wisdom on the best luxury timepieces to buy as an investment.

Charlie Morgan, editorial director of Watch The Story, the iPad watch magazine, shares his wisdom on the best luxury timepieces to buy as an investment.

An Aston Martin or an Audemars Piguet?

It may seem odd to launch an article delving into the world of investing in watches by looking at a 1968 Aston Martin DB6 Mark I Volante but strangely enough this particular car opened my eyes to the merit of investing in “vintage”, swiftly followed by a certain amount of friend envy.

A number of you will have those friends, the ones who seem to consistently make the right moves and purchases that never seem to go wrong and always sees them coming up smelling of roses.

The friend in question purchased the aforementioned Aston in 2001 for the princely sum of £60,000 (around $97,000). Some nine years later he sold this stunning automobile in the October 2010 RM Auctions sale for £296,800. Like a true friend I smiled through gritted teeth and told him what a clever fellow he was, but was he really that clever or was it being in the right place at the right time?

After this sale and the inescapable gushing that followed I decided to look into how hard it would be to transfer these felicitous skills into the watch market.

For most, a watch or timepiece, dependent on which side of the fence you lean, is their only everyday accessory. This rings true particularly for men and makes it incredibly important. For most a luxury watch is a status piece. A City gent wearing an Audemars Piguet may be held in greater regard than one wearing an Omega.

The watch sector has grown remarkably over the last twenty years, with multiple luxury watch brands entering the market expressing their own unique provenance for all to hear - but buyers beware, are they worth their weight in gold?

With the upheaval in the world economy, one thing is for certain: tough times lie ahead for the “new kids on the block”. The last four years has seen a shift back to traditional and stable brands such as Rolex, IWC and Patek Philippe.

Investment or accessory?

The key identifier in the current marketplace seems to be the secondary market. Whilst researching this particular sector, I called several dealers across the country to try and sell some of the new brands, I won’t name names but you can probably work them out for yourself (just pick most watch brands with a £1,500 to £3,500 price tag launched in that last 15 years and you’ll get the picture) and the results were astounding in that not one would give me a bid on any of these brands. The bottom line is, if your chosen watch doesn’t have a secondary market, it’s not a good investment.

So what are the most important criteria for choosing your next watch?

Watches are simply divided into “sport” and “dress” - but the mechanics and functions start to increase pricing. When you start adding “complications”, “power reserves” and “minute repeaters” these become another world to most, but take your time and do your research. Speak to an authorised retailer regarding the particular watch you are interested in purchasing; good retailers will give you the information you require before purchasing the watch. For example, gold watches aren’t necessarily more valuable than stainless steel equivalents over time. If you are going for gold, then choose white or rose gold; platinum is always a safe option.

Caveat emptor

Another must is only ever buy from authorised dealers or recognised pre-owned dealers such as Carr Watches or Blowers. That 1965 Rolex Daytona “Paul Newman” may look good value on eBay for £15,000 but it is better to pay the realistic amount of around £35,000 and know you have the real deal.

Fakes are a real problem and a thorn in the side of most watchmakers and these unscrupulous manufacturers are getting better and more cunning at delivering watches that even some experts take a long time to recognise as fake.

When investing in today’s watch market brands are important, Rolex is certainly the first name to slide off most people’s tongues over supper when chatting about which watch to buy.

Rolex has a strong heritage in innovation and long-term values of its most successful ranges such as the Submariner continue to remain strong. If you had purchased a stainless steel Rolex Submariner back in the seventies it would have cost you around £250, today the same variant is closer to £5,000 brand new and seventies watches are still selling for over £3,000. Since 2004, Rolex has been issuing price increases yearly, making the cost of entry more expensive each year. The Sea Dweller Deepsea is a perfect example of this: in July this year you could have purchased this watch new for £7,050. One month later saw the price rise to £8,020, a tidy profit were you to sell on the watch, which is easily done with a Rolex as their secondary market is so strong.

The acknowledged leader among Swiss watchmakers though is Patek Philippe. The company was founded in 1851 and has been responsible for some of the most important innovations in the watch sector, such as the minute repeater and perpetual calendar.

My personal favourite has always been the Nautilus, which is a timeless classic first introduced in the seventies inspired by the universal shape of a porthole found on virtually all maritime vessels. The current retail price on this watch is around £15,000 - for me money well spent.

Of the ten most expensive watches ever sold at auction, nine of the ten were Patek Philippe, and this speaks volumes not only for the brand but for its potential as an investable asset.

Starting out

If you are starting out building a new collection based on long-term growth, you can’t do much better than focusing on Rolex, Patek Philippe, IWC, Audemars Piguet, Vacheron Constantin, Omega, Jaeger-LeCoultre and Cartier. All these have strong secondary markets enabling you to cash in when the time is right.

A selection of brands that manufacture limited edition models include Vacheron Constantin, Breguet, Patek Philippe, Audemars Piguet and A Lange & Söhne. All of these seem to be winners in the current climate.

Out of the newcomers I recommend taking some weekend time out to explore FP Journe, H Moser, Greubel Forsey and Richard Mille.

If you are collecting vintage watches, there are some bargains out there, mainly through the auction houses, where you can pick up stainless steel variations of Omega from £1,500 through to Patek Philippes from £2,500. The economic downturn has had some impact on prices, but prices at the top-end have held up well. Christie’s, Sotheby’s, Antiquorum, Dreweatts and Bonham’s have regular watch and jewellery sales so there are always regular auctions to attend around the globe.

Finally, a limited edition Audemars Piguet “End of Days” Royal Oak that you could have purchased new back in 1999 for around £9,000 sold recently at auction for upwards of £50,000. Looking at this model of investing in watches versus the Aston Martin case we started with, if I’d bought six varying models of these watches and sold them today I would have made £246,000 profit, some £9,200 more than my friend - and without all the oil changes.