_Watches make top investment
Along with wine, watches were the top performing investment of passion in 2021 with annual growth of 16%, according to the Knight Frank Luxury Investment Index. Rolex at Auction, a new research report from our index partner Art Market Research (AMR), takes a closer look at what is making the market tick. AMR author Sebastian Duthy talks to Knight Frank.
Why focus on Rolex watches in particular?
While the brand can claim just one out of the top 10 most expensive watches ever sold at auction, the ‘Professional’ Rolex watch sector has grown in value twice as fast as any other group of watches.
What are Rolex Professional watches?
Rolex describe their professional watches as: “True tool watches designed to meet specific professional and sporting needs in the fields of diving, racing, navigating, exploring and aviation.” The original professional watches, known as references, were sold between the 1930s and 1970s, and it is these watches we track at auction.
The most well-known professional watches include the Daytona, which was made famous by Paul Newman, and the Submariner, the preferred watch of Sean Connery as James Bond. But they also include Rolex’s Explorer, GMT-Master as well as scientific watches such as the Milgauss and references with moon phase dials such as the 6062 and 8171.
An engraved Rolex Daytona Ref. 6263 owned by the actor Paul Newman. Sold by Phillips for US$5.5 million in December 2020
How has the market been performing?
The market has experienced regular intervals of impressive growth since 2000 with the latest rise being the most extreme.
What has been driving the increase in values?
Initially, rarity was the most important factor, but I think with the rise of ‘commercial properties’ - Rolex watches produced since the turn of the millennium – which collectors want in nearly new condition - have changed expectations across the secondary market. Some of these references, which were produced for a long time, have probably seen more examples survive and this gives confidence to buyers wanting to see resale figures to track values.
What watches are most in demand?
Rolex Daytona watches have been the number one choice for collectors for a very long time and remain so. Particularly ones with a ‘Paul Newman’ dial, which have a particular Art Deco style font for the numerals on the sub dials. With prices of these moving out of reach of the average collector, I can understand why previously underrated references such as the Explorer ref.1016 have grown in value quickest over the past five years.
Have collectors’ tastes changed over the years?
Yes. Once upon a time Rolex’s Prince wristwatch, beloved by doctors for its help in taking a patients pulse, was popular. The ‘Bubble Back’, which gets its name from the rounded case, was popular for being the template for a self-winding wristwatch, has not grown much in value for a long time.
Which is your favourite Rolex?
I would have an early Explorer so I look good climbing to our top floor flat.
What was the most surprising finding from your new report?
I was interested to see how some references with long production runs are particularly popular with collectors. We are all led to believe rarity is key when valuing items in the collectible world. In fact, it turns out liquidity may be a positive factor in the Rolex market (as long as the watch is in great condition). I call it the ‘Picasso Effect’ because one of the reasons Picasso works have become so valuable is that the artist’s highly prolific output inadvertently created a reliable and robust brand from his legacy.
What is the future outlook?
The auctioneers we spoke to for the report felt very positive about the market because of the sheer number of very well-researched young collectors joining the market. As we saw during the Covid-19 pandemic lockdown, the watch market remained buoyant and so appears not to correlate with many other asset classes.
This article was originally published in Knight Frank's global flagship publication, The Wealth Report 2022.