From The Economist's 1843 Magazine, January 9:
As demand for luxury watches has rocketed, the business has become beset by skulduggery
It took just 14 minutes to cause consternation in the watch world. On November 5th 2021 the bidding opened on a vintage Omega watch at the Geneva branch of Phillips, a British auction house. Aurel Bacs, the auctioneer, had a reputation for drumming up record-breaking prices. Yet the watch, a Speedmaster Broad Arrow from 1957, had a fairly low starting price for its type—just SFr60,000 ($66,000 at the time).The watch was an early version of the model that became known as the “Moonwatch”, after Buzz Aldrin wore one during the first lunar landing. It had a coveted “tropical” brass dial, meaning that its colour had changed as it aged, from black to a rich chocolate brown. Other than that, there was little to distinguish it from the many other Speedmasters that are auctioned by Phillips each year. Nor was this watch immaculate: it had several blemishes, including a long scratch on the dial.Sacha Davidoff, a Geneva-based dealer, had a client who was interested in buying an early-series Speedmaster with a tropical dial. But Davidoff thought the watch on the auction floor was so unremarkable that he slipped out with a friend for chips and a beer. It “felt like it had been fiddled with”, he told me later: he thought the dial had been restored and that the bezel, the ring that surrounds it, was not in the same condition as the rest of the watch. These changes were not necessarily the result of malicious intent, but they did mean the watch was not of the highest calibre. “You get the feeling when you have that crusty watch that has never been opened before…when you know it’s been unmolested, untouched, perfect,” Davidoff told me. “And then there’s this type of watch, where you know it’s been through many hands before.”The Speedmaster’s starting price reflected these reservations; at the time, the record for the model at auction was almost seven times greater. Davidoff advised his client that it was not worth more than $150,000 “all in”.Davidoff’s friend live-streamed the auction on his phone while they ate. They watched in amazement as the Speedmaster’s price climbed to SFr1m ($1.25m). In the auction room, the audience burst into applause. As the price rose even higher people started to gasp. “And I’m like, ‘You’ve got to be kidding me’,” Davidoff said. “By the time I walked back, which is not that far, it was at, like, SFr2.7m.”The Speedmaster ultimately sold for SFr3.1m: more than 25 times its upper estimate. Another Speedmaster with a tropical dial in the auction, which Davidoff considered superior because it was “just a pristine, untouched example”, sold for a mere SFr101,000; three others sold for considerably less. To this day, the 1957 Speedmaster Broad Arrow remains the most expensive Omega watch ever sold at auction. “That result pretty much confused everybody. It made people suspicious,” said Davidoff. “I couldn’t believe it was real.”Watch-collecting used to be considered a dull pursuit, “synonymous to collecting stamps. You’re boring, you’re old, snooze, nobody wants to know,” said Carson Chan, a watch expert, to an audience at a talk in Hong Kong in 2024. Collectors tended to be nerdy and pedantic, finding poetry in the mechanics of micro-rotors or blue-tempered screws. “It’s ultra-precision. Things have to fit so precisely together, or they won’t work,” said Mark Hammerschmidt, a watch collector in Hong Kong, gasping as he opened up the back of a rare watch in front of me.In general, collectors didn’t swan around conferences or on the party circuit (unlike those in the more glamorous art world); instead, many quietly sought out the watches that brought them the most pleasure. “You fall in love with a Rolex Submariner because you want to be James Bond; you buy an Omega Speedmaster because you fantasise about being an astronaut,” Matt Hranek, a New York-based collector who owns both models, told me. “Really we’re addicts,” Hammerschmidt said, grinning. “Just instead of being addicted to alcohol or cigarettes or drugs, we’re addicted to the chase of acquiring a new watch.”Indeed, even the richest collectors have to “chase” brand-new luxury watches. Should someone desire, say, a stainless steel Rolex Cosmograph Daytona (retail starting price: $16,000), they must join the years-long waiting lists at official retailers. I approached several licensed Rolex dealerships to find out more about their vetting processes; none of them agreed to an interview. But many industry insiders and collectors told me that it is common for brokers to sell the most popular models only after the clientele agree to buy less desirable watches first (on its website, Rolex notes that it is “not authorised to intervene in the relationship” between these independent dealers and their customers).
In the late 2010s watch manufacturers and dealers began to embrace e-commerce, which made fine watches more accessible to a global audience. Then, when the pandemic began, the market exploded. “I have never seen such a big spike. In 2021, 2022, it was such a crazy moment,” said Chan, who is also a member of the academy of the Grand Prix d’Horlogerie de Genève (a kind of Academy Awards for watches). In 2021 total auction sales of luxury watches rose by 86%, according to an index by Everywatch, a market database. The following year they jumped by another 16%, reaching a peak of $846m. These numbers reflect an especially dramatic increase in the number of people involved in collecting secondhand watches, which now account for more than a third of the global luxury-watch market, according to a study by Deloitte in 2024.
During the pandemic the rich benefited from low interest rates and a thriving stockmarket; stuck at home, they shifted spending from travel to luxury goods. Simultaneously, the increasing value of cryptocurrencies and NFTs created a new wave of buyers who were ready to splash their cash. “It was the hype asset during covid. Nothing else went up as much as watches, except for maybe dogecoin,” said Ben Adams, head of the Asia division at Watch Collecting, an online auction platform established during the pandemic.
Many of these new enthusiasts were young and social-media savvy. Jackie Ho, a Hong Kong-based dealer, remembers “kids in their early 20s just literally rocking up and going, ‘Oh, I like this, I heard about this brand. How much is it? HK$4.5m ($600,000)? Ok, I’ll take it’… just because they saw someone posting on Instagram.”
The surge of interest in watch ownership coincided with the covid-induced suspension of watch manufacturing across Switzerland, which throttled the already-limited supply of new watches. This drove consumers towards suppliers of secondhand watches as well as so-called greymarket dealers, who buy new watches with the goal of selling them on. New digital auction platforms such as Watch Collecting and WatchBox emerged, offering easier access to coveted brands and lower buyer fees than traditional auction houses. Prices for secondhand watches soared. “It was kind of a perfect storm: you had all these cryptocurrency buyers who were big speculators…who were buying Patek Philippes from dealers or the secondary market and then a year later selling them for three times their retail value,” said Adams....
....MUCH MORE
Our last visit to 1843:
December 2025 - "The Hermès heist: how an heir to the luxury dynasty was swindled out of $15bn of shares"
