This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on September 5 - 11, 2016.

Independent watchmakers sought after

Handmade complications by independent watchmakers can also contribute to the price appreciation, notes Anantha.

Meylan says a watch, whether vintage or new, by an independent watchmaker could appreciate well. “First of all, buy a watch that you like or are passionate about. Even if the value depreciates in the short term, it may appreciate over the longer term, depending on its rarity. I am quite convinced that watches by independent makers [which produce 50 to 1,000 watches a year] could increase in value over the long run.

“Although our company is quite new, our watches are in demand. For example, our H. Moser & Cie Swiss Alp Watch was sold out in two days (we manufactured 50 pieces). I believe this watch will sell for a higher price in the next few years.”

A watch that is frequently cited as investment-worthy is the Rolex “Paul Newman” Daytona. But it was a failure when it was launched, says Anantha. “No one wanted to buy them. The reason it is so famous and sought-after today is because the Italian market played up the qualities of the watch, saying that it is exotic and the dials are different.

“Newman is said to have worn it in one of his movies, although no one has been able to identify the movie. But the real reason the watch is a collectible is because there are not many of them around.

Hon says, “The Paul Newman Rolex broke the record. It could fetch up to RM400,000 or RM500,000 now, depending on the generation [of watches]. That is because there is a limited supply and it is no longer in production.”

According to books on Newman and the Rolex Daytona by authors such as Samuel E Rinaldi, James Montgomery and William Messina, the watches were relatively inexpensive upon release (US$210) and that a pair was given to Newman by his wife, Joanne Woodward, when he took up motor racing in 1972.

Anantha says Patek Philippe watches, which go for millions of dollars at auctions, are usually one-of-a-kind bespoke watches. “However, it is important to find out who buys these watches. Often, it is the brand’s museum that buys them. A well-documented incident would be the Omega mania auction by Antiquorum several years ago. The prices fetched by some of the standard Omega models were unbelievable and many of them were record prices,” he adds.

“Later, it was found that a number of the watches had been purchased by Omega itself for its museum. Prior to this incident, no one except the insiders knew this was a common practice.”

Anantha says another factor that elevates the price of watches are the parts. “The Rolex Daytona movement is called the Valjoux 72 — the same movement used in Breitling and Longines watches. So, you may observe that the prices of these two brands are going up, but it is not because of the value of the brands.”

Willing buyer, willing seller

Tay Liam Khoon, general manager of Cortina Watch Malaysia, a luxury watch retailer, cautions that the sale of vintage or pre-owned watches is subjective and based on “willing buyer, willing seller”.

“Returns are based on factors such as the value of the brand, how well the watch is maintained, the current market situation and the after-sales support by the brand,” he says.

“You can buy a watch from a very reputable brand, but if the brand does not provide after-sales support or make the parts anymore, it will be very challenging when the watch needs repairs or servicing.”

Anantha stresses that owning a vintage watch does not come without challenges. “When you get a watch from the 1940s, you can expect rust, wear and tear, and moss because these watches are not made for this environment. So, what do you do? How do you repair it? You have to find a good watchmaker. And mind you, there are not many in Malaysia.”

However, Hon says vintage watches are not that difficult to care for. “You may not need a humidifier or a special room to care for them, unless it is a really high value watch. Vintage watches, thankfully, are not that fragile. All you need to do is keep it at room temperature and make sure that it is not too humid. You must also remember to have the watch serviced at the recommended intervals.”

He adds that it could be expensive to insure a vintage watch collection. “You will have to acquire the insurance yourself. If you would like to insure your collection, you must submit supporting documents to the insurer, such as appraisal documents by well-known watchmakers or auction houses. Without this, it will not even consider covering your collection. The premium will depend on the value of your watches. This, of course, will not be cheap.”

Anantha says it is vital to know enough about vintage watches before investing in them. “I can’t stress enough that you need to know about the watches thoroughly. Having a wealth of experience in this game is also important. Otherwise, you will lose your pants as there is plenty of inaccurate information on the internet and, unfortunately, many aspiring buyers believe it. It is important to talk to other more experienced watch collectors or dealers and expose yourself to as many types of watches as possible, vintage or not.”

Buying vintage watches online may be more convenient, but the risks are higher, says Hon. “Nowadays, you can buy anything off the internet. But a disadvantage is that you may get cheated. So, unless you know your watches or the trustworthiness of the sellers, you will be putting yourself at risk.”

Anantha recommends collectorstime.com as one of the reputable sites to peruse and buy vintage watches. “I had positive dealings with them in the past. I find them to be reasonable [in terms of pricing and services]. They assisted me as well when I needed to sell a watch,” he says.

Hon stresses that luxury or vintage watches should not be considered investment-worthy unless they are rare or collectible items. He says although you can make some money flipping vintage watches, buying one purely for investment is unwise.

“Vintage watches have a certain value cap; you cannot expect to buy them at a low price and sell them at a high price. There is a tendency among Malaysians to call an expensive purchase an ‘investment’. My opinion is that we should not buy a vintage watch for the sake of the returns you expect from it. Buy it because you love it and its history.”

As Meylan says, “People wear watches [especially luxury watches] for status, prestige, because they love beautiful things and because they appreciate the skill and craftsmanship that goes into each piece.”

Anantha concurs. “I find buying watches for investment an arguable proposition. Watches are a hobby, an interest. And if you are lucky, you may break even or make a bit of money,” he says.

“For example, an acquaintance of mine bought a Richard Mille tourbillon for RM1.2 million. When times were bad and he needed quick money, he only managed to sell it for RM450,000 as it was the best offer. So, how is this an investment?”

Frank Hon’s list of new watches with potential investment value (for beginners)

1. Tudor Black Bay
Reason: Reasonably priced, long history of the brand

2. Omega Seamaster
Reason: Long history of the brand

3. Jaeger-leCoultre Memovox
Reason: Discontinued model

Breitling, Zenith and Longines are also good starter brands as they are affordable and their movements are of good quality.

Blue-chip watch brands

STARTING A VINTAGE WATCH COLLECTION

Frank Hon and Anantha Krishnan provide some pointers on how to start a vintage watch collection.

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