03 May 2024
“My dad used to buy Rolex watches for scrap”
5 minutes
Third generation family jeweller Ash Dunga, Director of Prestige Valuations, shares his expert view of the ever-changing luxury watch market.
When I was a lad, my dad used to buy 36mm Rolex watches for scrap. He would take off the back, pop out the mechanism and put it in a big box, pop out the glass and put it in another box – before melting the bracelets!
Can you imagine that now?
He would then phone a jeweller in London and say, “I've got a box of 100 Rolex components” and the jeweller would always buy them. This was more than 25 years ago when dad bought the watches for about £800-£1,000 each. He probably broke up more than 300 of these watches and I often wonder what their value would be now if he had held on to them.
The watch market has changed over the last 25 years, particularly two years ago, when the market went crazy with thousands of people chasing the few Rolex watches that had been produced.
Prices went sky high, even for entry-level models, and we saw more and more ‘flipping’ – that is when local authorised dealers of the most coveted luxury watch brands would sell the timepieces to their regular clients who would then sell them on the grey (secondary) market for double the price or more.
The luxury watchmakers then began to re-scrutinise their supply. For instance, to make sure a buyer is not ‘a flipper’, Patek Philippe ensures authorised dealers introduce a new client to Patek and supply their credentials. Patek decides whether they are eligible to own one of its watches so, in other words, Patek chooses its customers and not the other way around.
If Patek says ‘yes’, the customer can buy the entry level watch and slowly climb their way to the most sought-after watch range. The entry watch could be a Calatrava, the very essence of a round-faced wristwatch, but it’s not a model everyone wants to wear so if they are sold on the next day, it can be below retail price.
Another way to stop ‘flipping’ has been to hold back documents that come with a watch. If, for instance, you had been granted permission to buy a Patek Philippe, the certificate could take up to a year to be sent. Without that certificate, a watch loses 20 to 25 percent of its re-sale value.
If, say, a customer has moved up to a £20,950 Aquanaut stainless steel watch, the investment becomes much more significant; about two years ago we valued such a watch for £80,000 as it was one of the styles that jumped in price because it was so sought after.
Watchmakers such as Patek Philippe, Rolex, Audemars Piguet and Vacheron Constantin are long-term players so although the market has calmed, their businesses remain strong. Demand continues to outpace supply, with client registration lists extending and average selling prices growing.
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(Image: The sought-after Rolex GMT Master II) |
(Image: The Audermars Piguet Royal Oak Offshore) |
Of course, all of this means that Prestige Valuations has to be completely on top of the market since our primary business is insurance claims with watches and jewellery. We are trusted valuers for high-net worth brokers and underwriters such as Chubb and Hiscox.
The brokers have a duty of care to ensure their clients are correctly covered and they need to charge the right premiums. This way, if there's a claim, they can indemnify it correctly and quickly.
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A while back, people were not keen on getting valuations because they had reservations about leaving their fine watches with a jeweller – and they were often being charged a percentage of the value of their items. This left clients in the dark about how large the invoice could be. Some jewellers were overvaluing items because those fees were on a percentage basis, so we simplified the process by charging a straightforward hourly fee when visiting clients at their home, business or vault centre. We also offer online valuations for watches that have supporting documentation and/or certificates. At the moment, everyone's holding onto their timepieces and it’s rarer that you get a ‘flipper’ because people are waiting to see what certain watch houses will do. However, we still continue to value watches based on the current market. For instance, rumours can be a very powerful thing. Just a whisper that a watch is going to be discontinued can send the market into a whirlwind with people suddenly wanting that model. That’s just how frantic the watch market can be – rather like the stock market. A perfect example is the flagship stainless steel Patek Philippe Nautilus 5711 with the standard blue dial. A rumour that it might be discontinued meant the watch, which retailed at £22,000, jumped to £55,000 on the grey market. When the rumour was confirmed by Patek Philippe the price leapt to more than £100,000. During and just after the pandemic that was the way of things with the most sought-after luxury watches, but now in 2024 the numbers have come down and prices climb at a realistic level. |
The importance of maintaining your watch
A watch is very much like a car. It’s advisable that after the first three or five years (depending on the standard warranty), that you send it in for its initial first service. Dust can get into the movement, drying out the oil that then turns into a paste and this is the catalyst to wearing down components that should usually last a lifetime.
Use an authorised dealer so there is no risk that the components might be changed, leaving you with a ‘Frankenstein’. A recent example of this was when a watch brought in for appraisal had a copy strap in place of the original 14-carat strap – and that was not a pleasant situation when having to let the client know.
About Prestige Valuations
Prestige Valuations is a leading independent watch and jewellery valuation specialist with more than 35 years’ experience in valuations and post-loss assessments. Valuations for insurance purposes consist of a full description of the watch including style, metals used, model number and identification number. The watch is photographed along with accompanying documentation so, in the unfortunate event of a theft, there are copies of all the important information.
When watches are appraised the client will find out the current replacement value so, if a watch is lost, damaged or stolen, the insurance claim will be quick and straightforward.
We keep a close eye on all leading watch brands and ensure that our clients are advised on any significant price movement.
Visit prestigevaluations.com
Watch Insurance
As brokers, we want to make sure that our clients are aware of the rising trend in watch thefts, so they can take necessary precautions. You can read more about this in our article: Keeping watch for the watch thieves. However, how can we best advise our clients on being more cautious without taking away the joy of owning and wearing a watch? One way is to ensure they have the right level of insurance cover. Although money from an insurance payout can’t fully compensate for the theft of a valuable watch – especially if it’s a family heirloom – having the right insurance cover in place will at least help with the financial loss.
When it comes to more expensive valuables, such as a luxury watch, a standard home insurance policy is unlikely to be suitable. Typically, there are low single article limits on jewellery and watches, so if the worst happens and a watch is stolen, in the event of a claim you may not be fully covered unless the item is specified. And many standard insurers won’t cover more than £20,000 of jewellery and watches in total. As a specialist broker we can help find policies with fewer restrictions and higher single article limits. Some of the insurers we work with will give a 25 even 50 per cent uplift for three years following a valuation, to protect policyholders from rising values.
To talk to us about your watch insurance please call 020 8256 4901 or email privateclients@howdeninsurance.co.uk