Temp check - a look at the watch market in 2024 with Paul Boutros
We like to do a temperature check on the state of the watch market at the beginning and around the halfway point of every year. Especially due to the opaque and slow nature of the watch industry, that six-month cadence allows for some shifts to be more easily observed.
It’s frankly not always easy to know what is happening in the watch industry. Auctions provide a snapshot of the market in a moment of time. There’s some value in tracking asking prices online, but that doesn’t always equate to final sale prices. There are more financial institution reports on the market and tools to track historical asking price movements than ever before, for sure. Generally, in this very old-school industry though, the best gauge of the market is the old-school way – conversations with professionals.
We were fortunate to speak with Paul Boutros, a friend of Esperluxe and Deputy Chairman and Head of Watches, Americas at Phillips, about how he reads the current pulse of the market. Paul started first as a collector, then as a watchwriter, and now leads one of the premier auction houses in the industry in the Americas. Our half-hour chat wandered through a whole range of watch market topics – here are the top three takeaways.
Speculators come, speculators go
“We certainly saw a large increase in ‘investors’ at Phillip, and we’re seeing a lot less of that type of speculation now,” mentioned Paul. From 2020-2022, there were plenty of luxury watches that significantly outperformed basically every other category of asset. That created a cycle – the more money flooded into the market, the more prices continued to rise. It was a virtuous cycle to some, a vicious cycle for others. This wave, as Paul mentioned, was observed primarily through the massive number of new registrations for online bidding. At the moment prices were highest, so was the interest in auctions.
Ultimately, this circumstance was one that could never last forever. Speculators encounter the classic gambler’s dilemma – hold and hope for a turnaround in prices or avoid further losses and sell.
To be clear, this is an issue that impacts big brands more than independents. There simply aren’t that many independent watches available at any point in time. For indies, prices did jump for some, but certainly not for all. There were plenty of spectacular timepieces from both new and established brands that arrived at “lower” price points, like Felipe Pikullik or Kudoke.
There’s always a strong market for the best stuff
Auctions are a microcosm of the market, but every microcosm isn’t always representative of the whole. Sometimes prices can be much higher than anticipated at auction because two bidders enter into a costly war to own something rare. Specifically with Phillips, each auction’s catalog aims to curate only the best of the best. “We want our auctions to be events, and that means every watch should be an event,” said Paul when we discussed the link between auctions and the general market.
There’s always a strong market for the best and most rare timepieces. Even if prices sag for a period, there’s always value in the truly collectible items. Paul sees this at Phillips, and we see this with our curation of exceptional independent timepieces. The ups and downs of the market may impact prices, but the demand for this category of timepieces stays strong. There’s always someone that is eager to add timepieces from Urwerk or MB&F or De Bethune (to name only a few) to the collection – that remains as true now as it did before and throughout the 2020-2022!
Prices dropping isn’t the end times
While Paul mentioned the exodus of speculators occurring now, he also added that “there’s a lot more people passionate about watches than ever before.” This is really important when considering a market downturn. Market downturns do not hit everyone equally. Speculators and dealers, they experience the brunt of it in often not-so-pleasant ways. For many collectors though, this is the long-awaited opportunity to purchase timepieces that were either previously out of reach or perceived as mispriced way too high. The great irony of a market downturn is that it will probably only improve the spirits of collectors and enthusiasts.
Lower prices, in the short- or long-term, is almost certain to usher in a new wave of collectors as well. Paul’s reference to more collectors and enthusiasts than ever before, that’s unlikely to be hamstrung by a sagging market and in the long run, the growth of the watch community will positively impact the growth of the watch market as a whole. The momentary ebb and flow of the market is very far from the end times.
Big shout out and thank you to Paul Boutros for the chat and all the insights on the watch market.