Collecting December 1, 2009, 3:09PM EST

The Day That Changed Watch Collecting

(page 2 of 2)

Story Tools

However, the auction market for vintage mechanical timepieces has held fairly strong. Aurel Bacs, the co-head of the Geneva watch department for auctioneer Christie's International, says that initially there was a fear that the financial crisis would force a number of collectors to sell off, driving prices down in the auction market. "The opposite happened," he says. "There is greater demand than supply." When brokerage Lehman Brothers collapsed, many clients thought presale auction estimates would drop. Instead, Bacs says, top quality pieces maintained their prices or went up, while those of poorer quality fell.

As the stock market now makes a comeback, despite continued economic woes, auction sales are racking up some impressive numbers. Last month, the auction house Antiquorum sold a yellow gold Patek Philippe Calibre 89 pocket watch in Geneva for more than $5 million. In 1989, Patek Philippe created a limited set of four Calibre 89s in platinum, yellow, pink, and white gold to commemorate the house's 150th anniversary. Aided by computer technology, Patek Philippe was able to create the piece with 33 complications, breaking its own 56-year record—and surpassing the legendary Supercomplication.

Indeed, at the close of this fall's auction season, important houses such as Sotheby's and Christie's reported strong sales. In November, Christie's "Important Watches Sale" in Geneva brought in $18.9 million—twice its presale low estimate with a sell-through of 94% of its lots. That same month, Sotheby's reported that its sale of two collections of pocket watches and watches that included pieces by Patek Philippe, Rolex, and Vacheron & Constantin (CFR.F), "soared over estimate." The sale brought in more than $5 million, with 80.9% of the lots sold. "You'd never know there was a recession in terms of the watch world," says Sotheby's Schnipper.

Patek Philippe Leads at Auctions

One rationale for the spike is the shift from the stock market to hard assets, with vintage watches being viewed as having durable value. Of course, among collectors watches have another unique value proposition. "The watch market is comparable to the stock market, but you don't buy stock because you are passionate about it," says Christie's Bacs. "You buy it as an investment to do well financially. You buy a watch because you like it. When it is less valuable, then you are just less inclined to sell it unless you have to."

Through the years, Patek Philippe pieces have commanded the highest prices at auction, and that remains the case in the current economic climate. Last month in Geneva, Christie's sold a collection of 10 vintage Patek Philippe wristwatches dating from 1938 to 1982 and totaling $5.7 million—twice the amount of their presale estimate.

The only privately held, family-owned Swiss watchmaker in Geneva, Patek Philippe limits its production to just 40,000 pieces a year. It has earned its reputation for impeccable quality and for making innovative and complicated watches with timeless designs, built to remain fashionable for 110 years. As the firm's famous ad campaign states: "You don't own a Patek Philippe, you take care of it for generations."

According to Larry Pettinelli, the president of Patek Philippe USA, recessions often separate the new luxury from the old. "I've been through three downturns in 21 years," he says. "Today 'luxury item' is too broad a term. We tend to do best in downturns. Patek customers are discerning; these are not impulse buys."

Says Pettinelli: "The auction price is the unbiased market price. We have no control over that. What has always held up is our value and [the auctions] help validate new sales."

If this past auction season is any indication, vintage watches will remain highly prized. Says Bacs: "Our worst enemy is when someone is no longer interested and people say they no longer desire watches."

Check out our slide show for a look at the watches and clocks that have commanded the highest prices at auction during the past decade.

Perman is a former staff writer for BusinessWeek in New York who is currently writing a book about the watch collections of Henry Graves Jr. and James Ward Packard and the shaping of wealth, status, and culture in America.