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Last year, international auctioneer Christie's racked up $91.2m in sales throughout the year. It was Christie's highest-ever annual sales total for fine watches - despite all the talk of recession and global economic downturn in 2010.
One man who played a key role in Christie's 2010 result was Aurel Bacs, International Co-Head of Christie's Watch Department. Last week, in his own words, Aurel kindly took us through the experience of selling a $5.7m wristwatch (the Patek Philippe Ref 1527) and also shared with us his eight tips for spotting a World Record priced watch.
This week, we bring you part two of Aurel's exclusive interview with Paul Fraser Collectibles, via telephone from Christie's Watch department's headquarters in the epicentre of fine Swiss watches, Geneva.
Aurel Bacs: 'We will see growth
Below, Aurel explains the beginnings of his passion for rare watches, why 2011 could be a great year for the watch markets, and reveals the inside story on how Christie's made $91.2m amidst global recession...
PFC: What first attracted you to the field of fine wristwatches?
Aurel Bacs: My father was an architect. It was a hobby of his, a pleasure of his. He's an engineer, he has a very technical mind. So it is probably of little surprise that he was always fascinated by engineering, by all mechanical pieces.
I remember, as a child, dismantling and repairing our electric trains at home. Learning about the beauty, the fascination, the history [and] the intriguing mechanisms of vintage watches... Especially, putting that into a context, this was the 1980s when wristwatch collecting had just started following the electronic decade.
[This was] when even many of the finest Swiss makers would abandon their traditional way of making watches, thinking that the world was now going to look for Quartz watches and electronic watches - which will obviously be more precise than a mechanical watch.
But people did not care about the five or 10 seconds that the Quartz or electronic watch would be more precise. [They] were looking for the beautiful craftsmanship, fantastic quality and traditions that a vintage or mechanical wristwatch could offer.
As a teenager, you began attending watch auctions...?
Absolutely. It was also the time of flea markets, vintage antique shows and of course in Zurich, my hometown, there were a couple of auction houses that would regularly hold watch auctions. It was a fascinating world for a teenager.
I was lucky enough that I wasn't laughed at, but [instead] was welcomed by the senior and experienced collectors and dealers who had a pleasure in sharing their knowledge and helping me to improve my knowledge.
What have been your highlights during your years in the business?
Well, I have to say there are many. Because a highlight can be a highlight in terms of simply the final result - meaning a watch that is fetching millions. But then watches of lesser value that just have a wonderful history - that have been considered lost for decades [and] that have been rediscovered - are equally highlights.
Patek Philippe Ref. 1526, sold for
And very much a highlight for me is when there is a seller or a buyer that has a very emotional or personal background that moves me - completely regardless of the importance of the items or the value. I have lived beautiful, emotional moments.
Despite economic downturn, Christie's recorded its highest sales total of $91m in 2010. How did you manage to achieve this?
Now we know it was the most successful year ever for our watch department. But the years before, 2008 and 2009, were more difficult - and were below the 2007 results, which was our then-highest year.
The main problem we had when we lost 10, 20 or 30% of our turnover was not because of people being more reserved or less secure about bidding. Our main problem was that some of the sellers, that would normally come to auctions and entrust us with the sale of one or several pieces of their collections, would not be inclined to sell.
They feared, in view of the financial uncertainties, that the market would not bid at a sufficiently high level for their beloved pieces - which I understand. That meant that we were not able to secure as many great watches as we were hoping, and were previously used to receiving; which simply meant we had less to offer to our clients.
However, what we had did extremely well. So it was a matter of a year until sellers' confidence returned. We would not only go back to the pre-crisis time, but even exceed it - and, because of a relative shortage on the market, make new World Record prices in many categories and bring the overall total to $91m.
Now, why is that? When we think of how this financial chaos started in 2008, it was because of the financial markets. Many financial products that private individuals and companies were buying as investments proved to be different than they were lead to believe.
Certain funds with '100% guarantees' and '100% returns' were not as 100% safe as they were told, or believed. Or the real estate wasn't as secure. All these things came to light. Something that Christie's understood, or learnt, was that things on paper are one thing - but reality's a different thing.
That meant collectors would say: 'Well, instead of buying a financial vehicle that I don't understand - I don't know what's behind it - I'll buy something that I understand. Whatever the world is [like] the next morning, it is what I hold in my hands.'
Suddenly tangible assets - and that could be antiques, sometimes also gold and diamonds - proved to be the 'best friends' of those who had liquidity and were looking to do something with it. So maybe thanks - or indirectly due - to the lacking appeal of the financial markets in 2008-09, I think some of the collectors were even more encouraged to bid at auction.
'I have lived beautiful, emotional moments...' Aurel Bacs presides over a Geneva auction
Overall, would you recommend collectible fine watches as an investment?
I actually would not directly encourage people to consider a watch - or any antique - as an investment as the starting point for their acquisition. It is my hope and my recommendation to first appreciate the object: to love it.
You don't need to understand it as a scholar. I'm not asking a bidder at our auctions to first take a watchmaking course and read 50 books. But appreciate the object. Say that if I spent £10,000 on a fine watch... My investment is my pleasure and my satisfaction - and the quality of life I gain by owning and eventually wearing this watch.
Having said this, those who bought them for pleasure - without the second thought of making money five years down the road - have actually turned their watches into very nice profits when they came to sell them.
This is because the watch market is steadily growing [in] double digit numbers every year. And that is because the watch has such an international appeal.
Most notably since the incredible growth of the greater Chinese market, India, Brazil, the Middle East... We see from all these parts of the world collectors pouring in, enjoying great classic vintage collectors' watches. Therefore there's a shortage of those great pieces. That makes them go up in value.
Last but not least, the watch does not have cultural, religious or other borders as maybe some other collectibles. I understand that a photograph by Helmut Newton displaying a nude is not everyone's cup of tea! But a fine mechanical watch can appeal on every continent, at any age and every cultural or religious background.
So we're possibly the largest collectors' community on the planet.
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