Take time and watch your money grow

Buyers have the money if you have the right timepiece. Dawn Hayes looks at some enduring classics

There was a time when watches were designed to tell the time. But these days they offer a solid investment opportunity, not to mention serious kudos for their owners. Indeed, a passion for fine old timepieces seems to be something of a celebrity phenomenon. Henry Dent Brocklehurst, a close friend of Liz Hurley, is among the elite of vintage watch collectors with a penchant for 1970s cool. He owns a formidable array of chunky, funky vintage items, including the Rolex Submariner that Roger Moore wore in Live and Let Die.

There was a time when watches were designed to tell the time. But these days they offer a solid investment opportunity, not to mention serious kudos for their owners. Indeed, a passion for fine old timepieces seems to be something of a celebrity phenomenon. Henry Dent Brocklehurst, a close friend of Liz Hurley, is among the elite of vintage watch collectors with a penchant for 1970s cool. He owns a formidable array of chunky, funky vintage items, including the Rolex Submariner that Roger Moore wore in Live and Let Die.

Arnold Schwarzenegger, Bruce Willis and Sylvester Stallone are all big vintage watch enthusiasts. So is Formula One star Michael Schumacher. As the roll call of names suggests, it is largely a male domain, perhaps because watches tend to be the largest accessory that men wear. And let's face it, if you want to compete with your peers on material cool, it's easier to wear a watch than drive your Ferrari into a restaurant.

The vintage watch market sprung out of nowhere about 15 years ago, when interest in old-style pocket watches crashed and wristwatches took over as a collectable item. Each watchmaker has its own classics: Jaeger-LeCoultre's Reverso and Memovox models are etched into its brand name as the most famous vintage models that hold the greatest value.

Rolex's Daytona is there among the greats. And although Cartier may be known mainly as a jewellery brand, its early Tank America model is hugely sought-after. Other big names to look out for in this arena are Vacheron & Constantin, Audemars Piguet, Patek Philippe, Longines and Omega.

"I know people who went to places like India and for every £20,000 they spent on vintage watches, they made £150,000 to £200,000," says Tom Boles, director of watchguru.com and watch designer at Dunhill. Those days are gone, but the amount of profit that can be generated in this area remains impressive. Ten years ago, a 1950s Rolex Datocompax stainless-steel chronograph would trade for around £9,000. Today, it sells for up to £85,000.

"The renowned brands of old watches are still around because they were so well made," says George Somlo, founder and managing director of Somlo Antiques in Piccadilly Arcade in London. "The market in vintage watches is very steady."

Watchmaking started as far back as the 16th century in the form of pocket watches, or fobs. Towards the end of the 19th century, watchmakers started soldering wires on to pocket watches so that people could wear them on their wrists. Then the first true wristwatches started to appear around 1910.

When the quartz revolution arrived in the 1960s, the whole watch industry came to a standstill as watchmakers tried to assess the damage the new electronic medium would wreak on their trade.

Patek Philippe and others bowed to the new technology and started making quartz watches. Meanwhile, Rolex swum valiantly against the tide and continued making mechanical watches. It didn't make a quartz watch until five years after the revolution began.

Like other accessory industries, the vintage watch market is fashion-led. Watch-making in the 1970s was characterised by lairy, funky, large designs, whereas the 1980s reacted by going back to a sleeker style. In the 1990s the fad for sportswear, including accessories, took off and in the last five years chunky sports and military models have been popular, with Panerais and IWC's Ingenieurs becoming highly desirable items among the cognoscenti.

Panerai watches were made for the Italian navy, to be used while they guided torpedoes into enemy warships during the Second World War. The original models, which measure some 45mm across, were designed to strap over a wetsuit and have a huge, clear dial and a lock on the crown to counter underwater pressure. Ten years ago, they could be found lying around, unwanted, in boxes in Italy and dealers bought them for as little as £600. Now, according to Mr Boles, they can't be bought for less than £20,000.

But while there is money to be made, the uninitiated need to know their onions in this game. Knowing the difference between a genuine vintage classic watch and a fake is essential. Unscrupulous watch makers will spend £10,000 to £15,000 making a fake vintage classic, which they then sell to the unsuspecting for many multiples of that cost.

Watchmakers in India, China and Italy are particularly adept at making fakes, according to collector Wendy Meakin ( see inset). Even a restored face on a vintage model can wipe up to 70 per cent off the value of your investment. So this is no easy way to make money. If you don't know your dials from your chronographs, you need to get to know a reputable dealer.

The best ones, such as Luca Lombardi from Florence, are in Italy, where watches have always been hot. But there are good ones elsewhere, including watchguru.com in Chiswick, Somlo Antiques in Piccadilly Arcade in London and Watch Commander in Miami.

Mr Boles believes the fad for chunky watches is drawing to a close and that smaller, sleeker models are set to come into their own as fashion items. Investors may be well advised to look into the hitherto undervalued ladies' vintage market. "If you buy a diamond ladies' Rolex watch today, they're hideous and a decent one costs £12,000," says Boles. "For £2,000 you can buy a 1950s vintage diamond white-gold ladies dress watch and it's absolutely beautiful. The true beauty of watches has been lost in the last five years in terms of collectability."

Similarly, you can buy a vintage 1950s Jaeger LeCoultre watch for a third of the value of the current reproduction model, Mr Boles says. And there is plenty of earnings potential in something like the Rolex Striped Prince, the first waterproof watch, a rectangular 1930s model with chronometer movement and an automatic winder, which sells for £8,000 to £9,000 now, compared to as much as £14,000 five years ago. The difference in price comes down to fashion.

If vintage watch fashion is heading for small and sleek, investors might look out for dress watches from the big names, including Vacheron & Constantin, Patek Philippe and Jaeger LeCoultre. The latter's Reverso model is undervalued right now, says Mr Boles. He was drafted in to reposition Dunhill's watch strategy. He has designed new Dunhill models to be released onto the market at the end of the year, which he describes as a bridge between chunky, oversized watches and dress watches.

For those looking to get into the market, auction houses are a rich source of vintage watches, especially when you are dealing with the top of the range models that cost between £30,000 and £100,000. But they don't offer great value for the uninitiated because you're paying a premium at both ends of the process - a hammer price, plus commission - and auction houses make margins of 25 per cent to 30 per cent. On top of that, there's tax to pay. "There's one customer for every dealer in an auction room, so how are they going to get a good price?" says Boles. In addition, vintage watches can require extensive repair and finding a good watchmaker who is capable of replacing old parts is like trying to find a needle in a haystack, according to Mr Somlo.

Ms Meakin's advice to the uninitiated is that first and foremost you should love what you're buying. "It's like any investment, in order to make an informed decision, you need to know the history in this area," she says.

"But it's a fun thing to learn about. Make sure that the piece you buy is correct to the best of your knowledge, that the dial is clean and the watch is working well."

Mr Somlo agrees. "They have to be in pristine condition - anything that is not quite right is worth a lot less than something that is 100 per cent right."

On some of the watches she's purchased, Ms Meakin has made a 40 per cent return on her investment within as short a period as two years, although she counsels five to 10 years as a normal timeframe for investment. But the returns can be much bigger. Mr Boles' advice is to not pretend you know about vintage watches if you don't. "Unless you know about the condition watches should be in, hold your hands up and ask for a reputable dealer," he says.

You don't have to be a Hollywood star or a celebrity to make money out of vintage watches. As Ms Meakin puts it, "you can start with as little as £500 to £1,000, then you should spend as much as your circumstances will allow on a vintage watch."

The main advice from the experts is to love the piece you buy, get good advice on it, and keep an eye on fashion trends.

'If I buy a Rolex it has to be vintage'

Wendy Meakin, a 38-year-old lecturer in anthropology and art history, is one of a rare breed of female collectors, who has been investing in funky gents' vintage watches since she was in her mid-twenties.

She puts her interest down to a long family history of preserving functional things for the future. Her grandfather, an engineer, had a collection of Swiss watches, called Universal Genevas, and ran a business in agricultural machines and products.

"I never believed I would have got into it as heavily as I am now," she says. "I used to be really nervous, but not any more. It's a solid place to leave your money. I've kept my money in watches - I've never cashed in and taken the money."

Her first purchase was a Rolex Bubble Back, a 1950s model, which had a distinctive curved face. She bought it for £1,100 and sold it two years later for £1,400.

From there, Ms Meakin continued to amass a collection that has included Panerais, Audamar Piguets, Vacherons, Hamiltons, JW Bensons and pilot watches. But she decided more recently to narrow it down to vintage Rolexes.

But they've got to be vintage: "I wouldn't touch a brand new Rolex because I don't think they are such a good investment.

"Watches are great; they are functional items that serve a purpose, but you really have to love them," she says. "I wear all of mine."

STANDING THE TEST OF TIME

* The Panerai. Made in the 1940s by the Panerai family for the Italian navy, these have shot up in value.Navy personnel used to don these for sitting astride torpedoes, which they guided into enemy warships, jumping off at the last minute. The Panerai family sold the business to Richemont Group in the 1990s, too early to reap the benefits of their popularity. Dealers were able to pick them up in Italy for as little as £600 10 years ago, but since the trend for oversized, chunky vintage watches took off, they now sell for between £20,000 and £28,000.

* The Rolex Diamond Cocktail watch. This is an elegant ladies' 1950s vintage diamond watch made in 18-carat white gold. There's a lot of investment mileage in ladies' watches, because they are undervalued. It's harder to find men's watches in equivalent condition that survived the same length of time. Watchguru.com sells this model for £4,850.

* The Ingenieur SL Automatic by IWC is one of a trio of cult watches designed by Gerald Genta in the 1970s. Henry Dent Brocklehurst owns one. The others are the Royal Oak, which was made for Audemar Piguet, and the Jumbo Nautilus for Patek Philippe. Think about Magnum the TV series and any one of these would fit right in. The Ingenieur is a steel jumbo-sized 1970s anti-magnetic automatic that is considered to be very good value as an investment and still has good potential for increasing in value. It was made in very small quantities - only 582 pieces exist. It sells now for £6,850.