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After five years of exceptional watch sales at auction houses in Hong Kong, a recent sharp downturn has coincided with resignations and job moves, leaving Sotheby’s and Christie’s without permanent department heads and Bonhams with no regional department at all.
In early 2016, the head of Sotheby’s Asian watch department, Sharon Chan, announced her resignation along with other members of her team, making the department rudderless at a time of significant difficulty in the market. New York-based Katharine Thomas is serving as acting head.
Christie’s, meanwhile, is also without a Hong Kong watch department head after Frederic Watrelot moved to the firm’s Los Angeles office to focus on building the US business.
And following the departure of Nick Biebuyck — who quit to join Christie’s as a senior specialist — Bonhams’ watch department in Hong Kong has disappeared.
The fall in auction sales preceding these moves has been precipitous. Sotheby’s sales in Hong Kong declined from HK$221.5m ($28.6m) in April 2013, a global record for the house, to HK$65.6m three years later. Christie’s most recent Asian watch sale in May grossed HK$99.3m, compared with a high of HK$186.3m in November 2012.
Auctions can be much smaller too. Bonhams’ last event had 68 lots in June and realised less than HK$5m. Typical sales a few years ago featured 120-plus lots worth nearer HK$15m.
These poorer results may in part be driven by the severe downturn in the retail market. A glut of leftover product is now being offered at significant discounts at retail outlets in Hong Kong, negating the inclination for buyers to seek out pieces in the salerooms.
Swiss watch exports to Hong Kong were down 29 per cent year-on-year to August, according to the Federation of the Swiss Watch Industry. This is part of a worldwide trend — 2.1m fewer watches were sold from January to August 2016 than the year before.
The fall in retail sales has been prompted by, among other factors, competition from smartwatches, the Chinese crackdown on bribery and a trend for Asian watch-buyers to shop abroad — especially in London, to take advantage of the post-Brexit fall in the value of sterling.
Watch specialist Charles Tearle, a Los Angeles-based consultant with watch-focused auction house Antiquorum, says collectors are now travelling from the US to Hong Kong to snap up bargains from retailers instead of auctioneers. “There is so much inventory there that supply is far exceeding demand. One client of mine recently flew to Hong Kong to buy a Breguet tourbillon and paid 20 per cent less for it than the last example sold for at auction,” says Mr Tearle.
One watch expert believes auctioneers are facing additional competition from the growing number of private collectors’ clubs. “I really think the traditional watch auction model which was previously so successful in Asia is no longer viable,” says the expert, who asked not to be named.
“Collectors are starting to trade watches privately among themselves, which enables them to avoid auctioneers’ premiums and to cut better deals. The likes of Christie’s and Sotheby’s need to change their game plan if they are to win back buyers.”
Asian auction-goers also appear to be moving towards rarer, harder-to-source vintage pieces, turning away from the contemporary watches that made up the bulk of what has lately crossed the block in Hong Kong.
Phillips is one example of an auction house thriving in Hong Kong in part because of its focus on vintage items. Having re-established its international watch sales department only two years ago after a 10-year hiatus, it now holds the number-one spot not only in Europe but also in Asia.
In May, the house staged its second Hong Kong auction, grossing HK$150.7m and setting a world record for any watch sold at auction in the region for a 1968 Patek Philippe Reference 2499 (HK$19.7m).
Auctioneer Aurel Bacs, the consultant who organises the sales in association with Phillips, believes the firm has been successful because it realised early on that the Hong Kong watch auction market could not sustain bulk sales of contemporary, widely-available pieces. “I have felt for a long time that the days of staging auctions for the sort of watches sold tax-free at airports have been numbered,” says Mr Bacs.
To that end, Phillips and Mr Bacs have put together a groundbreaking event scheduled for November 28. Hong Kong’s first-ever auction of solely vintage watches will comprise 38 lots with an overall value of around US$5m. It aims to tell the history of Rolex by featuring one example of every model made since the name was registered just over a century ago.
The other houses say they intend to rebuild their departments and change strategies. “A head of department leaving does have an impact on sourcing and I understand that people might have felt less confident in consigning [watches to auction],” says Maria Kelly, Sotheby’s international divisional director for jewellery and watches.
Sotheby’s has put together a 290-lot sale through its regional and international offices scheduled to take place on October 5 in Hong Kong. It has a presale estimate of US$4.8m-$6.9m. “If we don’t have a great sale in October then we will just have to accept that — but the [auction] market in Asia has changed, and my priority now is to rebuild the team and develop a strategy based on that,” says Ms Kelly.
“Despite less than stellar news on luxury in Asia, we see the watch market there as very much alive and well,” says John Reardon, international head of Christie’s watch department, who adds that the house will announce a new specialist in Hong Kong. He also says that “our November Hong Kong sale will include our most diverse selection of vintage watches yet.”
“We will continue to have a watch department in Hong Kong and are currently looking to recruit a team,” says Jonathan Darracott, global head of watches at Bonhams. “We did see the change coming — the market was simply being flooded with too many modern pieces.
“But the beauty of auction houses is that we can bend to the trend, and Bonhams will certainly stage another Hong Kong watch sale in the first quarter of next year.”
However, Julien Schaerer, managing director in Geneva of Antiquorum, does not see a simple switch to selling vintage pieces as a panacea.
“Vintage is growing in Asia, but it remains a very small market. Modern pieces still represent an important part of the business and I don’t think we can start to disregard that.”