The Depreciation game

Adrian Hailwood identifies the jewellery and watch pieces that will hold their value

Depreciation is one of those facts of life that we all have to accept. Most of the things we buy start to lose value from the moment we hand over the money. Over time, they often end up being virtually worthless. But there are a few asset classes that buck the trend – including jewellery and watches. Jewellery will have a commodity value that underpins its market price. This gives a minimum price that the object can fall to, based on the cost of the metal and stones. Fashion will add desirability on top of this, or not, dependent on the style, quality and era. Pieces from the top designer houses will always sell for more than comparable generic examples, but this has to be balanced against the eye-watering fall from the original purchase price. Of course if the jewellery has interesting provenance or a particularly rare stone set into it, the collectability of the piece can send the resale value rocketing up. So, if a ring has its gold-weight and diamond to fall back on, what do we make of a steel watch with no metal value that may retail for thousands? Watches are a very complex area with residual values based on brand, material, functions and age. All watch brands with a very few exceptions will depreciate immediately after purchase. There are a few such as the grand complication Patek Philippes which are in such short supply and high demand that they can immediately sold for a profit.


If you are re-selling watches into the market, the only factor that counts is popularity with buyers. Well-known, highly regarded brands will fare best, while niche pieces can be ignored, no matter how much of a saving is offered from the original retail price. This goes some way to explain the dominance of Rolex and Patek Philippe in the watch auction world. They are instantly recognisable brands that have a great track record so their residual value is buoyed by that desirability. There is a way to escape the depreciation trap, and that is to ‘buy at the bottom’. This means avoiding the issue of VAT, allowing someone else to experience the joy of first ownership and then letting the market decide the true second-hand value. To do this you need to buy at a specialist auction – specialist because you need to be sure that the items, whether jewellery or watches, are described correctly and are as they should be. If you have your eye on a popular watch brand or a piece of jewellery from a top designer you should be able to save a significant sum against the retail price. Should your tastes run to the rare vintage collectable end of the scale then there is every chance that your jewel or watch may cost you more than original buyer paid, but rest assured, if the piece is that desirable, you won’t be losing money should you want to move it on again as both the vintage jewellery and watch markets are buoyant.

Adrian Hailwood is director and watch specialist at Fellows Auctioneers