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Artificial Scarcity Drives Limited Edition Watches – Experts

ADEDOYIN JOHNSON

Artificial scarcity drives limited edition watches industry experts say. Analysts argue that watch Maison deliberately create artificial scarcity with their limited-edition watches to drive price and value.

“People want to buy some pieces because there are not many created or in the market,” says an industry analyst who prefers to remain anonymous. “It creates artificial scarcity. Some of these watch houses do it on purpose. They know that people like the watch instead of producing the watch in mass for people to buy, they will hold it. They will make it scarce. The more they make it scarce, the more people will desire it. That is why they say sometimes they have a five-year waiting list. This is artificially created scarcity.”

Often, the wrist watches targeted for investment purposes are rare time pieces that are one of a kind. Richard Mille, Backes & Strauss, de Grisogono, Rolex, Chopard, Paiget, Patek Philippe are among the most collected brand of wristwatches in Nigeria. The demand for these brands is usually driven by the wristwatches’ condition, scarcity and complications.

Globally, Patek Phillipe tops the list of the most sought-after luxury watch. Patek is considered to be extremely top of the range. It is known as an elite watchmaker with superb quality, elegance, outstanding complications, and horological feats. A Patek timepiece is a piece of art. Famous auction house Christie’s describes Patek owners as people who know they have the very best in terms of craftsmanship, heritage and design sitting on their wrists. Reports say a fewer than one million Patek Philippe watches has been sold since it was founded

In November 2019, Patek Philippe steel Grandmaster Chimesold for $31 million, the highest price for a wristwatch in auction, at a charity sale run by Christie’s in Geneva. It beats the existing record of American actor, Paul Newman’s Daytona Rolex sold at $17.8 million. 

Record auction prices for watches have been accelerating in recent years. In 2010 the highest price was $5.7 million. Some of Patek’s model that performed well at auction in 2019 by Sotheby’s include Patek Philippe Calatrava, reference 6000 137,500 Hong Kong Dollars, Patek Philippe Ref. 1480, a pink gold wristwatch, made in 1947 for 68,750 Hong Kong Dollars, and Patek Philippe Ref. 5000g a white gold automatic wristwatch made in 1992.

At auctions, the race is always between Patek and Rolex. Until 2019, Rolex has held the crown as the most expensive watch sold at an auction. Rolex is one of the most iconic luxury watch brand names in the world, made famous by its long and storied history of innovation, exquisite craftsmanship and (associations with important figures and characters such as Winston Churchill, Steve McQueen and, James Bond. Some of the pieces sold at auctions include Rolex Gold Automatic Wristwatch With Date Circa 1967 at $7,220, GMT-Master II Stainless Steel Automatic Dual Time Wristwatch Circa 1989 for $10, 000, GMT Master II Automatic Dual Time Wristwatch Circa 1989 for $11,110 among others.

In addition to Rolex and Patek, Chopard, Paiget, Backes & Strauss, Frank Muller, Richard Mille and Urwerk top the list of luxury watches collected as alternative means of investment.

The trend which is global is now steadily catching on in the country as super rich Nigerians buy vintage and highend luxury wrist watches not just as fashion statements but as alternative investment items. The Nigerian market for vintage wistwatches is estimated at more than $1 billion but it is growing fast, according to those familiar with the industry.

In spite of this new interest, watch dealers in the African luxury market believe part of the driving force behind the performance of some watch brands at auction is a deliberate attempt to release limited editions creating artificial scarcity and eventual demand for the watches.

“Yes, Patek is the most sought-after but not all Patek are investment pieces.

There are some pieces sold by Patek that most people don’t even buy. And there are some that they make that people want to buy them, because there are not many pieces created or in the market, it creates artificial scarcity. Some of these watch houses do it on purpose. They know that people like the watch instead of producing the watch in mass for people to buy, they will hold it. They will make it scarce. The more they make it scarce, the more people will desire it. That is why they say sometimes they have a five-year waiting list. This is artificially created scarcity,” says a dealer.

However, Bolaji Adeola, a watch expert, argues that the underlying factor mostly considered by his clients is the aesthetics of the watch before they think of investment value.

“Often, clients buy what appeals to you. It is about the pleasure of owning a watch that is beautiful and of good quality. It does not really matter whether it is a big brand or small brand. The small brands are of better quality than the big brands, at times. What should be paramount is that owner of the watch is happy with the aesthetics. The watch is working well, the movement is good and the watch is beautiful. Those are the most important. Buy a watch that makes you happy. 

“The fact that a Patek is worthy of investment does not mean you will buy an ugly Patek that you can’t wear. The investment comes when you are thinking that the future is unstable. You will buy a watch that you can quickly, sell. But if you are financially table and you plan yourself well.” 

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