Investors warned to be on guard against fake luxury watches

The demand for top of the line time pieces has increased in recent years, however, this lucrative market is also attracting counterfeiters with increasingly sophisticated fakes.

DUBAI // Investors planning to spend tens of thousands of dirhams on vintage and luxury watches have been warned not to be fooled by high-quality copies of leading brands.

The demand for top-of-the-line timepieces has increased as more people regard them as an investment that consistently appreciates in value over the years.

However, this lucrative growing market is also attracting counterfeiters who hope to fool unsuspecting collectors with increasingly sophisticated fakes.

Tariq Malik, from Momentum in DIFC, which specialises in vintage watches such as Panerai and Rolex, advises clients to be on their guard when planning to splash out on a watch for their collection.

“The interest has certainly increased in the last few years as more and more people realise what a fantastic long-term investment luxury and vintage watches can be,” he said. “On the other hand, this has also made criminals raise their game and now some of the fakes I have seen have become very good indeed.”

Most fakes can be identified by subtle differences in the colour, feel or even the weight of a watch. However, these are often only noticeable to the trained eye.

The attraction of high-end watches for collectors and investors alike is that unlike many other luxury goods, after an initial drop in value they steadily increase in worth each year, said Mr Malik.

“Just like a Ferrari, as soon as you walk out of the showroom with a Rolex Submariner, for example, it has lost about 30 per cent of its value,” he said.

The watch will continue to lose value each year until it hits around half price.

“Once it reaches this point, the price plateaus and begins to regain its value steadily from then on,” said Mr Malik. “This is because the luxury-watch makers always increase the price of their products every year. This in turn means each year it will keep pace with that price. There is no upper limit to how much the watch is worth.”

Mr Malik gave the example of the Panerai PAM339 Composite. Only 1,500 were made two years ago, and it is proving extremely popular with collectors. The list price at the time was Dh55,000 but they are now valued at between Dh85,000 to Dh100,000.

The Rolex Daytona Paul Newman is a one of the most sought after watches in the world. It was made in the early 1960s and cost about Dh1,101 at the time. Depending on the condition, they can now sell for almost Dh300,000.

Some watch makers actively work to maintain the value of their products.

“Patek Phillipe will even buy watches at auction at a higher price to maintain the value of their brand and encourage collectors,” said Mr Malik.

But collectors must be careful where they buy watches. Buying online is a particular risk.

“You should only buy something you have held and seen in person, otherwise you really don’t know what you’re getting,” said Mr Malik.

The Federation of the Swiss Watch Industry said the counterfeit watch market was a multibillion dollar industry worldwide.

“Counterfeiting is a serious problem for innovative Swiss industries, and watchmaking is particularly hard hit,” the federation warns on its website.

“Economic losses resulting from counterfeiting are in the order of two billion francs in Switzerland alone. At a global level, the losses add up to several hundred billion or more.”

Much of the problem is centred in Asia.

Oliver Wulff, a German businessman, has been collecting vintage military watches for more than 25 years. He urged potential buyers to do their homework before parting with their cash.

“If something is at a cheap price, then, although you can get bargains, I would be suspicious about its authenticity,” he said.

“Your gut feeling also plays an important role and if something doesn’t feel right, then just walk away.”

And when you do find a genuine watch, to protect the investment collectors should not risk subjecting it to wear and tear.

“A watch bought for collection purposes should not be worn because that will lower the value,” said Mr Wulff.

“It should be kept in its original packaging in mint condition.”

The more complex the internal mechanism and less common the watch, the more likely it will improve in value and become a collectors item in future, he added.