The state of the market – VFA’s at the Spring 2021 auctions

How it started

As I sit here reflecting on the sales of vintage Grand Seikos at this season’s major watch auctions, it’s hard to believe that The Grand Seiko Guy has been up and running now for over three and a half years.

Back in early 2017, I was made redundant from my job in Dubai, a job that involved things like this…

…and was at a bit of a loss as to what to do. It is both figuratively and – as you can see – quite literally, hard to top that.

I’d tried making something of my hobby of photographing watches (having moved on from photographing Dubai), but it turns out there’s rather more to making a living from being a photographer than simply taking what you think are pretty photos. After 6 months of precisely zero income, my wife turned to me and said “whatever you’ve been doing since you lost your job, maybe it’s time to try something different?”. Charming. Or, as Derek and Clive would succinctly put it – “harsh, but fair”.

I’d been collecting vintage Grand Seikos for a while, my interest in the brand having been piqued by Ben Clymer’s seminal Hodinkee article on vintage watch shopping in Tokyo. One of the things that had struck me was that perhaps the window of opportunity to be able to build up a decent collection of the watches was closing. In the vintage era, Grand Seikos were only (well, nearly only) ever marketed and sold in Japan.

Whilst the brand was relaunched as far back as 1988 – so far back in fact, that those early SBGS-series watches now officially qualify as “vintage” themselves – it wasn’t until 2010 that Grand Seiko established an international presence. It was clear by the time my eyes were fully opened to the brand that they were very serious about turning themselves into a highly successful and highly respected global powerhouse.

Japan has a population of around 125 million people. It doesn’t take a genius to appreciate that if a brand is going to market itself to not just the population of Japan, but potentially the population of the planet, this might have an impact on demand.

Clearly in recent years – and particularly since Grand Seiko was split off from the parent company and established as its own entity in 2017 – the brand has done a superb job of growing its sales and geographical footprint, along with garnering significant recognition and respect for their watches – both modern and vintage.

Whilst Seiko share neither top line revenue nor unit sales for Grand Seiko, we can get a sense as to just how significant this growth has been – and the market they are aiming for – by comparing production of watches cased in platinum at two points in time.

In 2007, Grand Seiko released just a single new reference in platinum – the SBGW021, priced at 4.2 million Yen.

In 2021 – and at the time of publication of this article, it is only May – Grand Seiko have released three platinum cased references – SBGD207 at 20 million Yen; SBGZ005 at 10.5 million Yen, and SLGH007 at 6 million Yen.

But it’s not the fact that prices have gone up, nor that so far this year they’ve launched three references compared to just one back in 2007. What is most significant are the quantities.

The SBGW021 was produced in an edition of just five pieces.

Across the three limited edition platinum cased references introduced in the first months of this year, there are no fewer than 205 (that is not a typo – I’ll spell it out: two hundred and five) units being manufactured.

Now I have no idea whether or not Grand Seiko actually plan to sell all those 205 units in a single year, but there’s no escaping the fact that in 2007 they introduced 21 million Yen’s worth of platinum cased new references to the market, and so far in 2021 they’ve introduced 1.665 billion Yen’s worth.

That’s worth a chart, don’t you think?

Reckon that might have an impact on the vintage market?

I’m not going to claim that back in 2016 I would have predicted this kind of growth, but as mentioned earlier, I certainly did anticipate that perhaps the window of opportunity for building up a decent collection of vintage Grand Seikos for a (relatively) modest outlay was closing. There was next to no interest in vintage Grand Seiko outside Japan back then. If just a tiny percentage of those new international customers for the modern pieces were to turn their eyes to the vintage era, it would translate into a significant increase in demand.

Within just a few short weeks of that WatchTime Middle East interview, two things happened. At BaselWorld 2017 and to great fanfare, Grand Seiko was relaunched as an independent brand (it is only now that I look back at the remarkable serendipity of the timing of my interview and the rebranding and can’t quite help but wonder whether Nitin knew what was coming around the corner); and I lost my job.

Fast forward to that fateful evening in late October 2017 when my wife suggested that maybe I wasn’t ever going to be making any money from photographing watches, and perhaps I should consider alternative ways to put food on the table, and I looked at my vintage Grand Seiko collection and pondered – maybe there’s a way to build something here?

So I drew up a spreadsheet that detailed the (then) 66 watches in the collection, how much I’d paid for them, and what I might be willing to sell them for. There is a very important distinction here to be made which holds true still to today. I have never priced watches based on what I believe they are worth on the marketplace today. I price watches, whether those from my original collection, or ones subsequently purchased, based on what it will take to buy them from me todayAnd depending on the particular watch in question – its condition, its rarity, how much I love it – that may well be a price that some people aren’t comfortable with (and “mon Dieu!”, did some people let me know how uncomfortable they were with the prices when this site launched).

I can’t for the life of me remember where I picked up the phrase from but the above ethos tends to mean that I operate on a “Wayne Gretsky” pricing basis. Mr Gretsky is of course famous for many things, but the salient one for this extended monologue is the following quote –

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

Now I’m certainly not claiming to be a great watch dealer, I’m a terrible watch dealer – I can’t even afford to own a car for goodness sake – but the indirect effect of my pricing rationale is that from the outset I have tended to price things where I see the market heading towards, not where it is today. If anyone looks at a price for a watch and thinks it’s not realistic, then the reason is because I know just how difficult it is going to be to replace that watch were I to let it go.

Over the last few years of first collecting, and latterly dealing in, vintage Grand Seiko, I have got a pretty good handle on not just the absolute rarity of every individual reference, but also crucially that leads to an understanding of the relative rarity of references to one another. Having knowledge of the entire vintage Grand Seiko range and seeing how the market has evolved over that time also provides an insight into the other important aspect of the references, and that is their desirability.

The true desirability of any reference can only be arrived at if collectors are well informed and educated about not just that single reference, but just as importantly, the position it occupies in the pantheon of the entire vintage Grand Seiko era.

I mean, sure, the 5646-7030 on its original bracelet (17mm lugs remember – bottom row, four from the right) may well be an extremely rare piece – I’ve seen more print logo dialed “Firsts” (top left) than I have 5646-7030’s on a bracelet – but let’s be frank: except to a completist, it’s not especially desirable.

And if nobody knows why the 4580-7010 (fifth row, second from the right) could well be considered one of the greatest time-only watches of the entire 20th century, there’s never going to be much of a demand for it, is there?

Right now, whilst I have a much better handle on the relative scarcity of each reference compared to when I started out to build my collection, I believe that we are still quite some way off from the broader market establishing the true desirability of many of the references from the vintage era. Whether my “Wayne Gretsky” pricing is in any way an accurate reflection of where the market is headed is of course up for debate – and I’m happy to have that debate. But I have some pretty hard objective data based on what has sold over the last three and a half years from this site, as well as seeing how prices have moved in the wider market.

And that pricing has just arguably faced it’s first “real-world” test.

When I launched this site, someone commented that “it’s not a passionate or collector’s approach. In fact the only thing that bothers me is the price, it tries clearly to make a maximum of money and sometimes asks delirious prices …”.

Well firstly, I’m certainly not going to sit here and argue whether or not I’m passionate about vintage Grand Seiko – I’ll let this site speak to that. And if the intent was to make the maximum amount of money, pricing things where you see the market headed in 1-3 years time certainly isn’t the way to do it.

And secondly?

Well, looking back at that spreadsheet that I put together prior to launching the site, there are many watches – long since sold – that stand out. But there’s one reference in particular that I want to focus on because it serves as a nice segue into the core of this article – the appearance and sale of vintage Grand Seiko VFA’s at Sotheby’s, Phillips, and Christie’s auctions in the past few weeks.

In 2017, prior to this site being a twinkle in my eye, I paid $4,000 for a Grand Seiko 6186-8000 silver dial VFA to add to my collection. When the site went live, that watch was priced “deliriously” at $12,500. It sold within 12 months.

In March this year, I sold another example of the exact same reference to a collector for $14,000.

Keep those prices in the back of your mind as you read on.

How it’s going – VFA’s at the Spring 2021 auctions

Whilst a vintage Grand Seiko VFA has appeared at auction before (more details on this later), there is no doubt in my mind that in years to come people will look back at this season’s auctions and say “that was a turning point” for the collectibility of vintage Grand Seiko.

The more cynical of people may well point to the appearance of VFA’s at three separate auctions from the three major auction houses – Sotheby’s, Phillips, and Christie’s – in the same auction season, and believe that it is all some kind of coordinated effort on behalf of Grand Seiko corporately to establish more brand credibility.

However, unless Grand Seiko managed to do this through a very well orchestrated and undercover plan via actually consigning through collectors whom they managed to swear to secrecy, I simply do not believe this to be the case. Yes, it would seem to be a remarkable coincidence, but the simple fact of the matter is that I’m extremely confident that I know where each of the four VFA’s originated. Sorry conspiracy theorists – nothing to uncover here.

Whilst I don’t have to hand the publication dates for the requisite catalogues, the order in which I came across the listings was the same order in which the auctions eventually took place. Unsurprisingly, there was a lot of chatter amongst the community regarding the appearance of vintage Grand Seikos at the major auction houses, and whilst it was tempting to write something up prior to the auctions with my perspective on the watches being offered, I felt it would be more insightful to wait until after the results were known.

The four lots provide a good spread of VFA references, with examples from both Daini and Suwa featured, covering manual wind and automatic, and time only, date, and day-date options. For anyone relatively new to the world of vintage Grand Seiko who wants to learn more about the VFA’s, I would recommend reading the article I penned for Watches by SJX that was published back in 2018.

I’ll feature the watches in the order in which they were sold, starting with Sotheby’s “Important Watches” Hong Kong auction that took place on 23rd April 2021. Throughout this next section I will be using photographs provided by the auction houses for their online catalogues. Naturally I do not own the copyright to these images, but believe that I can use them under the “Fair Use” guidelines as set out in section 107 of Title 17 (Copyright Law of the United States). Should any of the copyright owners wish any of the below images to be removed, please do not hesitate to get in touch.

Sotheby’s “Important Watches” Hong Kong – April 23rd 2021, Lot 2157

Lot 2157 of the Sotheby’s auction was a Grand Seiko 6185-8021 VFA, dating from May 1971. With an estimate of 60-80,000 HKD (US$7,725-$10,300), the watch hammered for 65,000 HKD, and with a buyer’s premium of 25%, along with an “overhead” premium of 1%, the final price of the watch to the purchaser was 81,900 HKD, or US$10,500.

One thing to point out about this watch is its case-back reference of 6185-8021. At the time of writing the article on the VFA’s linked to above, I was under the impression that the correct case-back reference for this watch was actually 6185-8020. However, having investigated more examples that have come to the market in the intervening time, it is clear that both -8020 and -8021 versions of this watch do exist.

Interestingly, this same watch was originally offered four years previously in Sotheby’s October 2017 Hong Kong auction (lot 2065), where it failed to sell against a guide price of 60-90,000 HKD.

Patina is of course a very subjective matter, and I think it fair to say that the relatively uneven patina seen on the dial of this example probably didn’t do it any favours. However, the fact that it sold (with premiums) just above the top end of the estimate this time around would certainly indicate a shift in the market.

This particular VFA reference is subjectively the least desirable of the 61GS VFA’s (and I suppose, therefore, of all VFA’s), although it is certainly one of the stealthiest. Of course, “least desirable” is very much a relative term when discussing these watches – and it is interesting to ponder on what a “clean” example might have sold for.

It is also worth mentioning that of course the Sotheby’s Hong Kong auction was the first of the season to include a VFA. Had this auction come after the next one (or indeed, had the watch been presented in it), I rather suspect it would have hammered for quite a bit more.

Phillips “The Geneva Watch Auction: XIII” – May 9th 2021, Lot 173

Presented on the second day of a two-day auction, lot 173 at Phillips in Geneva was without question the best preserved of the four VFA’s to appear at auctions this season.

Interestingly, its pre-sale estimate of CHF 7-10,000 (US$7,750 to $11,075) was broadly inline with that of Sotheby’s 6185-8021 in Hong Kong, but several people pointed out both before and after the auction that Phillips’ estimates were very conservative across the board. The watch ended up hammering for a staggering CHF 35,000, meaning that with the 26% buyer’s commission, the winning bidder paid US$48,850 for the privilege of being its new owner.

At this point you would be forgiven for scrolling back up the article to check you were recollecting things correctly. But yes – you are. This is an example of the same reference that I paid $4,000 for when adding one to my collection just four years ago, and an example of the same reference (albeit in not quite as good condition as lot 173) that I sold for $14,000 just two months ago. Delirious? Moi? Peut-être pas.

Christie’s “Rare Watches” Geneva – May 10th 2021, Lots 193 and 194

Christie’s auction featured two VFA’s in consecutive lots. Up first as lot 193, with an estimate of CHF 10-15,000 was the blue-dialed variant of the 6186-8000, and following it as lot 194 was without question the rarest of all four VFA’s presented across the three auctions, the 4580-7000 with an estimate of CHF 20-30,000.

The 6186-8000 hammered for CHF 11,000, which, with a buyer’s premium of 25%, meant the winning bidder paid US$15,230; and the 4580-7000 hammered for the same price as the 6186-8000 at Phillips – CHF 35,000 – which made it $48,450 in total for the new owner.

One thing that does need to be mentioned is that Christie’s really did come up with some nonsense in their lot notes, where they state that “total production of VFA 61 series is believed to be less than 300.” This is so far off the mark that I can only assume it is a typo, and they actually meant 3,000 units. For what it’s worth, I would estimate – and it is only an estimate – total production across all VFA references to be of the order of 5,000 units, with probably 95% of these being 61GS.

Regarding the condition of the two watches presented at Christie’s, if you follow the links above and take a good look at the photos, you will note that both watches have cases that – putting it politely – have seen better days. There are significant “dings” on the cases and bezels of both the 6186 and the 4580, with the movement of the former also looking much the worse for the 50-odd years since its production.

Whether the price achieved for the 4580-7000 was in any way impacted by its description as a possible “protoype” watch (based on it not having a case-back serial number) can only be known by those who were bidding for it. The lack of a case-back serial number is certainly an anomaly, and, this watch excepted, we don’t recall seeing another example of a vintage Grand Seiko – of any reference – missing its case-back serial number (commemorative watches such as those produced for Idemitsu and Toshiba typically have the serial number stamped on the inside of the case).

Where it’s headed

There is much to be learned from – and even more to be speculated upon – the auction results of the four VFA’s detailed above.

Firstly, let’s consider the four watches and try to glean some perspective from the prices they achieved relative to one another.

At first glance, the shock result is of course the $48,850 price achieved by Phillips for their 6186-8000. But it’s easy to overlook the fact that the 4580-7000 at Christie’s changed hands for fundamentally the same price.

From a rarity perspective, those who have an interest in vintage Grand Seiko will be aware that the 4580-7000 is significantly rarer than the 6186-8000, and typically one could expect it to achieve a much higher price for it. Certainly in the past, we have achieved prices for 4580-7000’s that are several multiples of what we have sold 6186-8000’s for.

Once you take into consideration the conditions of the two offered watches, the prices actually make – relatively – a lot more sense. What we have here is a pretty beaten-up 4580-7000 selling for the same price as a very good (although not “top”) condition 6186-8000.

Had the 6186-8000 been in our possession, then historically here at TGSG, we probably would have offered it for around $16-18,000. We also know for a fact that in the past, the 4580 at Christie’s didn’t sell when offered publicly for $25,000. It’s hard to put a price on it were we to have had it ourselves, because we simply would never have considered it, but – pre these auctions – if I had to put a price on it, I guess it would be something around the $20k mark – in other words, in the same ballpark as we would have priced the 6186.

What I’m trying to convey here is that the price achieved at Christie’s for the 4580 – in my view – actually broadly corroborates the price Phillips achieved for their 6186. If one of them is “worth” $50k, then so is the other.

Arguably, the market has undergone a fundamental shift over the course of the last few days, and – possibly – expectations need to be re-set as to just what might happen to pricing for VFA’s – and, by extension, vintage Grand Seikos more generally – in the coming weeks and months.

There is more going on here than just “the Phillips” effect, although I would not deny that there absolutely is such a thing, and I just want to talk about that “Phillips effect” for a moment.

Having sat through the majority of all three auctions, there is absolutely no question in my mind that Phillips are of a totally different class when it comes to running watch auctions. I would challenge anyone to sit through the sale of just half a dozen of the lots presented by Phillips on the Sunday, and then do the same for Christie’s the following day, and not come to the same conclusion.

Here’s how the auctioneer at Christie’s introduced lot 193.

“Lot 193… [pause] … uhhh … [pause] … [almost sotto voce] …Seiko.” It was palpable that the auctioneer considered it beneath themselves to be auctioning a mere “Seiko”.

And to be honest – we should be thankful for even that introduction, based on how many of the other lots were described by just their lot number, with not even a single other word uttered about what was being offered for sale.

By comparison, the energy generated by Phillips even in their COVID-19 regulated auction room could  be felt thousands of miles away over a broadband connection. Sadly we didn’t have Aurel Bacs auctioning the Grand Seiko (that would probably have added another 15-20% to the hammer price), but the auctioneer did a superb job of enthusiastically describing what was under the hammer, avidly engaging her colleagues on the phones, and through them undoubtedly enticing their clients on the ends of the lines to submit “just one more bid”. Anyone bidding online would have been caught up in the moment.

And the enthusiasm that is on display by people who very clearly are passionate about both their job and the products that they are selling, must surely help drive the impressive figures that Phillips achieve in general, and in particular for their first vintage Grand Seiko?

Just think about it – Phillips, in Geneva, being excited about offering a vintage Grand Seiko in their auction. It’s bloody marvelous.

Ok – enough ranting about the sales approach, back to the product.

What of the prices achieved by the other two watches – how should they be considered in context?

Well, let’s first look at the blue dial 6186-8000 that came up immediately prior to the 4580-7000 at Christie’s. Against a similarly beaten-up 4580-7000 selling for $48,450, it sold for about a 30% of that marker, at $15,230.

And once again – relative to one another, the prices do make sense based on our experience here at TGSG.

Finally, the 6185-8021 at Sotheby’s. Had the Phillips auction come first, I don’t doubt that this would have hammered for more, but we also do have to take into account that dial. $10,500 in the context of the other three VFA’s does feel a little on the low side in comparison, but perhaps only by 20-30% or so. We’re not a million miles off relatively.

So where does that leave us?

Well – it leaves me with one observation, and a couple of thoughts.

The observation is this – these auctions have clearly demonstrated that they can achieve prices for Grand Seiko VFA’s of the order of 2-3x compared to where those prices were just last week.

And my final thoughts are these –

If Christie’s can get $48K for a beaten up example of a 4580-7000, what price could Phillips potentially get for a good one – given that historically this is a reference that has traded at 3x the price of a 6186-8000 silver dial?

And what does that mean for valuations on the really interesting VFA’s – such as the 6185-8000, 6185-7000, and of course, the absolute grail, the 4580-7010?

We’ve taken the decision to remove pricing on all the VFA’s previously listed on the website whilst we think about what to do. They’re currently listed as “price on application”, but to be honest, there’s no point asking us at the moment as we have no idea what those prices are going to be.

In the mean time, our spring sale is in full swing, and everything else listed on the website is still available at 15% off the previously listed price.

 

Gerald Donovan

May 2021

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