Why is The Patek Philippe Nautilus So Expensive & Is There a Nautilus Bubble?
Patek Philippe is one of the best watch manufacturers around the world — no doubts about it. And when you ask around a crowd of people interested in horology about Patek, the logical — and most common term associated with Patek is… “Nautilus”.
The Nautilus is all the current fad there is about Patek. Forget the Calatrava, the perpetual calendars, the repeaters — everything. We can make a parody of the old Sting’s album — so, people do not care about turtles: they dream about the blue Nautilus.
But if you are serious about owning one, beware.
Is The Patek Philippe Nautilus in a Bubble?
You are entering the mysterious territory known as a “bubble”.
What is a bubble? Technically, it is a term used in economic cycles — and it is an economic cycle characterized by the rapid escalation of asset prices followed by a contraction.
It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior (that is, something bordering on the irrational). When no more investors are willing to buy at the elevated price, a massive sell-off occurs, causing the bubble to deflate. Such is the definition.
The problem is that while bubbles form, no-one has really any clues about how, and more, about when the bubble deflates and prices get back to normal. And the bubble effect — that is, selling something that everyone wants at inflated prices — is the cardinal rule of luxury marketing, the one that makes it “tick”.
Enter Patek Philippe and the Nautilus. For reasons unknown to everybody, the Nautilus (and especially, its blue flavor) has become THE object of desire in horology. And this was, and still is happening, something so unexpected that even Patek Philippe’s owner has no idea why.
So, we introduce you to Mr. Thierry Stern, president of Patek Philippe, the latest heir of the Stern family, that is, the current owners of the watchmaker. He is the son of Philippe Stern, who was at the helm of the company in 1976 when Gerald Genta designed the Nautilus.
The shape of the original Nautilus, the Ref. 3700, comes from the creative inspirations of Monsieur Genta at that time — and the passion of Mr. Stern Sr. for sailing. So, the volcanic Italo-Swiss designer took the shape of a ship’s porthole and designed a watch around it.
“Why is the Nautilus so popular?” Mr. Stern asked himself rhetorically in an interview during one of the family-owned house’s promotional events. “Of course I am happy about it, but honestly I don’t know the answer.”
But the tone of Mr. Stern was not so enthusiastic about this fact, as if the current head of one of the oldest and most prominent Swiss families would show a mild irritation for a world-famous but not so respectable (and discreet) member of his own family.
And this perception was confirmed when he continued with “We make about 140 different models at Patek Philippe, and the basic Ref. 5711 in steel is just one of them. We have many other models that are more complicated, and arguably, more beautiful.”
But, just in case you were hoping for the contrary, Mr. Stern stated he did not plan to do anything to fix the current situation.
“We don’t discuss (Patek Philippe) production quantities, but clearly we don’t make enough Ref. 5711s… and it is going to stay that way.”
Mr. Stern added: “For us, this is not a race to make more money. It is a race for beauty, for the long term, and for greater choice in our collections.”
Well, frustrated buyers would hardly agree, but this is the situation.
Patek Philippe is not really needing that extra money. It already generates 1.5 billion Swiss francs in sales. And in last January, Bloomberg reported that “The New King”, as the company is known in watch speak, might be offered for sale, with analysts estimating its value from $8 billion to $10 billion. The usual suspects, that is, Swatch, Richemont, LVMH and Kering, are warned.
So, the motivations why the current situation would probably stay like this for a longish amount of time are very clear, after all — and it is quite easy to understand that the current “bubble” shows no signs of suddenly bursting. If you make a cursory search about the prices at which the Ref. 5711 and its brethren are exchanged in the second-wrist market, you discover that we are talking of prices around 200% of the original list price — which currently lies around the 29.000 CHF ($29,333) mark, give or take.
Watches generally make horrible investments, but the Nautilus is clearly the exception to the rule.
A Brief History of the Nautilus Price
Between all of the Patek Philippe production, the Nautilus is currently the most sought after line.
It is estimated that the yearly supply of Nautilus covers around 10% of the requests in its different references, which range in price from the five to the six figures bordering to seven. Which puts the company in a steady position financially, with such a “cash cow” in its lineup.
Patek Philippe, which is said by analysts to manufacture some 50,000 watches per year, through the words of its President has clearly shown no intention of widening its production runs — and instead, is cashing out from the current restricted supply of watches in another way: hiking up its list prices continuously, and sometimes, brutally.
Our research shows that Patek applies two kinds of price raises.
— The first is an annual raise, accounting to around 3–4%, which is usually applied to the whole price list.
— The second is an extraordinary price list hike on some selected models and collections. One of these has upped the prices as far as of 20% overnight, just last year in March: a move that has been criticized by some online commentators as “This ‘must have at all costs’ consumption of brands is bordering on revolting”.
But we have to note that this call for a reality check has been left unanswered by the public, which is continuing to beg to get into these “waiting lists” — which, from our latest pieces of information, are nowadays closed.
The compound effect of these price raises is awe-inspiring, given the fact that currently, the waiting list for a 5711 in any Patek Philippe boutique of the world is 7 years long, and as we said above, you cannot reserve your seat for this game anymore.
Something which makes the Nautilus an asset people speculate on, driving prices through the roof towards an insanity level.
But has it always been so? Not at all.
The current scramble for getting the Nautilus is a very late craze — that is, after 2010, well after the launching of the 5711 model.
The Nautilus 5711 and 3700: how they differ
The Ref. 5711 was introduced in 2006, and it was a restyling of the original 3700. This development focused on a few key aspects, which might seem trivial to the uninitiated, but actually, have mysteriously sparked the current craze.
The 3700 was designed by Genta in 1976 to have a two-piece case, mainly, the monobloc case and the bezel, which are screwed one into the other like a real porthole. The 5711 has a typical three case setting, as it incorporates a sapphire glass back.
The dimensions, which were very generous in 1976 with its 42 mm, and earned it the nickname “Jumbo”, became a bit bigger, with 43 mm, for the new 5711, and somewhat thicker, to allow for the introduction of the third hand and the introduction of the new movement.
The movement used originally was a version of the ultra-thin automatic Jaeger-LeCoultre Calibre 920 movement, dubbed the Calibre 28–255C. With its 3.05 mm thickness, it was a tad thinner than the current Calibre 324 S equipping the 5711 — which is, however, a more modern caliber of true Patek Philippe make, something which will please purists.
Movement aside, the last difference between the two Nautilus releases is the bracelet — and precisely, the clasp, which in the 5711 version becomes more complete, with a double folding clasp and a flip lock. Such a system looks much nicer, of course, than the old simple folding mechanism with flip lock, and much more in line with the current requirements of a typical modern luxury watch.
As you can see, some nice details, but hardly anything earth-shaking.
The retail price for the watch when introduced was around $17,500, and while the market was immediately brisk and appreciative over this new line, there was no waiting list to buy one.
So much so that in 2011, a pre-owned Ref. 5711 was traded at around $13,500.
And if we make a comparison at what we are finding now, we discover that in just eight years the evaluation of this specific model has increased a tad shy of five-fold.
What has caused this craze for a watch model which is not overly different from the old Ref. 3700?
Some things have really no logical explanation. If we make a cursory search on the internet, however, we find that this watch is currently gracing the wrist of the most important VIPs who happen to be watch lovers everywhere in the world, and the model has reached such an iconic status that if you are a serious collector you just ought to have one — and show it.
The Luxury Daily Beater
Part of this fame undoubtedly comes from the fact that — as precious as it is — the Nautilus is the epitome of the daily beater.
If you ask a typical Nautilus fan, he would tell you that a 5711 does everything they need from a watch without going beyond, and being perfectly adequate every time without looking “too much”. As such, the Nautilus is the perfect fit for almost everything, from the most mundane daily activities to a day at the office to a gala dinner, without skipping a beat.
Another 5711 fan adds: “It has the comfort of sneakers with the elegance of a tailored Savile Row suit. It still gives me the same pleasure today as on the first day.”
As far as this sounds a bit pretentious, it represents the truth. The genius of this Genta-designed timepiece was to make a luxury watch always wearable, making it a sort of more “democratic” timepiece. Remember that the Nautilus comes right after 1968 when the rules of etiquette and fashion were completely changed.
Gone were the days of the gold and crocodile leather and diamonds. The new luxury was based on a different take of stainless steel, as the same Mr. Genta had pioneered when he launched the Audemars Piguet Royal Oak, another iconic watch stemming from the same period, which he designed right before the Nautilus.
“I might sell my Audemars Piguet Royal Oak because my budget will not allow me to keep both. It is difficult to let go of this baby, but I am considering selling it for the Patek.” The man uttering this shocking statement is not a typical someone: he is Alexander Rosenbeck. That is, the 25-year old, 2.3 million followers Instagram star who is behind Daily Watch, the Instagram site he co-founded in 2013.
“I already own the Audemars Piguet Royal Oak 15202 with an ultrathin movement,” he said in an interview. “But the watch I want now is the Ref. 5711, because it is classy and sporty, and you can spot it a mile away.”
Ouch. The New King beats the Young Prince at its own Genta-designed game.
“Every month that goes by, the watch gets more expensive,” he added. “My friends think that paying so much just to see the time on your wrist is crazy.”
But examining the situation from another perspective, Mr. Rosenbeck might not be all this crazy after all. As handsome the Royal Oak might be, currently the Nautilus has become a member of another, superior, category — the objects of desire.
A Talk With a Horology Connoisseur
Ring, ring — and on the line there is a real expert calling: one of the best independent boutique watchmakers of Italy. So, we exchange some small talk about Patek Philippe and the value of its collections, especially long-term.
“We should really divide Patek into two niches,” he says. “On the first, we find the most popular pieces, like the Calatrava and the Nautilus. On the other one, there is the true Patek Philippe: and I mean, the Haute Horlogerie. Not that there is this difference in quality or make: but the public is somewhat different, especially since the list prices are.
And while we are assisting to a unique feat in the world of horology, with one line of a watch that has grown in value for 500% to 800% depending on the models in just ten years, in the other realm, the haute gamme Patek, we find watches made in tens or hundreds of units and featuring spectacular complications, which seldom see the light of the day from their resting place in the bank caveaus, but are literally worth millions.
My educated opinion is that buying a Patek — and with this, I am saying, every Patek — is going to be a very safe investment for your money, and I add, a medium to long-term investment. Pessimists preach to not fall into this spiral of false expectations, as the bubble will be bursting. Well, I have been seeing this with Rolex for ten years, and the bubble is continuing to get larger year by year, with no signs of weakening.
So, if it hasn’t deflated for Rolex, which manufactures 1 million watches that are industrially made, it won’t for sure for Patek, which makes 50.000, and are handmade for a large part of their production run. The pessimist assumption simply makes no sense.
Final Word of Advice
As things stand now, we do not see an end to this craze — until Mr. Stern, or the new eventual buyer of the company changes strategy. However, disrupting the current business model would prove itself harmful for the company and for the owners and would-be buyers.
Even if Patek Philippe suddenly changes strategy, invests heavily into production and clears some backlog of orders, the current waiting list would be shortened by one year, maybe two if you are lucky — there is always another five years to go. And it would really go against the rules of luxury marketing, which is based on restricted supply and high prices (in some cases, ridiculously so).
We have to note that despite all this Nautilus fever, the rest of Patek’s production does not enjoy the same treatment. You actually can walk in a Patek store and get out of it with a new Calatrava, which is possibly the most beautiful dress watch of the world. No problems at all — if you have a valid credit card, that is.
The problem would arise if and when you follow the flock and line up for a Nautilus.
So, as we are watch lovers and experts, our last word of advice is that, while you might be tempted to aim for a Nautilus to demonstrate something to yourself, it would be much wiser for your bank accounts to heed for Mr. Sterns call: “We make about 140 different models at Patek Philippe, and the basic Ref. 5711 in steel is just one of them. We have many other models that are more complicated, and arguably, more beautiful.”
For example, you could get a beautiful Golden Ellipse 3748, which was also designed by Gerald Genta a few years before the Nautilus. It is a brilliant, minimalistic take — despite its 18k gold case and bracelet — of the dress watch. A dark blue dial displays the baton-like hour marks, and you can see in the oblong shape of the case the creative essence that you find in the lines of the Nautilus.
Or you could resort to the Calatrava 3520D, a refined, elegantly minimalistic, and quintessentially perfect rendition of the dress watch, displaying a clean white dial with Roman numerals, mounted on an 18K yellow gold case.
And both of these beauties would come for less than five figures — which for the pleasure of having a Patek Philippe grace your wrist, is a sort of a bargain.
Or if you feel a little more adventurous, you could pamper yourself with this Jump Hour Anniversary Watch 3969, a tonneau-shape limited edition made for the 1989 Anniversary of the watchmaker in only 450 units. The hour is shown at the window on top of the watch, while the minutes are displayed using a single Breguet-style hand.
The watch is encased in an 18k case, secured at the wrist by an azure leather wristband with golden buckle.
As you can see, the possibilities are almost endless — and these timepieces exude a charm which is almost unique. So, our last question is: why lining up for years to buy something that everyone is wanting to have when you can have something which would be worn only by a selected few?
