Israel’s affluence lures high-end watch brands
Israel may be a small country — with fewer people living there than London — yet its watch market is surprisingly lucrative.
Swiss watch exports to Israel increased by 4.1 per cent to SFr52.6m ($57.1m) between January and August this year compared with the same period in 2019, according to the Federation of the Swiss Watch Industry.
Meanwhile, luxury watch brands have started setting up shop there. Hublot announced its first concession in port city Haifa’s Impress watch and jewellery shop, 18 months after opening its own first boutique in Tel Aviv. Audemars Piguet, one of the world’s largest privately owned independent watchmakers, opened an AP House in Tel Aviv last month. The boutique is located in the city’s financial district, where an apartment in the 32-storey Rothschild 1 Tower can cost Shk50m ($15.6m).
“Israel is one of most interesting countries in my region [whose] market is much bigger than it looks,” says Augusto Capitanucci, Hublot’s regional director. Sales for the brand have grown by double digits year-on-year in Israel since he started his role in 2015. Figures for 2021 are now back to the same level as 2019’s sales as there was a faster bounceback in Israel after the first lockdown than in his other territories.
Reginald Brack, a US-based watch industry analyst, compares Israel’s watch market to that of St Barts, Monaco or Hong Kong. “I don’t think the size matters, as much as the concentration of wealth,” he says of the billionaires, millionaires and tech entrepreneurs who make up the Israeli clientele. “They are more frequent return purchasers than you might expect.”
Israel has one of the highest per capita ratios of billionaires in the world and a growing tech sector that is attracting overseas buyers, thereby creating a lot of “sudden” local millionaires, says diamond industry analyst, Edahn Golan.
However, Panerai’s chief executive, Jean-Marc Pontroué, believes his brand’s business with Israelis living or travelling abroad is much bigger than the business done inside the country. His daily sales figures per nationality show Israelis regularly buying in boutiques all over the world.
He adds that tax refunds make Panerai’s standardised global prices more affordable as, in Israel, imported watches are subject to a 17 per cent tax.
Worn as status symbols, watches by Rolex, Omega or Patek Philippe are among the most collectible in Israel, says Herzliya-based vintage watch dealer, Nimrod Kozik. So, too, is “everything military,” he adds — in a country where conscripts are traditionally gifted a watch before their service in the Israeli Defence Force.
Local spending has shot up to a six-figure average whereas “before it was like four digits”, says JB Jewelers’ Jonasoff, who sees increased demand for more exclusive pieces.
Location matters, with Tel Aviv being at the forefront as the luxury, fashion and business centre. “[In] Jerusalem, most of the customers are Jewish tourists [from America, Europe, Russia and elsewhere] who visit once or twice a year so they are repeat customers,” explains Jonasoff, whose boutiques are located in Tel Aviv’s luxury fashion area, Kikar Hamedina, and near the landmark King David Hotel in Jerusalem.
Haifa and Eilat are popular watch buying destinations, as well, says Jaffa-based watchmaker Itay Noy, who also lectures on watch movements at the Bezalel Academy of Arts and Design in Jerusalem. “Haifa is the capital of the north, so all the people from the north would go to Haifa and not to Tel Aviv,” says Noy. The appeal of Eilat, Israel’s southernmost city, is its exemption from the 17 per cent VAT, which makes it popular with tourists.
Analyst Brack says the interest in Israel is a natural evolution of big brands — such as Rolex, Patek Philippe and Audemars Piguet — looking to tap into watch markets that are not yet saturated, like those in the US and Europe.
“Any of these brands are constantly looking to see [where is the] white space in retail, what are we missing,” he says. “Where are some other markets that we can we go to sell?”