It has been reported that the Magpies will complete the transfer of the 25-year-old forward this week.
Former Newcastle player Watson has said that joining the Premier League outfit would be a good move for Austin.
“Newcastle is still a huge club and anybody that knows football knows there is huge potential there," the 41-year-old told talkSPORT.
"To come to a club like Newcastle and do well, as a number nine, you have got a hero status for life there."
Newcastle are pretty much an also-ran in the Premier League at the moment and narrowly avoid relegation to the Championship at the end of the recently concluded 2014-15 campaign.
However, Newcastle are one of the biggest clubs in England, and have a very strong and loyal fanbase.
Moving to the Magpies from Championship outfit QPR will be a step-up for Austin, who will also get to play in the Premier League next season.
However, Newcastle could face a battle to sign the 25-year-old former Burnley star, who was arguably the best player for Rangers in the 2014-15 season.
Meanwhile, on Sunday, The Sun reported that Merseyside outfit Liverpool are ready to make a bid for Austin.
Austin scored 18 goals and created 23 chances in 35 Premier League appearances in 2014-15, had a pass accuracy of 66% and a shot accuracy of 67%, and won 86 headers, 15 dribbles and 16 tackles.