Singapore pulls away as regional family office hub

Date: 14 May 2019

Bumblebee Design

The announcement in February by Singapore’s Finance Minister of a plan to extend tax exemptions for family offices, which were due to expire this year, has driven further demand from the wealthy in the region to establish more formal structures around their assets.

The extension of the scheme for funds managed by Singapore-based fund managers, and the broadening of the scope of some of the tax exemptions, has seen the growth of Singapore as a family-office hub. While it is estimated that there are only around 500 family offices in Asia, compared to thousands in Europe, advisers in Singapore say that number is growing rapidly.

“The global trend for economic substance is making families critically examine their existing arrangements,” says Valerie Wu, a partner leading the tax and private wealth practice for the law firm Pinsent Masons in Asia. “That is leading a drive towards onshore structures, which, combined with the incentive structures that Singapore has in place, is really fuelling a trend towards setting up single family offices or even moving entire structures here.”

Rich Chinese and southeast Asian clients are increasingly seeking more control of their wealth, investment diversification and sophisticated succession planning, and Wu says demand is not just coming from the region: “There are also equally European families that might already have a family office in London but now want to have a footing in Asia,” says Wu. “That may be for diversification reasons, or to make sure they can access the opportunities in this part of the world.”

The number of family offices in Singapore quadrupled between 2015 and 2017, according to the Monetary Authority of Singapore, and that trajectory looks set to continue.

Li Fei Quek, a partner and head of the private client team at the law firm Colin Ng & Partners, says: “In the last year, we have observed quite a number of high net worth and ultra high net worth individuals coming to Singapore, or already in Singapore, and looking at estate planning. Some of those clients already have something in place but want to revisit what they have, and others are fairly new to this but are now much more open to it. Sometimes a generation passes and the younger generation takes over wanting to have some form of estate planning, and other times it is the more senior family members now wanting to put arrangements in place.”

There is also a growing amount of work gravitating to Singapore from across the region. Quek says: “Because of the uncertain political outcomes in Indonesia and in India, we are seeing a little bit of a spike in the mainland Indian continentals, and foreign expat Indians in the Middle East, coming to Singapore for estate planning.”

Linda Wong is Managing Director of Kensington Trust Singapore and says she is increasingly talking to people with assets across several jurisdictions and throughout the region. She says: “The geographies that are generating work for us at the moment include Singapore, Malaysia, India and to some extent Indonesia, though that market is more inward-looking.”

She, too, is watching India closely as a growing work source: “There are quite a number of wealthy families in India who have family members outside the country and used to favour family offices in London,” says Wong. “Now, they are looking for other options, and Singapore is probably one of the jurisdictions they are considering as a better place for them to set up a family office. They are either moving family offices here from the UK or setting up second family offices.”

At the end of last year, the Hong Kong-based Raffles Family Office announced plans to open in Singapore, as the $1.5 billion multi-family office seeks to grow assets under management and target HNW families from Malaysia, Indonesia and Thailand, as well as non-resident Indians.

Quek says: “Singapore has the advantage of being a former colony and a commonwealth country, so the common law legal system and the transparency of the courts, as well as everything being conducted in English, gives us considerable help. For a while we were tussling with Hong Kong, but the reason for choosing Hong Kong over Singapore for wealth planning was always China. Now that China is getting closer and closer to Hong Kong, I see Singapore becoming more viable as the private wealth capital of the east. Singapore now has one of the highest concentrations in Asia of ultra high net worths and their families.”

With government and regulators taking active steps to further support the industry, there could be plenty more growth on the horizon.