The Asia-Pacific has slowly but surely become a dominant player in the race to become a leading hub for Family Offices. Despite less than one third of all Family Offices in the region having 10 years in operation behind them, Asia has arguably got more to offer than anywhere else in the world and its pull is becoming harder and harder for Family Offices to resist.
Being home to a number of financial playgrounds, Asia has always boasted an incredible array of professional services, trade links and a deep rooted talent pool but 2020 and 2021 have been hugely formative years for Asia’s Family Office ecosystem.
As of 2020, there were 400 Family Offices in Singapore and 2021 only built on this success. In Q1, China announced that its economy grew a record 18.3%, the highest jump in GDP since China started recording quarterly in 1992. In Q2 Forbes announced that Beijing overtook New York by hosting more billionaires than any other city and in Q3, Hong Kong rolled out a red carpet for Family Offices by legislating Limited Partnerships – a popular format for Family Offices. Within weeks, the Hong Kong Family Office Association was launched followed swiftly by the Global Asia Family Office Circle in Singapore, both of which were launched to attract more Family Offices to their respective marketplaces and both of which seem to be working extraordinarily well.
With the IMD ranking Singapore the most competitive economy in the world, INSEAD rating it first in the world for political and operational stability and the EU stating it is the fourth largest recipient of foreign domestic investment, Singapore is leading the APAC Family Office initiative but it isn’t alone. Hong Kong and Singapore are battling it out for the top spot and their respective governments are fully behind them.
As part of the new Agreus Family Offices in Asia report, I interviewed FamilyOfficeHK, the Monetary Authority of Singapore (MAS) and the Economic Development Board of Singapore (EDB) to find out why they think their ecosystem is the best for Family Offices. Here is what they had to say:
HONG KONG
A contribution by Geoffroy Dedieu of Invest HK and Family Office HK, a body of the Government of Hong Kong.
“Over the past few years, Hong Kong has increasingly attracted global Family Offices looking to set up additional offices. These satellite Family Offices as they are called, typically provide easier access to investments in Asia and serve as convenient locations for part of the office’s processes. UHNW families chose Hong Kong primarily for its closeness to China and Asia, and with its top rank for economic freedom, free flow of capital within and access into and out of the Greater Bay Area (GBA) region, it is not hard to see why. It is largely a question of a change in world outlook. I have been using an Asia-centric World map for 20 years. I often showed my students in my Family Office university course the two planisphere models, Europe-centric and Asia-centric. I asked them how they viewed the world.
“There are over 80,000 UHNW families in Greater China, 17,000 in the GBA and more than 5,000 in Hong Kong alone. Each of these families could arguably form its own Family Office. UHNW families and their officers need to embed themselves in a good location, close to assets or family members and a good ecosystem. Hong Kong provides both. The Special Administrative Region (SAR) has one of the freest economies globally with a low and simple tax system, access to capital, deals and assets as well as a complete palette of professional services.
“In 2021, the Hong Kong government identified Family Offices as a priority for InvestHK, which has created a specialised team to support the setup of Family Offices in Hong Kong. FamilyOfficeHK is a team of dedicated Family Office experts based in Hong Kong, China, and Europe, here to help families plan, set up and launch their offices in the SAR. At the same time, we have been working hard to build bridges between family offices, their stakeholders, the regulators and Government with an aim to further optimise the FO ecosystem in Hong Kong.”
SINGAPORE
A contribution by the Monetary Authority of Singapore and the Economic Development Board of Singapore
“Family Offices across the globe have allocated or have plans to increase their investments in the Asia-Pacific. Singapore, as an international financial hub and a leading wealth management centre in Asia, can play a key role in addressing the increased demand for wealth and investment management services in the Asia Pacific region.
“Our strong rule of law, stable and competitive business environment, ease of access to professional services (such as legal and accounting firms) and availability of wealth management and banking professionals, as well as the breadth and depth of investment opportunities that we offer as an international financial centre are some of the factors that Family Offices value in deciding to base themselves in Singapore. There is a mix of Asian families, and an increasing number of non-Asian families coming to Singapore to set up offices to support their investments in the region. The growing global Family Office community here provides an excellent platform for families to exchange insights and explore co-investment opportunities.
“As Single Family Offices (SFOs) do not manage third party monies, they are not required to register with or be licensed by the Monetary Authority of Singapore (MAS). In March 2019, MAS and the Singapore Economic Development Board (EDB) jointly established the Family Office Development Team (FODT) to lead and coordinate initiatives that will enhance Singapore’s position as a Family Office hub in Asia through three key thrusts:
(i) Enhancing the operating environment for Family Offices. We look to create an operating environment that is conducive to the establishment of family offices to achieve their varied objectives effectively while operating on our shores. This includes reviewing the applicable regulations, policies and incentive regimes to ensure that our offerings remain relevant to the needs of Family Offices.
(ii) Deepening the capabilities of financial and professional services professionals. We look to ensure that there is a ready pool of professionals capable of understanding and serving the multifaceted needs of Family Offices through continuous training and upskilling. In partnership with industry experts, the Institute of Banking and Finance (IBF) and MAS developed the Family Office Executive Skills Map, the Family Office Management Professional Skills Maps and the Family Office Advisor Skills Maps with the aim of enhancing the specialist skillsets of Family Office professionals and their advisors, to better serve Singapore’s growing Family Office ecosystem. These skills maps serve as a resource for training providers and financial institutions to design Family Office-related training and provide guidance to family offices on the skills and competencies which Family Office professionals should possess.
(iii) Building a strong community of Family Offices. We look to build a strong community amongst the Family Offices here to facilitate experience sharing and the exploration of co-investment opportunities. Building a strong community of Family Offices would also enable the collective deployment of resources toward meaningful causes such as philanthropy, ESG and enterprise financing, and achieve economies of scale in pursuing desirable outcomes. Hence, the Global-Asia Family Office Circle was established in October 2021 with support from MAS and EDB to foster stronger ties within the family office community and strengthen the partnership between government agencies and the community. It will be a key platform to galvanise the Family Office community towards meaningful endeavours.”
Hong Kong offers a quick fix for interested parties that consists of a simple structuring process, minimal administrative work and an absence of capital gains, value-added and wealth tax. What they lack in taxes they offer in talent with a deep-rooted talent pool, not just expert in professional services and technology but Family Office.
Hong Kong has the richest Family Office ecosystem in the whole Asia-Pacific, dating more than 15 years and boasting over 5,000 UHNW families which could all make Family Offices in their own right. With a supportive government that has been long rolling out the red carpet to Family Offices, Hong Kong has a great deal to offer to affluent families looking for a new playground to structure their wealth but, it might not be their first choice.
Singapore on the other hand is, according to 23% of Family Office Leaders seeking a second office location in Singapore and a further 24% who rank it as number one hub for Family Offices, globally. Singapore is the most competitive economy, it is first in the world for political and operational stability and its strong rule of law, stable and competitive business environment, ease of access to professional services and breadth and depth of investment opportunities on offer are just some of the reasons why it is proving to be so popular within the global Family Office community.
Singapore also offers an extraordinary lifestyle. Proven to be the safest place on earth during the pandemic as well as the cleanest and its transparency, low crime rate and high standard of living makes it extremely attractive for professionals and their families.
Ultimately, Hong Kong will always be held in high regard as being the gateway to China but Singapore is increasingly holding the key and in my opinion, it will continue to rise as a playground for Family Offices. It is a well-established country with a strategic location, stable economy, balanced political system and robust regulatory framework. It has a well-regulated financial centre, a selection of trust and corporate services providers and the simplicity of a shared language.
