The recently tightened tax incentive criteria for family offices have made Singapore more attractive to high-net-worth individuals seeking diversification and exclusivity.
In recent years, Singapore has seen an influx of wealth from Greater China, as newly-minted millionaires and billionaires seek to spread their assets across more markets and achieve asset diversification.
The recently tightened tax incentive conditions for family offices have made Singapore more attractive to some high-net-worth individuals (HNWIs), and industry observers expect the strong inflow of funds to continue.
“The raising of the bar makes having a family office in Singapore more coveted among the newly rich. It’s something they can now boast about to their other rich friends,” said Loh Kia Meng, chief operating officer and senior partner at law firm Dentons Rodyk.
Stricter conditions include a larger fund size, higher growth targets for total assets under management (AUM), and a greater commitment to business spending.
For example, a family office applying for a fund that it directly manages and/or advises must have a fund size of at least S$10 million at the time of application and reach S$20 million within two years.
“Nobody puts all their wealth into their family office. So, if a person can set aside at least S$20 million, their net worth would be much more,” Loh added.
According to data from analytics platform Handshakes, the number of new family offices set up here has increased significantly over the past three years — from 27 in 2018 to 453 in 2021.
In particular, the proportion from Hong Kong and Macau has been rising recently. In 2019, about 30% of new family offices here were from the region. As of April this year, about 44%, or 63 out of the 143 new family offices here, were from Greater China.
Wealth Flow from Greater China to Singapore
| Year | Total New Family Offices | New Family Offices from Greater China | Proportion from Greater China (Full Year, %) | Proportion from Greater China (Jan to Apr, %) |
| 2018 | 27 | 5 | 18.5 | 25 |
| 2019 | 110 | 33 | 30 | 21.4 |
| 2020 | 203 | 76 | 37.4 | 20.8 |
| 2021 | 453 | 175 | 38.6 | 40.8 |
| 2022 (Jan to Apr) | 143 | 63 | (Blank) | 44.1 |
Source: Handshakes
Angie Han, Head of Wealth Planning for South Asia at Pictet, said the government’s tightening measures are in fact “a reflection of the fast-growing and maturing family office landscape in Singapore.”
“This has enhanced investor confidence, and they have expressed great interest in being part of this growth story,” she said.
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Push and Pull Factors
Industry insiders say Singapore is a popular destination for the wealthy due to its political, financial, and cultural stability. It operates in a similar time zone and is culturally familiar to many HNWIs.
Edwin Tan, Chief Operating Officer of asset management firm Prime Asia, said that Singapore also provides a springboard for these entrepreneurs to invest in and operate entities in other parts of Southeast Asia.
Over the past three years, Prime Asia’s total assets under management have grown by a double-digit percentage, with half of that growth coming from the Greater China region.
Strict pandemic control policies over the past three years and rising geopolitical risks may have also influenced the decisions of this newly wealthy class.
Manish Tibrewal, CEO of Maitri Asset Management, said, “After the government’s crackdown on its tech sector last year, inquiries from Greater China have increased. The proportion of wealth from Greater China flowing to Singapore’s shores has also increased significantly.”
Furthermore, cyclical stock market crashes have also unsettled this wealthy demographic. To avoid the crisis of wealth shrinkage, they hope to make more diversified investments.
Young, Rich, and Willing to Take Risks
Industry insiders say that the recent wave of HNWIs from Greater China tends to be younger with a higher risk appetite.
Leo Kwek, founder of a local property consultancy, said that some clients are also uprooting themselves to do business here.
“We see people putting their money here not just for asset management. Many of them are quite young compared to clients from other regions. Some are serial entrepreneurs. When they move to Singapore, they look for businesses they can buy and run, or they might start something from scratch,” he said.
Their interests range from traditional sectors like real estate and consumer goods to emerging industries such as digital assets and digital banking.
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