Single family offices: S’pore, HK can explore joining forces to court super rich, say experts

SINGAPORE – Singapore and Hong Kong are often seen as rivals in the high-stakes world of family offices which serve the super rich, but this can lead to missed opportunities for collaboration, experts said.

This view fails to recognise that single family offices (SFOs), or firms that manage the wealth of a single family, do not just operate in one location.

Some have offices in both Singapore and Hong Kong and other financial centres too, experts from the School of Business and Management of The Hong Kong University of Science and Technology said on July 11.

“SFOs often diversify their assets across different parts of the world, necessitating the establishment of subsidiaries or branch offices to manage their assets locally,” said Professor Winnie Peng, director at the Roger King Centre for Asian Family Business and Family Offices at the university. 

A survey conducted by the centre from August 2022 to August 2023 found that a third of the SFOs had multiple office locations and the rest, a single location. 

About half of the 160 respondents had offices in Hong Kong, while a quarter had outlets in mainland China. About 14 per cent had offices in Singapore and 11 per cent, in other regions.

The survey found that familiarity with a country and geographical proximity, along with the tax regime for investments, topped considerations in selecting a place to set up an SFO.  

Others included having an ecosystem to support a family office, as well as the ease of injection and repatriation of capital. 

Mainland Chinese SFOs often took advantage of Hong Kong’s unique position as an international financial hub, free flow of capital and low tax rates, it said. 

Proximity to China influenced many of them to choose Hong Kong over Singapore, in addition to the cross-border banking system and non-double tax agreements.

Prof Peng said Singapore plays a different role as a platform to South-east Asia, but is complementary to Hong Kong.

Hong Kong has a good mix of new and old money, while Singapore boasts diverse ethnic groups. 

“Collaboration between the two cities will provide access and enlarge the current family office circle of each city, and create more co-investment opportunities in Asia,” she said.

Art collection and investment is an area of potential collaboration, Prof Peng added. 

Hong Kong is one of the world’s top three international art markets, while Singapore has seen significant growth as a regional art hub.

Philanthropy is another area of collaboration between the two financial centres.

Hong Kong is home to some of the oldest family philanthropy and charitable foundations in Asia, while Singapore aims to establish itself as Asia’s philanthropic hub. 

“By fostering collaboration between the two influential economic powerhouses in Asia, families can significantly amplify the reach and effectiveness of their charitable efforts,” Prof Peng said.

A collaboration among the universities could also help nurture talent for family offices in Asia and attract the next generation of owners to study and work in Asia, she added.

According to Professor Roger King, a senior adviser and founding director at the centre, family offices are facing challenges due to longer lifespans of the older generation and shorter business cycles due to technological advances.

He said the younger generations are less interested in joining family businesses, preferring to start their own ventures. 

But for a family business to succeed, there must be a focus on commitment, confidence, knowledge and passion, and this is where single family offices can help to preserve the family wealth, harmony and values, he said.

The survey also showed that when it comes to charity, family offices prioritised education, and relief of human suffering, followed by medical needs. 

About two-thirds of the respondents allocated less than 10 per cent of the family wealth to philanthropy, while the rest allocated between 10 per cent and 20 per cent.

Singapore had 1,400 SFOs as at the end of 2023, while Hong Kong was estimated to have 2,700, according to a Deloitte report.