ASIA: Family offices adopting ‘dual hub’ approach to manage Asian wealth

Singapore and Hong Kong have emerged as the top hubs to manage intergenerational wealth for Asian family offices, but both jurisdictions face major challenges.
Wealthy Chinese and Indian families are increasingly spreading their wealth across the region’s best-known financial hubs — Hong Kong and Singapore — in order to diversify risk and access a wider range of services.

Ultra-high net worth (UHNW) and high net worth (HNW) families in the Asia-Pacific region are projected to undergo an intergenerational wealth transfer of $5.8tn between 2023 and 2030, according to McKinsey analysis. UHNW families are expected to account for close to 60 per cent of this transfer.

In response, many are establishing family offices to navigate the process. The number of single-family offices in Hong Kong and Singapore — Asia-Pacific’s leading hubs for such entities — has surged, increasing fourfold since 2020 to around 4,000 across both jurisdictions.

While there has been a long-standing battle between the two for Chinese wealth in particular, more families are now spreading the wealth between different jurisdictions, say the region’s bankers.

“Some families may have family offices in both locations, each catering to different needs and purposes. Each family is unique, and their needs are diverse,” says Mike Tan, Singapore-based global head of wealth planning and family advisory at Standard Chartered.

In Singapore, many family offices formally apply for tax exemptions. “Currently, the application and approval process for these incentives is well clarified and transparent. In our view, this process lends credibility to family offices by verifying their backgrounds, source of wealth and robustness of their structure,” explains Mr Tan.

“Currently, the application and approval process for Singapore’s tax exemptions incentives is well clarified and transparent,” says Mike Tan from Standard Chartered
Hard-won reputation
Some family offices believe this process ensures only the most reputable and compliant entities are established in Singapore, maintaining the country’s reputation as a well-governed and regulated jurisdiction for to manage family affairs and investments professionally.

Hong Kong, in contrast, allows family offices to seek tax and legal advice to ensure they meet conditions outlined in the Family Office Tax Concessions Ordinance. “Pre-approval or application to qualify under these new conditions are not required, as family offices can self-declare once they confirm they satisfy the conditions,” says Mr Tan.

Together with the Capital Investment Entrant Scheme and other immigration channels, these developments provide a “very accessible” and “convenient” platform for families to choose Hong Kong as a base for family offices, while benefiting from the hub’s position as “gateway” to the Greater China region.

Both centres have registered growth from Indian families establishing bases. According to DBS’s Global Indian Family Offices: Evolution of the Indian Diaspora report, 6,500 HNW Indians left India in 2023 for new opportunities in regional financial centres, including Dubai, Singapore and Hong Kong.

Attracting families to set up in a location requires more than just a tax scheme, says Edith Ang, head of family advisory, Asia-Pacific, at HSBC Global Private Banking. “It is critical for jurisdictions to provide a healthy ecosystem that attracts like-minded families. This includes stable regulations, access to capital markets, new investment opportunities, a robust network of advisers, and a pool of experienced talent to run their offices,” she says. “Lifestyle factors for family members and core staff are equally important,” she adds.

In both Hong Kong and Singapore, family vehicles managed by a single family office are offered “clear” and “distinct” approaches to capital and income treatment. Ms Ang says this provides tax clarity for single-family offices, but “more importantly, it signals to families that they are welcome sources of wealth in their respective economies”.

There are operational differences in how each jurisdiction oversees family offices, she acknowledges. For example, in Hong Kong, the process is by election, meaning families set up and operate for a year before applying for tax concessions. In Singapore, the process is by application, requiring approval before trading begins.

“Some of the larger UHNW families are opting for dual setups, leveraging the strengths of each city based on their business footprints, diversification goals and personal preferences,” says Ms Ang.

The choice of location often reflects the family’s core business geography, she says, with risk diversification planning and generational goals typically valued more than short-term geopolitical factors. While geopolitical dynamics, including China’s influence, are important, families tend to prioritise factors tied to broader long-term objectives.

Singapore and Hong Kong
In 2024, Hong Kong ranked among the world’s top four IPO venues, raising $83bn from 66 new listings.
Follow the leaders
A significant portion of younger family members are taking on leadership roles in the Asia-Pacific region, according to Deloitte’s Family Office Insights Series. For instance, 38 per cent are expected to assume the role of chief executive, 36 per cent as board members and 30 per cent as managers or executives.

Hong Kong and Singapore have unique geographic strengths and talent bases, says Roger Stutz, head of wealth planning at Julius Baer. “Hong Kong excels in capital markets transactions, while Singapore is renowned for its wealth management expertise.”

In 2024, Hong Kong ranked among the world’s top four IPO venues, raising $83bn from 66 new listings. At the same time, the Wealth Management Institute in Singapore introduced the Dalio Market Principles Program in Strategic Investing for Family Offices, reflecting the city’s commitment to enhancing wealth management education.

Julius Baer does not see a choice between Hong Kong and Singapore but rather an “opportunity” to tap into the strengths of both to profit from “regional growth opportunities”, says Mr Stutz, with “strategic presence” in both cities. “This dual-hub approach keeps us ahead in a rapidly changing landscape, he says, with the hubs continuing to “attract a substantial portion of family wealth from across Asia and globally”.

But practitioners believe both Singapore and Hong Kong should not rest on their laurels and must sharpen up their act, to support family office growth. While the depth of financial markets and their ability to synchronise with larger global players, plus quality of tax, regulatory and compliance network is key to support growth of family offices, other softer factors may be of greater importance.

The way which rival centres nurture their staff will be crucial for their growth over the next three to five years, believes Ms Ang at HSBC.

“Wealth centres around the world need to foster the growth of multi-disciplinary talent pools familiar not just with traditional services — such as investment management, structuring, legal and tax advice — but also with family governance dynamics and philanthropy,” she notes. She points to initiatives including the Hong Kong Academy for Wealth Legacy and Singapore’s Wealth Management Institute as positive steps in fostering the necessary expertise.

“The talent pool within family offices, the diversity of financial and professional services support, and the degree of rootedness of the family office ecosystem to the local economies will determine which location stands out as the key hub for family offices,” concludes Mr Tan at Standard Chartered.