Singapore Attracts China’s Nouveau Riche
SINGAPORE – Rich people from Greater China have made a beeline to Singapore in recent years, as newly minted millionaires and billionaires seek to diversify their holdings and spread their assets across more markets, reported The Business Times on Monday (23 May, SGT).
A recent tightening of conditions for family offices to be eligible for tax incentives has also made the city-state more enticing to some high net worth individuals (HNWIs), and industry experts anticipate continued strong inflows.
“The raised bar makes having a family office in Singapore even more coveted among the newly rich. It is something that they can now boast of to their other rich friends,” said Loh Kia Meng, COO and Senior Partner at Dentons Rodyk, a law firm that assists the wealthy in setting up family offices here.
Based on data from analytics platform Handshakes, the number of new family offices setting up a presence in Singapore rose sharply from just 27 in 2018 to 453 in 2021.
In particular, the proportion of family offices originating from China, Hong Kong, and Macau has been increasing recently. In 2019, roughly 30 percent of the new family offices here originated from that region. As of April 2022, around 44 percent or 63 out of 143 new FOs here were from Greater China.
Industry professionals shared that Singapore is an attractive destination for wealthy individuals thanks to its political, financial, and cultural stability. The city-state also has a similar time zone, and is culturally familiar to many of these HNWIs.
Singapore is also viewed as the gateway for these wealthy individuals to invest in and do business with companies from the rest of Southeast Asia, noted Edwin Tan, CEO at asset management firm Prime Asia.
Notably, Prime Asia’s assets under management (AUM) have climbed by a double-digit percentage in the last three years, with half the growth originating from the Greater China region.
Some market watchers also shared that the prolonged COVID lockdowns in China and the situation in Hong Kong have also spurred these capital movements.
Maitri Asset Management’s CEO Manish Tibrewal said enquiries from Greater China have grown after the government’s crackdown on the tech sector in 2021. The proportion of Greater China-originated wealth being brought onto Singapore’s shores has likewise increased “in a meaningful way”.
“The steep sell-off in Chinese equities and bonds has led to a harsh realisation, among families in that region, that they are heavily exposed to local markets, prompting their desire to diversify in order to preserve their wealth,” he added.
Furthermore, Prime Asia’s Tan disclosed that some customers are uprooting themselves from the Greater China region to do business in Singapore.
“We are seeing people put money here not just for asset management. Many of them are pretty young (compared with) clients from other jurisdictions. Some are serial entrepreneurs. When they move to Singapore, they look for businesses that they can buy and run, or they may start something from scratch,” he said.
The interests of these wealthy people range from traditional industries like property and consumer goods to newer sectors such as digital banking and digital assets, he added.