Singapore is considered to be one of the leading business hubs, not only in Southeast Asia, but also in the world. The city-state’s continuing efforts to position itself in the global market generated business opportunities for startups and scaleups alike. Moreover, Singapore is seen to be an attractive location for managers from various jurisdictions, having set up or redomiciled their funds in the country.
On the other side of the world is Switzerland — considered one of the world’s leading financial centres, and for good reason. The country is known for its economic prosperity and wealth, mainly driven by its services sector, especially in banking and finance – factors that are parallel with Singapore’s status as an economic powerhouse.
To further understand Singapore’s position as a global wealth centre, we delve deeper into the affairs that push the city-state’s title deeper.
The booming business ecosystem in Singapore
Global businesses, high-net-worth individuals (HNWIs) and family offices are a common sight in the small, albeit economically flourishing country.
According to the HSBC Navigator: SEA in Focus 2022 report, Singapore as a world-class financial centre provides a platform for international businesses to set their operational goals. Of the 1,500 companies that participated in the survey, it was found that 39 per cent of those that operate in Singapore are looking to prioritise their development in the city-state over the next two years.
In addition, Singapore is also regarded as an ideal place to facilitate “new-business building” — a top three priority for 56 per cent of business leaders in Asia Pacific, while 20 per cent consider it as a primary priority, according to a McKinsey survey. This is further strengthened by the innovative and expanding efforts of the Singapore government and local organisations to support a healthy and competitive business environment – which is proven by Singapore consistently being rated in the top five countries in the world for ease of doing business. We discussed Singapore’s status as a strong investment destination for startups and funds in this blog.
Furthermore, HNWIs and family offices are continuing to be on the rise, with single family offices amounting to about 700 at the end of 2021, according to the Singapore Economic Development Board (EDB). A significant increase in wealth in Asia correspondingly led to the rise of family offices and the demand to manage such wealth. It is estimated that wealth in the Asia-Pacific region accounts for 42 per cent of total global wealth and is valued at USD 218 trillion.
Add to this is Singapore’s reputation as a safe harbour for wealthy families, its attractive tax incentives and useful networks. Obtaining the assistance of family office service providers can be easily arranged with Singapore’s abundant professional resources. In early 2019, the EDB and the Monetary Authority of Singapore (MAS) established the Family Office Development Team (FODT) tasked with enhancing Singapore’s stance as the Global Family Office Hub in Asia.
Singapore claimed as Asia’s Switzerland?
Switzerland has long been known for being a global leader in wealth management. The Swiss financial centre has always been a front runner in managing and facilitating foreign assets, which then entails housing competitive financial institutions such as banks, insurance companies and asset managers. The same could be said for Singapore.
According to the Swiss Asset Management Study 2022, Switzerland’s AUM at the end of 2021 reached a record of CHF 3.30 trillion, roughly USD 3.5 trillion. In comparison, Singapore’s standing as Asia’s Switzerland is backed by the 16 per cent year-on-year growth of its AUM in 2021 to reach USD 4 trillion. According to the latest Singapore Asset Management Survey conducted by the MAS, Singapore’s asset management industry outpaced the global asset management industry, with only about 12 per cent of growth in AUM.
Another significant component of Singapore’s claim as an ideal wealth destination is the entrance of assets from another Asian neighbor— Hong Kong.
What was initially thought to overtake Switzerland as a financial centre by 2025, investors are now looking to shift their assets from Hong Kong to Singapore. In recent months, Singapore has seen an influx of wealthy Chinese families and investors. This is considered to be a significant contributor to the boost of the city-state’s AUM as they look to move their assets through a family office structure.
On another note, Chinese nationals were seen to have acquired 425 luxury units in the city-state from over the course of just a few months in January to August 2022, with costs valued at more than USD 3.52 million. Amidst a global property downturn, purchases of these luxury properties in Singapore from Chinese investors are noted to be on a record high.
The following are other reasons that can be associated with the emergence of HNWIs and Chinese family offices in Singapore:
- Political and economic stability. Wealthy Chinese communities are looking for alternative locations to set aside their wealth amidst political and economic issues in their respective jurisdictions. For instance, the 2019 protests have significantly affected investor’s thoughts about their asset’s safety. Singapore has been an attractive choice for domiciling these assets.
- Competitive tax regime. Dubbed as a millionaire haven, Singapore’s competitive and business-friendly tax regime continues to act as a magnet for the affluent to allocate their assets and businesses in the country.
- Geographical vicinity. Singapore’s proximity to neighboring investment opportunities in Asia add to its attractiveness for wealthy families looking for additional venues to invest in.
- Abundance of wealth management services. To keep up with the supply of assets and wealth entering the country, wealth management and family office services are available at one’s disposal. With this, the successful entrance of HNWIs in the Singapore market is ensured.
What to look out for?
Moving forward, challenges in the local and foreign professional’s sentiments regarding the influx of expats are gradually rising. Concerns towards the higher cost of living are surging, especially for rents of private homes. Singapore authorities are expected to take a closer look at these sentiments to maintain stability in the city-state, which is one of the reasons why investors are entering the Singaporean market in the first place.
The shift of wealth capital in the city-state calls for the assistance of professionals knowledgeable in successfully managing the assets and wealth of individuals, families and family offices. With this, future generations can be guaranteed a sustainable administration of assets and wealth.
Bolder Group Singapore is prepared to offer bespoke family offices solutions to cater to your unique financial needs and goals. Our experience in the Singaporean market as a corporate and fund services provider can ensure to get your fund securely up and running.
Planning to enter the “Asia’s Switzerland” market? Contact our Singapore team now.