28 Asian Legal Business | October 2024 Safer haven As Singapore and Hong Kong compete to attract ultra-wealthy family offices, legal experts weigh in on their rivalry. By Sarah Wong rich with a clear organisation vision and governance structures – tend to favour allocating assets in North America. However, this trend has been gradually shifting towards Asia-Pacific in the past five years, according to a report by UBS in May. Singapore and Hong Kong have been pulling out of the stops to attract the ultra-wealthy to allocate their riches there. Both cities, armed with streamlined regulations and a robust legal sector, have rolled out preferential policies and tax relief schemes to establish themselves as the region’s top-flight family offices hubs. The Lion City, prized for its centralised governance, steady geopolitical situation and attractive taxation policies, has in recent years been tapped as the slightly more favoured destination for the super-rich to park their assets. The number of family offices there has already crossed 1,100 as of 2022, with 59 per cent of family offices in Asia choosing Singapore as their base. However, there has been signs that the speed of new family offices is slowing down. Clifford Ng, partner at Zhong Lun Law Firm in Hong Kong, thinks that’s only natural. “Those who wanted to set up there probably did so already, some of the surge was probably driven by COVID lockdowns elsewhere and Singapore keeps tightening the requirements,” says Ng. Tightening the screws Indeed, while it still has aspirations to become the financial magnet of the region, Singapore has been treading a particularly cautious line in recent months following a money laundering investigation that began last August. However, Tahirah Ara, managing partner, and Vincent Sim, managing associate at Mishcon de Reya in Singapore, point out that the increased scrutiny in family office applications preceded the probe, indicating a fundamental shift in the city-state’s approach. “Since early 2022, the Monetary Authority of Singapore (MAS) has raised the qualifying conditions for the tax incentive schemes for family offices twice and has also increased their scrutiny on new applications to ensure that proposed family offices will have genuine and sufficient substance to justify enjoying the tax incentives,” note Ara and Sim. For example, new single-family offices are now required to employ at least one non-family member as an investment professional. Also, the proposed investment professional’s background will be closely examined to make sure that they possess the necessary education or work experience in investment management or similar areas. Family Office From the U.S. to Asia, family offices are on the rise as one of the fastest generators of wealth in the world. And the number of these offices has exploded globally in recent years. According to a report in January by Forbes, citing the Economist Intelligence Unit and DBS Private Bank, the number of these privately-owned firms has exploded to more than 15,000 worldwide, holding an estimated $5.9 trillion in assets. Traditionally, family offices – which manage the fortunes of single or multiple families of the super- • Singapore and Hong Kong compete for ultra-wealthy family offices • Regulatory changes impact family office growth in both cities • Each city offers unique advantages for different types of family offices
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