Family Offices in Singapore: The Advantages, Challenges and Impact on the Property Market

Family offices are private wealth management organizations that provide comprehensive financial and administrative services to wealthy families. These services are designed to preserve and grow the family’s wealth over multiple generations and are tailored to meet the unique needs of each family.

The number of super-rich families establishing family offices in Singapore to manage their wealth has nearly doubled in the last two years, reaching an estimated 700 offices. This represents a significant increase from the 400 offices in end-2020 and a seven-fold growth from 2017. This growth can be attributed to the attractive business environment, favorable tax policies, access to a highly skilled workforce, and robust financial infrastructure.

These families come from various regions including Asia, Europe, and America, with particularly strong demand from Asia due to the region’s rapid growth in private wealth. Industry observers attribute this growth to the region’s faster expansion in private wealth compared to other parts of the world.

The purpose of this article is to provide an overview of the advantages and challenges faced by family offices in Singapore, examine the impact of these offices on the local property market, and highlight the roles and responsibilities of a family office. Additionally, the article will explore the correlation between family offices and real estate investment.

Roles and Responsibilities of a Family Office

Family offices play a crucial role in managing the wealth and providing comprehensive financial services to ultra-high net worth families. They provide a range of services, from wealth management and administrative support to philanthropy and estate planning, and help families to make important decisions and resolve conflicts.

A. Wealth management
The primary role of a family office is to manage the family’s wealth and provide comprehensive financial services to the family. This includes investment management, tax planning, estate planning, and risk management, among others.

B. Administrative support
Family offices also provide administrative support to the family, including bookkeeping, bill payment, and personal assistance. This support helps to free up the family’s time and resources, allowing them to focus on other aspects of their life.

C. Philanthropy
Many family offices also play a key role in the family’s philanthropic activities. This includes identifying causes that align with the family’s values, managing the family’s philanthropic funds, and implementing the family’s philanthropic strategy.

D. Estate planning
Family offices also play a key role in estate planning, helping families to transfer their wealth to the next generation and to plan for their long-term financial future. This includes developing estate plans, managing the transfer of assets, and advising on inheritance tax issues.

E. Family governance
Family offices also play a key role in family governance, helping families to make important decisions and to resolve conflicts that may arise. This includes facilitating family meetings, mediating disputes, and providing guidance on succession planning.

Advantages of Setting Up a Family Office in Singapore

Singapore has increasingly become the jurisdiction of choice for establishing a family office for the following reasons:

A. Attractive business environment
Singapore has a favorable business environment that attracts investors and entrepreneurs from all over the world. It is known for its stability, transparency, and efficiency, making it an attractive destination for family offices looking to set up their operations.

B. Growing private wealth in Asia
Private wealth in Asia has grown faster than in any other region in the world, making it a key market for family offices. With a large number of wealthy families in the region, family offices in Singapore are well positioned to take advantage of this growing market.

C. Favorable tax policies
Singapore has a tax-friendly environment, making it an attractive destination for family offices looking to minimize their tax liabilities. The country has a low corporate tax rate, a territorial tax system, and a wide range of tax incentives or exemptions for investors.

D. Access to a highly skilled workforce
Singapore has a highly educated and skilled workforce, making it an attractive destination for family offices looking to attract top talent. The country has a well-developed education system and is home to a number of world-class universities, providing a pool of highly skilled workers for family offices to draw from.

E. Robust financial infrastructure
Singapore has a well-developed financial infrastructure, making it an attractive destination for family offices looking to establish their operations. The country has a strong banking sector, a mature capital market, and a highly efficient payment and settlement system, providing family offices with the necessary tools to manage their wealth effectively.

Impact of Family Offices on the Property Market in Singapore

Family offices have a significant impact on the property market in Singapore. These include:

A. Increase in demand for high-end properties
The increasing number of family offices in Singapore has led to an increase in demand for high-end residential and commercial properties. This demand is driving up prices, making the city-state an attractive destination for real estate investment.

B. Growth of the real estate sector
The growth of the family office industry in Singapore is having a positive impact on the city-state’s real estate sector, as the demand for high-end properties continues to increase. This, in turn, is driving the growth of related industries, such as construction, property management, and real estate services.

C. Boost to the overall economy
The growth of the real estate sector in Singapore is having a positive impact on the city-state’s overall economy, as the real estate industry continues to thrive. This, in turn, is creating new jobs and opportunities for economic growth, and is helping to solidify Singapore’s position as a leading financial center in Asia.

D. Competition among developers
The growing demand for high-end properties in Singapore is also increasing competition among developers, as they seek to meet the needs of the growing number of family offices in the city-state. This competition is driving innovation and creativity in the real estate sector, and is helping to improve the overall quality of the city-state’s real estate offerings.

Conclusion

In conclusion, family offices are becoming an increasingly popular trend in Singapore, as more and more super-rich families seek to manage their wealth in the city-state. The advantages of setting up a family office in Singapore are many, including the city-state’s stable political and economic environment, its reputation as a leading financial center in Asia, and its favorable tax policies. Additionally, family offices are having a significant impact on the property market in Singapore, contributing to the growth of the real estate sector and driving innovation and competition in the industry.

At Lushhome, we offer a range of property services to help family offices set up and manage their wealth in Singapore. Our network of family office set up companies and professionals are experts in the field and can provide tailored solutions to meet the unique needs of each family office. Whether you are looking to invest in real estate or manage your wealth in other ways, our team is here to help. Contact us today to learn more about how we can help you achieve your financial goals in Singapore.

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