Singapore has emerged as a powerhouse for family offices in recent years, attracting wealthy individuals and families from around the world. As of today, 50% of Southeast Asia’s top family businesses are in Singapore. This surge in family office establishments has significantly impacted the city-state’s economy and solidified its position as a global wealth management hub.
Rapid Growth in Numbers
The growth of family offices in Singapore has been nothing short of remarkable. As of August 2024, the number of single-family offices (SFOs) benefiting from tax incentives provided by the Monetary Authority of Singapore (MAS) has soared to an impressive 1,650. This represents a significant increase over the years:
- 400 SFOs in 2020
- 1,400 SFOs by the end of 2023
- 250 new SFOs added in the first eight months of 2024
This exponential growth highlights Singapore’s appeal as a premier destination for wealth management and family office services.
Economic Impact
The influx of family offices has had a substantial positive impact on Singapore’s economy:
- Assets under management (AUM) in Singapore rose by 8% in 2023, resulting in a five-year compound annual growth rate of approximately 10%.
- In the first quarter of 2024, client assets at Singapore’s leading private banks grew 9.5% year-on-year.
- By the end of 2022, family offices in Singapore were managing approximately S$90 billion (US$66.8 billion) in assets.
These figures demonstrate how family offices are shaping the financial landscape, boosting economic activity, and attracting global wealth to Singapore.
Factors Driving Growth
Several key factors make Singapore an attractive hub for family offices:
Political and Economic Stability
Singapore’s reputation for strong governance, low corruption levels, and a resilient economy makes it a secure destination for wealth preservation and financial planning. This stability reassures family offices that their assets are protected from geopolitical risks and economic turbulence.
Favorable Regulatory Framework
The Monetary Authority of Singapore (MAS) has developed a well-regulated financial ecosystem, fostering trust among investors and financial institutions. The clear, transparent, and consistent regulatory policies help ensure compliance while allowing for innovation in wealth management.
Tax Incentives
Singapore offers highly competitive tax benefits, including the Enhanced-Tier Fund Tax Incentive (Section 13U) and the Singapore Resident Fund Scheme (Section 13O), which provide tax exemptions on specified investment gains, making it an attractive jurisdiction for family offices.
Strategic Location
Positioned at the heart of Asia-Pacific, Singapore serves as a gateway to fast-growing economies like China, India, and Southeast Asia. Its geographical advantage enables family offices to diversify their investments across multiple markets while leveraging Singapore’s extensive trade and investment agreements.
Talent Pool
The city-state boasts a highly educated workforce, particularly in the finance, legal, and wealth management sectors. The availability of skilled professionals ensures family offices can access top-tier expertise to manage their investments and succession planning efficiently.
Safety and Quality of Life
Singapore ranks among the safest cities globally, with low crime rates, excellent healthcare, and world-class educational institutions. Ultra-high-net-worth individuals (UHNWIs) value these factors when considering where to establish family offices and relocate their families.
Government Support
The Singapore government actively fosters the growth of family offices through initiatives such as the Family Office Development Team (FODT) established by MAS and the Economic Development Board (EDB). These initiatives provide guidance, support, and collaboration opportunities for family offices.
Business-Friendly Environment
With a corporate tax rate of 17%, robust infrastructure, and an efficient regulatory framework, Singapore ranks among the top destinations for ease of doing business. The city-state also provides streamlined processes for setting up investment entities, further simplifying family office operations.
Strong Family Office Community
Singapore has developed a vibrant family office ecosystem, supported by industry associations, networking platforms, and investment forums. This community fosters collaboration, knowledge-sharing, and co-investment opportunities, making it easier for family offices to thrive.
Tax Incentives for Family Offices in Singapore
Enhanced-Tier Fund Tax Incentive Scheme (Section 13U):
- Minimum AUM of S$50 million at application
- Employment of at least two investment professionals, with one non-family member
- Tiered local business spending requirements based on AUM
- Exemption from tax on qualifying investment gains
Onshore Fund Tax Incentive Scheme (Section 13O):
- Minimum AUM of S$20 million in Designated Investments
- Employment of at least two investment professionals, with one non-family member
- Tiered local business spending requirements based on AUM
- Designed to encourage the establishment of fund management operations in Singapore
Offshore Fund Exemption Scheme (Section 13D):
- Provides tax exemptions on income derived from certain designated investments
- This applies to non-resident funds managed by Singapore-based fund managers
- Enhances Singapore’s attractiveness as a global investment hub
Philanthropy Tax Incentive Scheme:
- Up to 100% tax deduction for overseas donations made through qualifying local intermediaries
- Deduction capped at 40% of the donor’s statutory income
- Encourages charitable contributions and social responsibility among UHNWIs
Global Investor Program Family Office Option (GIP-FO):
- Offers permanent residency to investors establishing a family office in Singapore
- Requires a minimum investment commitment in Singapore’s financial ecosystem
- Aims to attract high-net-worth individuals seeking long-term residency
These tax incentives reinforce Singapore’s reputation as a wealth-friendly jurisdiction while promoting local investment, employment, and philanthropy.
Future Outlook
The future of family offices in Singapore looks promising, with continued strong growth anticipated. Deputy Chairman of MAS, Chee Hong Tat, expects the number of new family offices in 2024 to exceed the 300 added in 2023. Key developments shaping this growth include:
- Expanding teams and offerings at leading private banks, including Bank of Singapore, UOB, Citi, HSBC, and Nomura.
- Government initiatives aimed at strengthening the ecosystem, particularly in philanthropy, private equity, and venture capital investments.
- Encouraging family offices to contribute to local charities and support Singapore’s push towards net-zero emissions.
As Singapore continues refining its policies and infrastructure, it remains well-positioned to maintain its status as a premier global hub for family offices. The continued influx of wealth and expertise will further strengthen the country’s economy and its standing as a financial powerhouse.
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