HK, SG or Dubai: How are family offices choosing their base?

Three locations are hotly competing to attract family offices right now - Singapore, Hong Kong and Dubai. 

All three destinations are pulling out all the stops in terms of making the business environment easier, offering tax incentives and showcasing their quality of life.

So how are family offices choosing where to set up base?

“One complementing strength of these three cities is their critical role as gateways to wider regions,” said Neil Synnott, chief commercial officer for Asia Pacific at investor services company IQ-EQ.

Neil Synnott

IQ-EQ

“Dubai to the Middle East and Africa, Singapore to Southeast Asia, and Hong Kong to mainland China.”

This allows family offices to strategically position themselves for regional growth.

Given the current ecopolitical landscape, family offices are placing great emphasis on evaluating a range of investment opportunities, the strength of legal and regulatory frameworks, and the political and economic stability of the region.

SINGAPORE STABILITY

Singapore, which has seen explosive growth in the past few years, is a major draw for family offices prioritising wealth preservation across generations.

“It is also the most established wealthy management centre with a deep pool of experienced professionals. Family offices focused on long-term wealth preservation may prioritise Singapore’s stability,” said IQ-EQ’s Synnott.

The lion city has undergone a robust growth phase under which several family offices launched their operations, lured by a mix of tax incentives and a stable operating environment.  

Singapore has about 1,400 single family offices that boast a certain structure that can claim tax benefits, according to official data.

Cameron Harvey
Landmark Family Office

Still, "the recent fraud case by a multi-billion-dollar family office there has brought a lot of scrutiny from the Monetary Authority of Singapore and resulted in very stringent requirements not only from the regulators but from the banking sector and associated service providers, which is understandable and to be expected,” said Cameron Harvey, CEO of Landmark Family Office.

All three locations are capitalising on post-pandemic opportunities and geopolitical shifts and rapidly evolving regulatory frameworks for family wealth and family offices.

Adam Ratner
Campden Wealth

“It’s evident that each jurisdiction has navigated the pandemic differently with Singapore reopening ahead of Hong Kong but lagging behind Dubai by about a year which has resulted in differing levels of family office engagement,” said Adam Ratner, director of research at Campden Wealth.

HONG KONG HOPES

Being the gateway to China remains Hong Kong’s biggest appeal for family offices.

“Hong Kong is a prime strategic location for setting up headquarters due to the supportive government policies, tax incentives, strong service provider ecosystem, geographic location from a global time zone perspective and as the gateway to China - the second largest economy in the world, deal size and deal flow in one of the largest global financial centres and robust capital markets with one of the highest market capitalisations worldwide,” said Landmark Family Office’s Harvey.

It also has a lower tax burden than most developed economies with a long history of connecting investors with Asian opportunities.

The ‘Fragrant Harbour’ city has also been making a deep push to attract family offices from Asia and overseas. Hong Kong has about 2,700 single family offices, according to estimates in a recent Deloitte report.

Yet while Hong Kong remains attractive for China-focused investments, a higher degree of caution is needed, some experts noted.

“It is facing increased regulatory scrutiny in recent years and an evolving relationship between Hong Kong and China that adds a layer of complexity for investors," IQ-EQ’s Synnott added.

"Still, Hong Kong offers unparalleled access to the massive Chinese market, a key advantage for family offices seeking to invest in mainland China.” 

The ongoing controversy about the planned launch of a family office by a distant member of Dubai's ruling family, nevertheless, is likely to affect perceptions about the sector for a while.

DUBAI DREAMS

Some industry experts see Dubai as a relative newcomer, offering a more tax-free and entrepreneurial environment.

It has hit the limelight because the Middle East is booming economically right now and the rulers of United Arab Emirates – of which Dubai is a part of -- is looking diversify income streams and attract foreign capital and talent.

They are also looking to expand outbound investments. All of this has led to a lot of innovation and a business-friendly environment.

“While new taxes have been introduced this year, they were coming from a very low base and so are now still the most competitive of the three locations from that perspective. said Landmark Family Office’s Harvey.

William Chow
Raffles Family Office

William Chow, deputy group CEO at Raffles Family Office, also noted that significant infrastructure developments are setting up Dubai to become a major financial centre and  the multi-family office is receiving more enquires, especially about the investment landscape.

IQ-EQ’s Synnott also believes that family offices seeking high-growth opportunities for the next generation might consider Dubai as a potential base.

Still, he acknowledges that the Middle East’s relative political and economic volatility compared to Singapore and Hong Kong might deter some risk-averse investors.

That sentiment is shared by Landmark Family Office’s Harvey who sees current geopolitical tensions in the region as a tail risk and keep some families from opening an entity in that part of the world.

Eventually, the decision on where to open an office will come down to the specific needs of each family, experts said.

This story has been updated to reflect the correct spelling of the IQ-EQ spokesperson.