India to Singapore, HK: Uber rich shift $235 bn to offshore family offices

High and ultra-high networth individuals from India transferred approximately $130 billion in financial assets to family offices in Singapore last year. This made India the city-state’s third largest source of such funds in the Asia-Pacific region, following China ($400 billion) and Indonesia ($140 billion) as of the end of 2023, according to a recent study by McKinsey & Company.

Hong Kong ranked fourth with $70 billion in transferred assets to Singapore; the rest of Asia collectively parked over $370 billion in the island nation.

Hong Kong is another popular destination, with Indian family offices parking $105 billion by the end of 2023. Indonesia followed with $70 billion, and Singapore with $60 billion. Mainland China led the pack in Hong Kong, transferring over $550 billion.

Assets parked by Indian high and ultra-high networth individuals account for nearly 10 per cent of total offshore family office assets in these two markets.  China, however, dominates with a 40 per cent share.

The attraction of Singapore and Hong Kong lies in their tax benefits, relatively clear regulations, mature financial systems, residency pathways for qualifying investors, and availability of skilled talent.

The Asia-Pacific region is the biggest source of wealth flowing into Singapore and Hong Kong, which collectively host 15 per cent of the world’s single-family offices. In 2023, each managed approximately $1.3 trillion in offshore assets, trailing behind Switzerland’s $2.5 trillion.
 

McKinsey’s report also highlights significant differences between family offices in the Asia-Pacific region and those in Europe and North America. Family offices in Asia-Pacific are a relatively recent phenomenon, with only 5 per cent of the region’s ultra-high net worth individuals having a single-family office, compared to 15 per cent in Europe and North America. 

Another distinction is the level of professionalisation and governance, which is more robust in the West. In contrast, Asia-Pacific family offices often see a heavier influence of the principal on investment strategies, sometimes leading to less cohesion in decision-making.

The report also notes that wealth transfer in Asia-Pacific generally involves first- or second-generation wealth holders, whereas in Europe and North America, families have often been wealthy for multiple generations. Investment preferences also vary: European and North American family offices tend to invest domestically or within their region, with increasing allocations to the Asia-Pacific for diversification. Conversely, Asia-Pacific investors show a keen interest in overseas investments, aligning with the global nature of their businesses.