The rise of family offices in Asia presents unique opportunities along with challenges

 

Family offices, which have been operating quietly in Asia’s financial community for decades, have emerged as a significant force in the financial markets in recent years.

A family office is typically established to offer personalised services covering everything from estate planning and legal affairs to philanthropy and multi-generational succession. The primary goal is to ensure financial prosperity while fostering growth of the family’s legacy, embedding long-term values and traditions into its financial strategies.

According to a Deloitte report last September, wealthy families behind family offices controlled an estimated US$5.5 trillion of wealth worldwide in 2024. That was 67% more than the $3.3 trillion five years earlier, with the figure projected to jump another 73% to $9.5 trillion by 2030, representing a whopping 190% increase between 2019 and 2030.

Total estimated assets under management of family offices is expected to surge 74% from $3.1 trillion last year to $5.4 trillion by 2030.

Globally, there were 8,030 single-family offices in 2024, up 31% from 6,130 five years earlier. The number is projected to reach 10,720 by 2030, representing a 75% increase since 2019.

Key factors driving the growth include increased wealth concentration, successful transfers of generational wealth, sale of family-owned businesses, and pursuit of more customised investment strategies and services.

The Asia Pacific region, home to some of the world's fastest-growing economies such as China, India and Southeast Asia, has witnessed a surge in new wealth over the past several decades, redefining the global wealth environment.

The region is poised to experience a 208% increase in family wealth and family office assets between 2019 and 2030, trailing only a 258% growth in North America.

Last year, rich families in the region that have set up family offices controlled approximately $1 trillion of wealth, coming in third behind North America’s $2.4 trillion and Europe’s $1.7 trillion.

Deloitte estimates Asia Pacific had 2,290 single-family offices in 2024, a 28% increase since 2019. This figure is second only to 3,180 in North America, and surpasses Europe’s 2,020. Africa, South America and the Middle East trail far behind with figures ranging from 60 to 290.

North America is expected to see a 32% rise to 4,200 by 2030, while the number in Asia Pacific is expected to expand 40% to 3,200.

Wealth transfer

More than two-thirds, or 68% of family offices were established after the turn of the millennium, highlighting ongoing transition of wealth across generations.

As younger generations take the helm, the offices are increasingly shifting from their traditional role embedded within the family’s operating business to become independent entities. This evolution enables them to broaden their services and embrace sustainable investments and digital technologies.

The trend towards independence has also fostered the rise of the multi-family office model, allowing several families to access professional services while sharing costs and administrative overheads. This can be achieved either through commercial third-party providers or private multi-family offices established by a founding family that has expanded its offerings to support multiple unrelated families.

According to McKinsey, wealthy families in the Asia Pacific region are poised to undergo an inter-generational wealth transfer of about $5.8 trillion between 2023 and 2030. Many are establishing family offices to facilitate this process.

The region is also benefiting from the trend of family offices expanding overseas. Typically, family offices are headquartered in the country where the family predominantly resides. While most offices operate a single branch, more than a quarter, especially those with over $1 billion of assets, now maintain multiple branches.

Family offices in North America and Europe tend to establish secondary branches within their own regions. However, those with three or more branches often choose Asia Pacific for new opportunities and asset diversification.

Conversely, three out of five family offices from Asia Pacific set up secondary branches in North America and Europe.

Competition

The growth of family offices has sparked competition among countries in Asia and the Middle East, all vying to become the preferred hub for these entities.

Hong Kong has been a base for many Asian family offices since the late 1800s. Prominent names such as the Ho Tung, Lee Hysan and Kadoorie families were among the first to recognise the advantages of centralised wealth management, laying the groundwork for the city’s family office landscape.

Hong Kong has since evolved into a major hub for family offices, bolstered by a robust financial infrastructure and favourable economic policies designed to attract ultra-high-net-worth individuals.

A market study commissioned by government agency InvestHK estimates that around 2,700 single-family offices were operating in the city in 2024. While this figure does not differentiate by asset size and is higher than Deloitte's estimate, it reinforces Hong Kong's significance as a base for these offices.

Singapore has emerged as an attractive option for establishing family offices in recent years as Hong Kong, which has experienced social unrest and stringent Covid-19 measures, now faces escalating geopolitical tensions between the US and China.

In addition to tax and immigration incentives, Singapore’s pro-business environment, political and economic stability, strategic location, predictable regulatory framework, and comprehensive wealth management ecosystem attracted over 2,000 single-family offices by the end of 2024, up from just 400 in 2020. This includes over 50% of Southeast Asian family businesses.

Dubai has also been actively courting family offices. The emirate is now home to more than 120 families and 800 family-related structures and entities, collectively managing $1.2 trillion of assets.

The favourable tax regime in the United Arab Emirates, low crime rates and convenient location at the crossroads of multiple continents and time zones make it an appealing destination for ultra-wealthy individuals and their investment firms.

More recently, Malaysia and Indonesia have announced tax incentives and plans to encourage local entrepreneurs to establish family offices as well as attract overseas family offices, particularly from Muslim countries.

India is also beginning to embrace the family office model. The recent approval of the first family office in the Gujarat International Finance Tec-City marks a significant step toward establishing a more robust family office ecosystem.

Challenges

The path to becoming a family office hub is not without its challenges. The swift influx of capital into Singapore has raised concerns about whether the benefits truly outweigh the costs, particularly regarding asset price inflation and local culture. This has sparked lively debates, from parliamentary discussions to conversations in housing estate coffee shops.

The city state faced scrutiny following a money-laundering case involving the "Fujian gang" from China, which came to light in August 2023, resulting in the conviction of ten individuals and the seizure of more than $2 billion of assets. In response, the government has tightened screening processes, enhanced anti-money laundering controls, and raised the criteria for granting tax incentives to family offices.

Chee Hong Tat, deputy chairman of the Monetary Authority of Singapore and the second finance minister of the city state, said at a family office summit last September that “the family office ecosystem has added diversity to the financial sector and created value for Singapore’s economy and society.”

He said the sector has generated quality jobs by directly hiring local investment professionals and indirectly benefiting private banks, fund managers, legal firms, and tax consultants. This growth enriches Singapore’s talent pool of skilled professionals in finance, law and asset management, leading to improved infrastructure and services that benefit both family offices and other businesses.

Chee cited several examples demonstrating that the patient or long term capital brought by wealthy families, along with their business expertise and networks, contributes to nurturing Singapore’s local ventures and innovation. Family-led enterprises have also played key roles in climate mitigation and adaptation efforts.

In addition, family offices can help Singapore develop as a philanthropy hub and a centre for private equity and venture capitals.

The rise of family offices in Asia not only reflects the region’s growing wealth but also underscores a shift towards more professional and institutionalised management of family wealth. As this trend continues, family offices will become integral players in Asia's financial landscape, driving innovation and transformation within wealth management practices for generations to come.

 

*This article was published in Asia Asset Management’s February 2025 magazine titled “A booming sector”.