The global environment has become more uncertain in recent times, characterized by greater geopolitical tensions and slowing growth. While risk is on the rise, this has also sparked new opportunities, especially with regard to Chinese investor diversification, according to a recent finews.asia panel discussion in Singapore.
In recent years, Singapore has experienced a meteoric rise as a preferred hub for private wealth in the region. This is especially the case for the ultra-rich with an estimated 59 percent of Asia-based family offices located in the city-state, according to a KPMG report.
Although no figures about exact wealth origins have been disclosed, a prominent source has been Chinese high-net-worth individuals (HNWIs), who have traditionally opted for Hong Kong as their top choice of hub.
Becoming a Family Office Hub
Hans-Peter Borgh, Claude Baumann, Jan Dirkmann, Wei-Ling Low, Hanzhi Ding and Rémy Savoya (from left)
This is evidenced not only by media reports but also by strategic moves at private banks to set up teams focused on the Greater China segment in Singapore.
«The government in Singapore is taking very cautious steps in devising incentives or programs to become a financial, wealth and family office hub. This includes an effective tax system, legislation and ecosystems,» said Jan Dirkmann, CEO and managing partner at Lumen Capital Investors Lumen Capital Investors (LCI), during a recent finews.asia panel discussion hosted at The Capitol Kempinski Hotel Singapore.
Singapore Properties
In addition to investments in global markets via financial institutions in Singapore, a lot of new Chinese wealth has found its way into real estate – oft-cited as one of the most favored asset classes by the segment. And according to Wei-Ling Low, CEO of Vanda Global Capital, this is partly due to the reputation of Singapore’s property market.
«Singapore properties have a strong track record of being completed on time and some projects may sometimes even be delivered earlier. The quality of developers is also very high due to stringent screening of various factors, including aesthetics,» said Low.
The event, entitled «Wealth Management in a Volatile World» and moderated by finews.asia Founder and CEO Claude Baumann, was attended by around 100 leading industry figures in wealth management, asset management, legal, technology and more.
European Interest
BIL Team: Paul Jessup, Rémy Savoya, Tobias Kamber, Nadia Bargetzi, Hans-Peter Borgh, Bryan Liu (from left)
Demand for diversification extends beyond booking centers and markets outside of Asia. Staying on the subject of real estate, for example, a shift in investor expectations and rising geopolitical risk has created potential opportunities for Europe, according to other panelists.
«Until a few years ago, it was very difficult to convince a Chinese client to invest in Europe, in general, because there were far superior returns at home. That is changing a little bit now and we are seeing growing interest in European property,» said Hans-Peter Borgh, Group Head of International and CEO of BIL Suisse, which has real estate financing capabilities across ten countries in the region.
Trends Likely to Change
«Chinese clients have traditionally been making significant investments in US properties but this trend will likely change due to geopolitical tensions,» added Hanzhi Ding, CEO of BIL Wealth Management Asia Pacific.
Despite recent shifts in the global environment, panelists note that it would be unwise to assume that the current trend will persist with certainty.
Inflow of New Residents
On Singapore, for example, Dirkmann noted that officials maintain their plan to grow its population to 10 million, though it may cause the city-state «to get a little bit tight». And on Hong Kong, panelists also suggested against counting out the city.
«In the past two to three years, we have seen some wealth transferred from Hong Kong to Singapore. But at the same time, Hong Kong remains resilient,» said Ding, citing a 170,000 inflow of new residents to partly offset the widely cited outflow of around 200,000.
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