SINGAPORE - Singapore-based family offices, which manage investments for ultra-rich individuals, have not bought a single residential property here in the past six years, said Minister of State for Trade and Industry Alvin Tan.
Hence, family offices have had virtually no impact on the Republic’s private housing market, he told the Parliament on Wednesday.
“There was no residential property transaction attributable to family offices over the last six years,” he said.
Even otherwise, the minister noted, the share of private residential property purchases by foreigners has dropped in the past decade, falling from 20 per cent in 2011 to a low of about 3 per cent to 4 per cent in the past few years.
“Coming out of the pandemic, the share has remained limited, about 7 per cent in the first quarter of 2023,” added Mr Tan, who is also a board member of the Monetary Authority of Singapore (MAS).
Prices and rents of private homes have risen sharply over the past year, with Urban Redevelopment Authority data showing the proportion of foreign buyers rising to 6.9 per cent in the first quarter of 2023, from a low of 3.1 per cent in the first quarter of 2022.
According to the central bank, there were 700 single-family offices (SFOs) in Singapore at the end of 2021, and about 200 of them have applied for tax incentives since April 2022 to invest in local assets.
Family offices on their own constitute a small part of Singapore’s overall asset management industry.
The minister said SFOs that have applied for and granted tax incentives by MAS managed about $90 billion worth of assets as at 2021 - less than 2 per cent of the $5.4 trillion in assets managed in Singapore as at 2021.
Institutional investors account for the bulk of the increase in AUM in Singapore, he added.
In the response to questions by Workers’ Party MP Louis Chua (Sengkang GRC) and Progress Singapore Party Non-Constituency MP Leong Mun Wai, Mr Tan said the top foreign source, in terms of region, for Singapore’s increase in AUM for high-end individual investors from 2017 to 2021 was the Asia-Pacific. This is followed by Europe and the Americas.
“We have not seen unusual surges of capital into the Singapore dollar that have required a pronounced response on the part of MAS and certainly not from family offices which, to reiterate, would not form a significant proportion of the total flow of funds for management out of Singapore.”
Given that approved applicants get two years to report their local investments, Mr Tan said, no data is currently available for family offices’ local assets.
The minister clarified that most of the foreign fund managers based in Singapore invest in overseas assets - within the Asia Pacific region or beyond.
Hence, the increase in assets under management here has virtually no impact on Singapore’s currency, inflation, or the official foreign exchange reserves.