The Rise of Asia-Based Family Offices in Real Estate

by Jie Xin Choo

  • 09 Nov 2016
  • RE

Asia’s growth story is one that has been told on numerous occasions. Due to a combination of strong economic performance, favourable demographics and significant capital inflows over the past couple of decades, the aggregation of private wealth in the region has surpassed levels seen in North America and Europe. Accompanying this growing pool of wealth is the rise of Asia-based family offices; Preqin’s Real Estate Online currently profiles 57 family offices in the region that invest in real estate, which hold $9.8bn in aggregate assets under management. In this blog, we will examine the investment trends and appetite of these Asia-based family offices.  

The location of a family office is an important consideration: the majority of Asia-based family offices are based in either Hong Kong (35%) or Singapore (28%). In addition to having robust regulatory frameworks, business-friendly laws and favourable tax treatments, both financial hubs also lie in close proximity to emerging economic powerhouses: Hong Kong to China and Singapore to the ASEAN region.

The concept of family office within the region is relatively new given that wealthy families in Asia typically prefer investments that are familiar and ‘tangible’. Therefore, apart from investing in private companies that are related to their businesses, the addition of real estate to their portfolio also holds considerable appeal. Preqin data reflects this trend: 59% and 58% of all Asia-based family offices have interest in private equity and real estate respectively, which is larger than the average proportion of all institutional investors based in region – 49% for private equity and 40% for real estate. Among the 57 Asia-based family offices that have invested or are considering investing in the asset class, 74% favour gaining exposure via direct real estate, while only 45% invest through commitments to private real estate vehicles.

In terms of geographic preference, this group of investors prefers to invest closer to home, as seen in the chart above. This could be due to the familiarity of the assets, business operations and regulatory frameworks. For example, OAKS Family Office, a Singapore-based single-family office, is considering investing in real estate in Asia-Pacific via direct assets and listed vehicles. In addition, TFO Management, a Hong Kong-based multi-family office, is considering making new private real estate fund commitments to managers with a track record that solely target the Asian real estate market.

Overall, Preqin has observed an increase in the number of Asia-based family offices that are looking at real estate investments, from 16 such institutions in 2013 to 57 in 2016 to date. As the region continues its path of economic development and increasing connectivity with the rest of the world, we can expect to see continued growth in the participation and influence of Asia-based family offices within the real estate asset class over the longer term.

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