Asia Pacific Poised Be Top Investment Destination Family Offices Globally Ubs Report
The UBS Global Family Office Report 2024 has revealed that Asia Pacific is poised to become the premier destination for family office investments worldwide. Based on insights gathered from 320 single family offices across seven regions, with an average net worth of US$2.6 billion, the report found that North America (50%) and Western Europe (27%) still hold the largest regional allocations for family offices. However, going forward, North America and Asia Pacific (excluding Greater China) are expected to attract the most added allocations, with 38% and 35% of family offices planning to increase investments in these regions over the next five years respectively.
According to Benjamin Cavalli, Head of Global Wealth Management Strategic Clients at UBS, “Almost half of Asia Pacific family offices plan to allocate more assets to their home region in the coming years.” The report also showed that family office portfolios have shifted towards a more balanced mix of bonds and equities. Cavalli points out that Asia Pacific family offices are looking to add fixed income (48%), developed market equities (45%), private equity (24% in direct investments and 32% in funds) and hedge funds (31%) to their portfolios in the next five years.
Furthermore, active management is regaining popularity as family offices seek to capitalize on opportunities presented by technological advancements, changing interest rates, and uneven growth. The report indicates that 39% of family offices globally are now relying more on manager selection and active management to enhance portfolio diversification, which is a 4% increase from 2023.
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In terms of investment themes, generative artificial intelligence is the most popular, with 78% of family offices worldwide projecting it as a potential investment area in the next two to three years. For Southeast Asian family offices, 88% believe that positive US real interest rates will persist for a longer period. These offices are also more inclined towards active management (50%) to diversify their portfolios.
Compared to their global counterparts, Southeast Asian family offices have the lowest average allocations to real estate at 6%. Their top concerns for the next 12 years include a major geopolitical conflict and higher inflation, while higher taxes and climate change are the primary worries for the next five years.
Sustainability has emerged as a crucial factor influencing family office investments, not just for portfolio diversification, but also for long-term business outlook. Philanthropy and charitable giving are particularly popular among Asia Pacific family offices, with 45% reporting that they currently take it into account. Healthcare remains the top theme for 59% of family offices in the region.
Other sustainability themes that are of interest to Asia Pacific family offices include clean tech, green-tech, and climate tech (40%) as well as philanthropy (39%). Compared to their global peers, family offices in the region are more likely to focus on impact investing (36%), education (36%), and carbon markets/carbon capture and removal (21%).
The UBS Global Family Office Report 2024 was conducted from January 18 to March 22 and is now in its fifth edition.