The Middle East, Asia nexus – the new family office ecosystem

The United Arab Emirates, Hong Kong, and Singapore family office ecosystem is overblown. Most family office dealings take place in the US and Europe. But things are changing, and Asia’s family office hotpots and the UAE are realising that greater cooperation will help their family office sectors flourish. Add India and Saudi Arabia to the mix, and the prospects are tantalizing. 

Singapore and Hong Kong have been obsessed with beating their own chests about their success in growing their family office ecosystems. Rarely a week goes by without some official comment about their family office sectors thriving. 

Although much of Asia and the Middle East undoubtedly have very strong and healthy family business ecosystems, that isn’t the case with their family office sectors

For the most part, Family Capital has been sceptical about its success. The number one culprit in this respect has been Singapore’s stated number of family offices, which is said to be 2000+. Yes, the numbers might be right—and high—but many of those that have set up are little more than shell companies with no plausible activity. 

That said, dismissing the family office activity in Hong Kong, Singapore, and the UAE would be foolish. 

But what is probably most exciting about these places is their gradual realisation that cooperation between them will strengthen the depth of their family office sectors. 

This week, the Emirates Family Office Association established a partnership with the Hong Kong Academy of Wealth to grow the family office sector more efficiently through cooperation. 

OK, this isn’t exactly an earth-shattering agreement, but it does show that the regions are looking at greater cooperation in the family office world and are seeking inspiration among themselves rather than from the US and Europe. 

As the chairman of the Hong Kong Academy for Wealth, Adrian Cheng, said: “The need for legacy development by wealth and business families transcends borders, particularly as both Asian and the Middle East are experiencing similar challenges of family enterprise transformation, cultivating next-gens, and formalizing and professionalizing family office governance.”

Although much of Asia and the Middle East undoubtedly have very strong and healthy family business ecosystems, that isn’t the case with their family office sectors. 

For the most part, family offices in these regions have been places to park access capital or, at worst, little more than a fashion accessory to brag about to your contemporaries. Of course, there have been exceptions, but for the most part, the family office ecosystem in most of Asia and the Middle East is still at an immature level of development. 

Perhaps India is the exception, and Family Capital has been amazed at the level of activity there, which continues apace. 

Of course, India’s economy has grown rapidly. It is an increasingly consumer-led economy with a very big family business culture and a significant diaspora of successful Indian or Indian-origin entrepreneurs worldwide. These are all factors that are ripe for a strong family office ecosystem to evolve. 

Saudi Arabia also has a big family business culture and an increasingly strong consumer-led economy. 

However, the lack of a big hinterland of economic activity in places like Hong Kong, Singapore, and the UAE will always limit their family office growth activities. 

They will need to think outwardly as much as possible, seeking opportunities to cooperate and learn from others in the region about developing best practices and opportunities to flourish in the future. Just like this recent deal between the Emirates Family Office Association and The Hong Kong Academy of Wealth has in mind. 

Suppose a real nexus of integrated economic and strategic cooperation occurs between Saudi Arabia, India, the UAE, Singapore, and Hong Kong. In that case, the family office sector will flourish, perhaps more than in any other part of the world. 

That is an exciting prospect.