Wealthy Indian diaspora powering growth of family offices

The Indian diaspora have become the main Asian group to embrace the family office concept over the past two years.

The family office world is emerging as a major force in the global economy, with the Indian diaspora spearheading growth, according to Singapore-based DBS, one of Asia’s leading wealth managers.

Since 2018, the number of family offices in India has surged from 45 to 300, reflecting rapid expansion of wealth among Indian high net worth families. Many families of Indian origin have also set up offices in global financial hubs such as Singapore, Hong Kong and Dubai.

This trend underscores the Indian diaspora's increasing affluence and evolving investment strategies. With a focus on technology, increasing risk appetite and social responsibility, these expanding clans are reshaping the landscape of family offices.

“For the longest time, family offices were always something which larger families in the West had deployed as a tool, and Asian families were kind of on the sideline,” says Lee Woon Shiu, group head of wealth planning, family office and insurance solutions at DBS Private Bank.

But the Asian family office started to take off in 2019, he says, with the Indian diaspora becoming the main group to see real acceleration in adopting the concept over the last two years.

According to DBS's Global Indian Family Offices: Evolution of the Indian Diaspora report, around 6,500 high net worth Indians were estimated to have left India in 2023 for new opportunities in regional financial including Dubai, Singapore and Hong Kong.

“The Indian economy in the last two years has really been on a rapid fireball ascent, and this coincided with the slowing down of the market economy in China,” says Mr Lee. This gave “impetus” for members of wealthy Indian families to work more closely together, particularly in the diaspora.

Discussions among family members from different branches led to consensus that it might be time to create a formal structure, to consolidate diverse streams of financial, human and social capital. This, Mr Lee suggests, was a key factor driving the sharp rise of interest in the family office model.

Changes in Indian laws have also contributed to this transformation. In August 2022, India’s historically stringent capital controls, particularly those limiting outbound investments by residents, underwent a significant shift. The introduction of a new Overseas Direct Investment framework liberalised rules governing cross-border investments, easing restrictions for both resident individuals and Indian entities.

Singapore is fast becoming a “top” destination for ultra-high net worth (UHNW) Indian families looking to establish a family office outside their home country, according to the DBS research. These families are also developing an appetite for “robust” succession and legacy planning.

Straight from the heart

“Singapore is one of the few hubs which, culturally, the Indian diaspora has been familiar with for decades,” says Mr Lee. The Covid-19 pandemic also showed Singapore’s “true mettle”, with its stable financial and legal systems finding their way “into the hearts” of many Indian diaspora families, he claims.

The Lion City’s favourable business climate is also helping. “I think during Covid, Singapore had a chance to just edge ahead of Hong Kong,” where stringent lockdowns and introduction of China’s National Security Law prompted a significant shift from businesses and financial professionals seeking more stable and predictable environments.

Singapore, by contrast, adopted a relatively open and business-friendly approach during the pandemic, positioning itself as an attractive alternative. This policy stance drew venture capital and private equity firms, with several financial institutions relocating teams or entire operations to Singapore, as a key regional hub. Although Hong Kong traditionally served as the premier destination for industry events and conferences, the pandemic prompted a shift, with many summits relocating to Singapore.

This transition bolstered Singapore’s reputation as a key hub for networking and deal-making, further enhancing its attractiveness as a base for financial activities, such as family offices, venture capitalists, and private equity management firms, including impact investing specialists, says Mr Lee.

Philanthropic ambitions

Impact investing has gained significant traction, yet the majority of UHNW Indian diaspora families continue to favour traditional philanthropic approaches focused on charitable giving rather than financial returns. However, younger generation philanthropists are beginning to embrace more innovative models that blend financial objectives with social impact, according to DBS.

In response to industry lobbying, Singapore has revised its tax laws to extend philanthropic tax incentives beyond domestic donations. Family offices in Singapore can now receive tax benefits for charitable contributions to international causes, provided they are routed through qualified intermediaries. This move strengthens Singapore's position as a regional philanthropy hub, according to Mr Lee, spurring a more structured analysis of the giving process.

“In some larger families, they are now taking the view that eventually it's not just about writing a cheque,” he says. “It involves deploying capital to helping sustain or support a cause, maybe climate change, which a family feels strongly for.”