APAC family offices optimistic despite economic uncertainty

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Family offices in the Asia Pacific expect growth in both their family wealth and assets under management (AUM) despite geopolitical instability and uncertain market conditions, based on a report jointly released by Deloitte Private and Raffles Family Office.

Among the 89 single-family offices surveyed in the region, 84% foresee an increase in family wealth, while 77% expect growth in AUM in 2024.

These family offices’ average AUM stood at US$1 billion, and wealth averaged US$2.1 billion.

The confidence in growth is despite a lack of a succession plan among 37% of the Asia Pacific family offices surveyed, while 35% expect to undergo a generational transition over the coming decade.

Roughly a fifth of the family offices have ranked this lack of preparedness as a core risk to their offices this year, while more than a third are making succession planning a top 2024 priority.

Rebecca Gooch, Deloitte Private’s global head of insights, noted that families might lose their wealth if they do not adequately prepare for succession.

“There has been a rapid hike in wealth accumulation across Asia Pacific in recent decades, and this is spurring the growth of family offices,” she said. She added that Asia Pacific families are particularly at risk, given their relatively limited experience with large-scale multi-generational wealth transference.

Macro uncertainties remain the family offices’ top market concerns. More than half of them highlighted geopolitics as a key risk, and 44% noted inflation as one.

In line with their global peers, families in Asia Pacific perceived investment risk, geopolitics, as well as regulatory and tax challenges as top risks to family offices in 2024.

These concerns are reflected in their strategic priorities, with investment risk management being a top priority, followed by investment governance and valuation policies.

“In recent years, family offices in Asia Pacific have leaned towards a more conservative investment strategy, maintaining a balance between wealth preservation and growth,” the report noted.

The top asset classes family offices invested in were equities (25%), private equity and direct lending (21%), real estate (19%), and fixed income (19%) in 2023, accounting for more than four-fifths of the average family-office portfolio.

The top asset classes they plan to increase their allocations in this year are developed market equities (32%) and real estate (31%).