Property developers need targeted approach to tap family office capital: PwC
Private wealth is drawn to Singapore’s stability, though the Republic is too small to keep it all
Add BT as a preferred source
[SINGAPORE] Property developers hoping to court Singapore’s growing pool of family office money will need to work out exactly what they can offer, as the capital becomes more diverse and harder to engage with a one-size-fits-all approach, said PwC Singapore executive chairman Marcus Lam.
Singapore is now home to some 2,000 single family offices, he noted.
“If you’re not tapping into family office capital, you’re missing out,” Lam said in a dialogue with Realion group chief executive Desmond Sim at the Real Estate Developers’ Association of Singapore’s Real Estate Market Outlook on Wednesday (Jul 15).
However, the pool is far from uniform. European family offices have been in Singapore for a while and tend to be more established and sophisticated, with their own investment processes, Lam said. Family offices from the region are younger, and their thinking varies depending on which generation is making decisions.
Compared with institutional investors, family offices place greater weight on privacy, personal attention and long-term relationships, and their capital deployment is less structured, he noted.
Developers looking to tap this pool should first identify which segment plays to their strengths, and be clear about what they can offer, he added.
Global capital still flowing in
Lam’s comments come amid continued strong capital inflows into the Republic. He attributed this to four key factors: Singapore’s certainty of law; transparency of regulation; depth of capital markets and long-term policy consistency.
He noted that with borrowing still expensive, investors have become more selective, judging assets on income resilience rather than headline yield. Stable cash flow and durable tenant demand now matter more than upside potential.
“Policy consistency is a superpower,” he said in his presentation before the dialogue. Investors are not simply acquiring assets in Singapore, but buying long-term participation in its growth story, he added.
Much of this capital is heading for sectors with long-term, structural demand, he said. These include premium offices, logistics and supply chain, data centres and digital infrastructure and the living sectors.
As to whether regulatory checks are a concern for global investors, Lam said investors whose capital comes from legitimate sources are not deterred by additional due diligence.
Such measures matter to the global investment community, he said, as they safeguard the market. “Without such measures, Singapore would not have the quality market it has today.”
Even then, Lam said, Singapore is “too small a place to keep all the global capital”. Capital is also flowing to larger markets with deep liquidity such as Tokyo and South Korea, he added, while Hong Kong is drawing renewed interest.
Preparing for the AI hit
On technology, Lam said the real estate sector’s adoption of artificial intelligence is lagging other industries, partly because the disruption has not been as immediate or as severe as in service sectors and professional knowledge work.
“That’s where you have to prepare for that hit. It’s going to come fast,” he said.
Companies that do not have technology conversations at the board and management level will lose out, Lam added. The challenge is no longer experimenting with AI, but putting it to use across the business.
In real estate, that ranges from helping developers improve planning and control costs, supporting asset owners in capital allocation decisions and gaining deeper insight into tenant behaviour, as well as enabling property managers to optimise energy use and anticipate maintenance needs.
Strong potential in Johor data centre growth
Asked by Sim about data centre developments across the Causeway, Lam responded that execution in Johor has been slower than hoped, with the master plan for the Johor-Singapore Special Economic Zone yet to be released.
How much say the Johor state government will have, versus the federal government, also remains unclear, he said.
Still, Lam sees real potential in the market, though administrative capability will be a challenge.
Turning to sustainability, Sim asked how receptive boards are to spending when upfront payback cannot yet be seen.
The answer depends on where the board sits, said Lam. While sustainability remains a priority in Europe despite some easing in expectations, climate risk is existential in Asia.
Boards weigh regulation against risk and return. Where regulation is not strong, the impetus to invest weakens, he noted. Still, he said, sustainability is a must for real estate in the long term.
“Sustainability is a capital strategy. It’s not a reporting strategy,” he argued.
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
