Family offices’ investments in China expected to cool down amid regulatory crackdown, real estate stress, UBS survey finds

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Only 39 per cent of global family offices expect to raise their asset allocations into China over the next five years, compared with 61 per cent in 2021, UBS survey shows

Family offices from Asia-Pacific show a bias towards region as they allocate 40 per cent of their portfolios to Greater China while western Europe and US investors set aside 5 per cent

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Family offices are turning more conservative about their investments in China. Photo: Bloomberg

Martin ChoiandDavid Ren

Published: 5:30pm, 9 Jun 2022Updated: 11:47am, 10 Jun 2022

Family offices are cautious about China’s growth and remain wary of committing more investments to the country as a survey from UBS showed a heightened reluctance from such clients to increase their allocations in the mainland.

Only 39 per cent of global family offices expect to raise their asset allocations into China over the next five years, compared with 61 per cent in 2021, according to UBS’ Global Family Office Report 2022 released on Thursday. Family offices manage investment and succession planning for wealthy families or individuals.

“It appears that the country’s regulatory measures and signs of stress in the real estate sector have blunted last year’s high levels of enthusiasm,” UBS said in the report, which surveyed 221 single family offices with a total net worth of US$493 billion between 19 January and 20 February this year.

China’s sweeping regulatory crackdown on the country’s tech sector, launched 20 months ago, has wiped out trillions of dollars in market value across New York and Hong Kong, while deterring venture funding for Chinese tech start-ups. Meanwhile, a number of mainland property developers are facing a liquidity crisis and have been pushed to the brink of default.

A slowdown in China’s property sector has turned family offices a bit conservative towards their investments in the country. Photo: Bloomberg

“We are not seeing a universal reluctance among our family clients to invest in China nor are they necessarily decreasing their investment allocation, but they are raising the bar for how they want to be compensated by way of returns for taking on additional risk,” said Mary Pang, head of global private client practice at the Boston-based investment firm Cambridge Associates, which has ultra-rich clients such as the Rothschild family.