SINGAPORE: Singapore is attracting wealthy investors and family offices moving their money out of the troubled Middle East in search of a safe haven.
March financial data released by the Monetary Authority of Singapore (MAS) - the first month available since the Gulf war erupted on Feb 28 - confirmed anecdotal reports that the rich were moving their assets to Singapore, and to a lesser extent, Hong Kong, after the war.
Looking at the data, Maybank’s economists Dr Chua Hak Bin and Brian Lee said these flows are reflected in an outsized jump in March for Singapore deposits, foreign currency deposits, deposits by non-residents, MAS foreign reserves, and gold imports from Dubai.
Total deposits rose by S$66.2 billion, or 7.2 per cent year on year, to $2.1 trillion in March, accelerating from a 4.8 per cent increase in February, MAS data showed.
The rise was driven by a 7.8 per cent increase in Singapore dollar deposits and a 6.7 per cent gain in foreign currency deposits, the economists told ST.
A significant portion of the surge was driven by non-resident deposits, which jumped 5.3 per cent from February to March, increasing by $33.2 billion to reach $659.1 billion.
On a year-on-year basis, non-resident deposits grew 4.6 per cent. There is no available breakdown by nationalities.
The inflows have also fed into official reserves, which rose by $15.5 billion in March and a further $2.4 billion in April, signalling continued capital entering the financial system.
At the same time, gold flows offer another indication of safe-haven demand.
Singapore’s gold imports from the UAE surged to a five-year high of 1,446kg, worth US$220 million, in March.
Dealers said high-net-worth investors with bullion stored in the UAE have grown concerned about insurance coverage and the ability to move assets quickly if airspace is disrupted.
The influx of capital is already affecting domestic financial conditions.
Increased liquidity has helped cap interest rates, with the three-month Singapore Overnight Rate Average or SORA - a benchmark for mortgages - falling to 1.07 per cent, down about 12 basis points since the start of the year despite no rate cuts by the US Federal Reserve.
Maybank expects the benchmark rate to decline further to 0.85 per cent by year-end if inflows persist.
A lower SORA typically means cheaper borrowing costs for homeowners with loans pegged to floating rates, especially if they have just refinanced or are due for repricing soon. They should see lower monthly mortgage instalments.
Homeowners on fixed-rate packages would not benefit immediately, but they may consider refinancing later if floating rates become more attractive.
The Singapore dollar has also strengthened, appreciating about 1.1 per cent against the US dollar since the start of the year.
The economists expect the currency to trade towards the stronger end of the Singapore dollar nominal effective exchange rate (S$NEER) policy band as inflows continue.
The S$NEER is an index of the Singapore dollar’s trade-weighted exchange rate against the currencies of the Republic’s major trading partners.
“Singapore is emerging as a major beneficiary from this capital flight. Singapore’s safe haven status is anchored by its AAA sovereign rating, rule-of-law framework, politically neutral foreign policy and stable exchange rate regime,” the Maybank economists said.
Regionally, Malaysia recorded modest increases in both ringgit and foreign currency deposits in March, while Hong Kong showed no clear above-trend rise despite reports it may also be benefiting from safe-haven flows, the economists said.
The shift in capital follows a sharp deterioration in investor confidence after the outbreak of the US-Iran war on Feb 28.
Dubai’s long-standing position as the Gulf’s financial safe haven is being tested, with reports that wealthy Asians were already relocating Dubai-based cash and family office structures.
A UOB report said in March that uncertainty linked to the Middle East conflict is supporting liquidity flows into Singapore, particularly from Middle East-based clients reallocating assets away from perceived higher-risk jurisdictions such as Dubai.
These inflows are strengthening private banking franchises and boosting fee-based income from wealth management, treasury services, and trading, the UOB report added.
SGX research showed the combined non-interest income for DBS, OCBC and UOB in the first quarter of 2026 rose to a record $5.16 billion from $4 billion in the preceding quarter and $4.78 billion a year earlier. The increase was driven by wealth fees, trading income and other fee income.
Despite the conflict, Maybank economists reckoned Dubai cannot be written off. The city has no personal income tax, no capital gains tax and no inheritance tax, making it ideal for the ultra wealthy and family offices.
The Dubai International Finance Centre (DIFC), a special economic zone, reported in early January that the top 120 families in the economic zone managed more than US$1.2 trillion combined.
Before the war, the DIFC said that it was home to 1,289 family-related entities, up more than 60 per cent from a year ago.
But the physical damage to Dubai’s infrastructure, its ties with the US and Israel, exposure to regional instability and reliance on foreign talent are likely to complicate its recovery in the near term, they said.
Before Iran targeted the UAE in the war, Dubai was home to 237 centimillionaires - those worth US$100 million or more - and at least 20 billionaires, according to Henley & Partners.
An estimated 9,800 millionaires moved to Dubai in 2025, bringing US$63 billion in wealth, more than any other country in the world, according to the residence and citizenship advisory firm.
Most of Dubai’s wealthy were from the United Kingdom, China, India, and other parts of Europe and Asia. - The Straits Times/ANN
