[h=1]Wealth Over the Edge: Singapore[/h]<!--<section class="sector two column col10wide" style="background-image: none; border-bottom: 0px; text-align: left; border-left: 0px; padding-bottom: 0px; text-transform: none; background-color: transparent; text-indent: 0px; margin: 0px auto; outline-style: none; outline-color: invert; padding-left: 0px; outline-width: 0px; width: 993px; letter-spacing: normal; padding-right: 0px; display: block; font: 10.39px Arial, Helvetica, sans-serif; white-space: normal; float: none; color: rgb(51,51,51); vertical-align: baseline; border-top: 0px; border-right: 0px; word-spacing: 0px; padding-top: 0px; -webkit-text-stroke-width: 0px">--> <menu class="artShareTools" style="margin: 0px; padding: 0px; outline: 0px; border: 0px currentColor; font-size: 10.39px; font-style: normal; font-weight: normal; vertical-align: baseline; display: inline-block; list-style-type: none; list-style-image: none; background-color: transparent;"> </menu>
By SHIBANI MAHTANI
March 7, 2013 10:07 a.m. ET
<!--<article class="module articleBody" id="articleBody" style="border-bottom: 0px; position: relative; border-left: 0px; padding-bottom: 0px; background-color: transparent; font-style: normal; outline-style: none; outline-color: invert; padding-left: 0px; outline-width: 0px; padding-right: 0px; display: block; font-family: Arial, Helvetica, sans-serif; clear: left; font-size: 10.39px; vertical-align: baseline; border-top: 0px; font-weight: normal; border-right: 0px; padding-top: 0px">--> Enlarge Image
The infinity pool at the Marina Bay Sands resort Photography by Darren Soh/Redux Pictures
It's midnight on a Saturday night at the Marina Bay Sands resort near the sparkling Singapore River, and all the boutiques are shut. But past a cosmetic-surgery clinic and a Ferrari accessories store close by, a large crowd is getting increasingly agitated. Dozens of hopefuls are clamoring to get in to what is billed as the world's most expensive club, Pangaea.
When most people think of Singapore, an order-obsessed Asian version of Wall Street comes to mind. But lately, Singapore has become a haven for the ultra-rich. WSJ Senior Editor Jonathan Dahl joins Lunch Break. Photo: Darren Soh/Redux Pictures.
Tight-fitting Herve Leger bandage dresses are practically a uniform here, often paired with Christian Louboutin heels and Chanel 2.55 bags, as women try to befriend club goers who are lucky enough to get past the red-velvet barrier and bouncers. It is frequently the leggy models, part of the club's core demographic, who succeed. Out-of-town visitors who negotiated their way onto the guest list weeks earlier are turned away, even after offering to pay more than $3,000 for a table. The nightclub is completely full.
Past the bouncers, a walk through a long tunnel with blue ultraviolet lights and a ride up an elevator reveal one of the world's most exclusive parties. Michael Ault, Pangaea's founder, sits at the club's most prestigious table by the bar, on cushions covered in exotic African ostrich skins. His table is covered with bottles of Belvedere vodka, Cristal champagne, buckets of ice and dozens of glasses for his friends. His wife, Sabrina Ault, a former fashion model and now his business partner, wears a fake shark's head and wields a plastic gun while dancing on a table top. At Pangaea, all surfaces are made for dancing—even tables made from the trunks of 1,000-year-old trees and the crocodile-skinned couches.
It may seem counterintuitive, but a dance club does not need a dance floor if you are Michael Ault. A veteran of Manhattan nightlife and descendant of blue-blooded socialites—he is the son of a Van Cleef from the Van Cleef & Arpels jewelry family and the stepson of Wall Street's famed Dean Witter—Ault, 49, prides himself on one thing above all others: the ability to throw a good party. And he has done just that over the years at more than 25 clubs from New York to Miami Beach and São Paulo to London. He is credited with being one of the first nightclub impresarios to introduce bottle service—now commonplace globally—at the legendary New York Spy Bar in the 1990s, where even Kate Moss was turned away on exceptionally packed nights.
The Pangaea experience, he says, replicates the feeling of being at a house party—one that just happens to offer African tribal masks from Ault's personal collection, throbbing music, a $26,000 cocktail that contains a diamond inside and is served by waitresses in black dresses, and the knowledge that many of the people around you are worth billions.
Pangaea, though just over a year old, is now considered the most profitable club in the world with revenues of more than $100,000 per night in recent months, Ault says. It's also one of the most expensive clubs, with tables costing as much as $15,000, and the uber-rich regularly chalking up six-figure bills. He could have brought this extravagance to just about anywhere in the world. London, with its collection of royals and a party scene that attracts Europe's glitterati. Dubai, too, the land of if-you-want-an-island-you-just-build-one. And of course, his hometown and former playground, Manhattan.
But Ault, who moved to Singapore three years ago, says he "no longer feels the magic" in Gotham, which still bears the scars of a financial crisis that knocked the wind out of much of its most extravagant party culture. Singapore, he says, is another matter. This is where he says the rich feel, well, rich, and unusually secure. And where they seem to know only one common language, the language of excess—all too shamelessly displayed in his club.
"One night, there were these kids here—literally kids in their 20s—who all had their own private jets," Ault recalls during another meeting, on a Thursday morning, leaning back on a leather couch in his club wearing bright-blue fuzzy slippers embroidered with a pink skull. "Serious jets, too. There was an A380 which was converted to include a pool and basketball court—it was ridiculous."
"What I see here is what I imagined must have happened in the U.S. in the 1880s, in the Gilded Age, when it first took over England in terms of wealth," he says. "It is truly shocking how much wealth there is—and how willing people are to spend it."
Welcome to the world's newest Monaco, a haven for the ultra-rich in what until recently was mocked as one of the most straight-laced, boring cities in the world. When most people think of Singapore, if they do at all, they think of an order-obsessed Asian version of Wall Street or London's Canary Wharf, only with implausibly clean, sterile streets and no crime. The southeast Asian city-state of five million people is perhaps best known for banning the sale of chewing gum or caning vandals, including American Michael Fay in 1994 for spray-painting cars. Drug traffickers face the death penalty, and even Ault complains the authorities won't let him import his prized gun collection, which now sits in his other homes in Palm Beach and Manhattan.
But over the past decade, Singapore has undergone a dramatic makeover, as the rich and famous from Asia and beyond debark on its shores in search of a glamorous new home—and one of the safest places to park their wealth. Facebook co-founder Eduardo Saverin gave up his American citizenship in favor of permanent residence there, choosing to live on and invest from the island while squiring around town in a Bentley. Australian mining tycoon Nathan Tinkler, that country's second wealthiest man under 40, whose fortune is pegged at $825 million by Forbes, also chose to move to Singapore last year. They join Bhupendra Kumar Modi, one of India's biggest telecom tycoons who gained Singapore citizenship in 2011, as well as New Zealand billionaire Richard Chandler, who relocated in 2008, and famed U.S. investor Jim Rogers, who set up shop there in 2007. Gina Rinehart, one of the world's richest women, slapped down $46.3 million for a pair of Singapore condominium units last year.
And then there are, of course, your average millionaires—more of whom can be found among Singapore's resident population than anywhere in the world. According to Boston Consulting Group, the island had 188,000 millionaire households in 2011—slightly more than 17 percent of its resident households—which effectively means one in six homes has disposable private wealth of at least $1 million, excluding property, business and luxury goods. Add in property, with Singapore real estate among the most expensive in the world, and this number would be even higher. Singapore also now has the highest gross domestic product per capita in the world at $56,532, having overtaken Norway, the U.S., Hong Kong and Switzerland, according to a 2012 wealth report by Knight Frank and Citi Private Bank.
Singapore has long been a magnet for rich expatriates and multinational corporate executives. They are attracted to the city-state's low taxes, virtually crime-free streets, pro-business policies and predictable government, with one political party in power since it gained independence in 1965. But the onetime British trading post's ascent into the stratosphere of the world's ultra-wealthy cities in recent years reflects a momentous shift in the global economy, as wealth settles in Asia after more than a decade of booming emerging-market growth. Asia now has more millionaires than anywhere else, according to consultancy Capgemini and RBC Wealth Management. While the rich lick their wounds in Europe and North America, the net worth of individuals in countries like China and Indonesia are up 6 percent to 7 percent annually.
Danny Quah, professor of economics and international development at the London School of Economics, has calculated that the world's economic center of gravity—measured by looking at income averages across more than 700 places worldwide—has shifted east over the past 30 years, from the Transatlantic Axis to somewhere across the Arabian Peninsula. If current growth trends continue, this center will move in another three decades to a resting point between India and China—just about where Singapore is, meaning its potential as the world's economic center may not even be fully realized.
Unlike the West or even places like the Middle East, though, much of the new wealth being created in Asia is emerging in countries where rich people see their assets at risk, either because of unreliable governments or unloved ones. The Chinese alone are reportedly exporting billions of dollars, saying they no longer trust their government and want to put their money elsewhere. Indians and Indonesians have likewise been looking for a place where they can stash cash to avoid high taxes or work with international-class wealth managers, while steering clear of the unpredictable policy shifts in their rambunctious—and some say, corrupt—democracies. Many Americans and Europeans just want a place where their investments can keep growing—hardly a problem in Singapore, smack in the middle of the fast-growing Asia.
"This kind of sharp change [in the global economy] brings with it an emergence of the very rich, who seek security and stability and a pronounced need for financial services in wealth management, investment, and facilitating and guiding decisions," Quah says. "A place like Singapore has developed both the reputation and the expertise along every single one of these dimensions."
But what really checks all the right boxes for many of the world's ultra-rich is Singapore's obsession with order, predictability and control, all of which give comfort to individuals whose fortunes have recently gone down the drain in many parts of the world. It doesn't hurt that Singapore has some of the lowest taxes in the world, including none on capital gains and most foreign dividends. But it also has relatively secretive private banking laws and zero harassment from paparazzi or protesters, whose activities are narrowly proscribed by Singaporean authorities, further creating an aura of order and stability. Ronen Palan, a professor of international political economy and an expert on offshore wealth and tax havens at City University in London, believes that while Switzerland is "clearly suffering" from the pressure put on its private-wealth sector from the European Union and the U.S., Singapore is a "very secretive location" where many—Asians in particular—believe their wealth will be spared scrutiny from Western regulators.
"For all the flack that Singapore has gotten for chewing gum and caning, it shows that things are orderly here. Corporate governance is in order, the ruling party is stable and is not going anywhere, things actually function—everything works," says Indonesian-born millionaire Frank Cintamani, as he sits in front of gold-embellished couture dresses, wearing a three-piece gray Lanvin suit paired with black brogue shoes. It is Haute Couture Week in Singapore, an event he leads after luring it away from Paris. A Singaporean citizen who has spent a large part of his life living in hotels and who frequently dons diamond brooches, he also leads Men's Fashion Week and Women's Fashion Week, and has a host of other interests and investments, including in publishing.
"Rich people can have fun anywhere," he says, as the sound of a Ferrari zooming past distracts his train of thought, while he directs a stream of models, designers and fashion writers coursing through a tent next to the Marina Bay Sands, where his fashion show is being held. Though sitting down, he constantly has to stand up briefly to greet the ultra-wealthy fashion aficionados who recognize him. "But over here they know they will always be safe, their privacy respected and their investments solid," he says.
Cintamani, 36, interrupts the discussion on Singapore's economic environment, drawing attention to two men—one in a three-piece black suit, and another in a futuristic-looking white top embellished with silver at its collar and reaching past his knees over skinny white pants with platform shoes—and a woman in a white two-piece, loose-fitting suit with silver heels.
"See those guys over there? The three people in the corner? Their combined worth is between six to seven billion U.S. dollars—and I know this for a fact," he says. "This is why we need to do this here," referring to his fashion ventures. He then points out that one of Mongolia's richest men, with wide interests in property and a keen investor in Singapore's real estate, is also in attendance at the couture show. Cintamani, whose business card carries several logos from ventures in magazine publishing to fashion shows, declines to say where his family's wealth comes from, describing it as "sensitive." (His spokesperson says much of it comes from the oil and gas business.)
The irony, as with other earlier boomtowns, is that the very sources of Singapore's success may ultimately prove its undoing. The gushers of cash that have flooded Singapore in recent years have put relentless upward pressure on property prices, with private-home prices rocketing 59 percent higher since the second quarter of 2009, even as real-estate prices have tumbled or gone sideways in much of the rest of the world. Prime Minister Lee Hsien Loong was only admitting the obvious, some analysts say, when in a recent interview he said that the country's property boom is "almost a bubble."
Singapore's "Gini coefficient"—the best-known economic measure of income disparity—is the second highest in the developed world. Wealth-X, a private consultancy that provides intelligence on the world's uber-rich, estimates some 1,400 ultra-high-net-worth individuals now hold more than $160 billion of wealth in Singapore. Even upper-middle-class natives find themselves unable to afford houses in some parts of the city-state, such as Sentosa Cove, where more than 60 percent of the houses are owned by foreigners. Some are put off by flashy displays of wealth, particularly when it is the wealth of foreign nationals.
The dazzling party scene, meanwhile, has brought a new kind of anything-goes culture to Singapore that is threatening the sense of order that helped make it so alluring in the first place. One of the more disturbing examples came in May 2011, when a Ferrari driver from mainland China, traveling at more than 110 miles per hour, crashed into a taxi after running a red light and killed himself, the taxi driver and a passenger. The accident triggered an outburst of anti-foreigner sentiment online, with some Facebook users creating a fake profile for the dead Ferrari driver with derisive comments against mainland Chinese. Although authorities have largely succeeded in keeping out the kinds of criminal elements that populate the shadows of casino capitals like Las Vegas and Macau, local papers don't shy away from reports of problem gambling in Singapore's two new casinos, with one local middle manager reportedly losing $400,000 in a single bet. On a recent Saturday night near Pangaea, seven police officers were seen arresting a topless Caucasian male for alleged drunken and disorderly behavior.
The rich in Singapore now find themselves with "new avenues to display their wealth," according to Garry Rodan, a fellow at the Asia Research Center at Murdoch University, while "aged Singaporeans with grossly inadequate savings can be seen on the streets collecting plastic bottles for recycling." Opportunities to move up the ladder, he says, are shrinking.
On the real-estate front, meanwhile, lawmakers have tried to deal with sky-high prices by introducing a 15 percent stamp duty on foreign purchases of private residential homes. Last year, the government also removed a program that allowed wealthy foreigners to "fast track" their permanent residency if they kept at least $8.1 million in assets in the city-state for five years, though investors who plan to dedicate a few million to help companies in Singapore grow are still welcomed. Authorities have repeatedly tightened the city-state's tight casino-control laws, already among the strictest in the world, to restrict some locals from patronizing gaming floors and to punish casinos if they fail to keep problem gamblers away.
Optimists say those steps may, in the long run, prevent Singapore from going down the same road as earlier cities-of-the-moment that burned bright and then flamed out, like Dubai. "The writing was on the wall in Dubai in 2007—we had made our money and it was time to move on," says Chris Comer, a property developer who is bringing the exclusive Nikki Beach franchise—a global chain of beach party clubs in St. Tropez, Miami and St. Barts, with girls in elaborate bikinis and patrons who show up in Caribbean pirate outfits or zebra body paint—to Singapore. Having lived in and out of Singapore for 17 years, Comer now resides in an oceanfront condominium in Sentosa Cove, a gated enclave of ultra-wealthy residents on an island 20 minutes from Singapore's city-center. His beach club venture—one that he insists is "recession-proof"—is particularly well-matched for the city-state, he says, nodding at the seven pages of used Lamborghini listings in the online auto classifieds.
"Singapore is my home, this is my base, this is where I feel safe," says Comer, speaking in the loft of his four-story office in a shophouse on Singapore's Ann Siang Hill precinct, a preserved historic area just off Chinatown.
Others aren't so sure about the future. They see youths burning through cash, and rich people who are totally oblivious to the sacrifices made by earlier generations that helped places like Singapore climb from Third World to First World status in just a few decades. "You see this happening often, one generation would make the wealth, and the next two or three will lose it," Ault says. Moreover, "there is a mathematical certainty that there is going to be an economic tsunami" at some point, adds Ault, who trained as an economist with degrees from Oxford and the London School of Economics and worked on Wall Street before becoming a nightclub owner.
Others are worried secretive Singapore won't be able to stay that way. The city-state, defiant against the label "tax haven," has taken steps to ensure its tax treaties allow for more information exchange on tax dodgers, most recently firming a double-taxation agreement with Germany. (A spokesperson from the Monetary Authority of Singapore says it works hard to report any "suspicious transactions.") Singapore is also forced to comply with new financial regulations—including the Foreign Account Tax Compliance Act, a way for the U.S. to ensure its taxpayers do not shirk payments through offshore holdings. This, Palan says, is a "game changer" for the private-wealth industry and will be used as a model by other countries.
Still, in the nightclub business—in which there's always another night, and more models and rich kids waiting in line for an exclusive party—it pays to be positive. At least that's how Ault, the highflying owner of Pangaea sees it. He figures that even if things do go awry, "Asia is better positioned." Singapore, his city of choice, he says, is "doing all the right stuff to stay on top."
—Sam Holmes contributed to this article.
By SHIBANI MAHTANI
March 7, 2013 10:07 a.m. ET
<!--<article class="module articleBody" id="articleBody" style="border-bottom: 0px; position: relative; border-left: 0px; padding-bottom: 0px; background-color: transparent; font-style: normal; outline-style: none; outline-color: invert; padding-left: 0px; outline-width: 0px; padding-right: 0px; display: block; font-family: Arial, Helvetica, sans-serif; clear: left; font-size: 10.39px; vertical-align: baseline; border-top: 0px; font-weight: normal; border-right: 0px; padding-top: 0px">--> Enlarge Image
The infinity pool at the Marina Bay Sands resort Photography by Darren Soh/Redux Pictures
It's midnight on a Saturday night at the Marina Bay Sands resort near the sparkling Singapore River, and all the boutiques are shut. But past a cosmetic-surgery clinic and a Ferrari accessories store close by, a large crowd is getting increasingly agitated. Dozens of hopefuls are clamoring to get in to what is billed as the world's most expensive club, Pangaea.
When most people think of Singapore, an order-obsessed Asian version of Wall Street comes to mind. But lately, Singapore has become a haven for the ultra-rich. WSJ Senior Editor Jonathan Dahl joins Lunch Break. Photo: Darren Soh/Redux Pictures.
Tight-fitting Herve Leger bandage dresses are practically a uniform here, often paired with Christian Louboutin heels and Chanel 2.55 bags, as women try to befriend club goers who are lucky enough to get past the red-velvet barrier and bouncers. It is frequently the leggy models, part of the club's core demographic, who succeed. Out-of-town visitors who negotiated their way onto the guest list weeks earlier are turned away, even after offering to pay more than $3,000 for a table. The nightclub is completely full.
Past the bouncers, a walk through a long tunnel with blue ultraviolet lights and a ride up an elevator reveal one of the world's most exclusive parties. Michael Ault, Pangaea's founder, sits at the club's most prestigious table by the bar, on cushions covered in exotic African ostrich skins. His table is covered with bottles of Belvedere vodka, Cristal champagne, buckets of ice and dozens of glasses for his friends. His wife, Sabrina Ault, a former fashion model and now his business partner, wears a fake shark's head and wields a plastic gun while dancing on a table top. At Pangaea, all surfaces are made for dancing—even tables made from the trunks of 1,000-year-old trees and the crocodile-skinned couches.
It may seem counterintuitive, but a dance club does not need a dance floor if you are Michael Ault. A veteran of Manhattan nightlife and descendant of blue-blooded socialites—he is the son of a Van Cleef from the Van Cleef & Arpels jewelry family and the stepson of Wall Street's famed Dean Witter—Ault, 49, prides himself on one thing above all others: the ability to throw a good party. And he has done just that over the years at more than 25 clubs from New York to Miami Beach and São Paulo to London. He is credited with being one of the first nightclub impresarios to introduce bottle service—now commonplace globally—at the legendary New York Spy Bar in the 1990s, where even Kate Moss was turned away on exceptionally packed nights.
The Pangaea experience, he says, replicates the feeling of being at a house party—one that just happens to offer African tribal masks from Ault's personal collection, throbbing music, a $26,000 cocktail that contains a diamond inside and is served by waitresses in black dresses, and the knowledge that many of the people around you are worth billions.
Pangaea, though just over a year old, is now considered the most profitable club in the world with revenues of more than $100,000 per night in recent months, Ault says. It's also one of the most expensive clubs, with tables costing as much as $15,000, and the uber-rich regularly chalking up six-figure bills. He could have brought this extravagance to just about anywhere in the world. London, with its collection of royals and a party scene that attracts Europe's glitterati. Dubai, too, the land of if-you-want-an-island-you-just-build-one. And of course, his hometown and former playground, Manhattan.
But Ault, who moved to Singapore three years ago, says he "no longer feels the magic" in Gotham, which still bears the scars of a financial crisis that knocked the wind out of much of its most extravagant party culture. Singapore, he says, is another matter. This is where he says the rich feel, well, rich, and unusually secure. And where they seem to know only one common language, the language of excess—all too shamelessly displayed in his club.
"One night, there were these kids here—literally kids in their 20s—who all had their own private jets," Ault recalls during another meeting, on a Thursday morning, leaning back on a leather couch in his club wearing bright-blue fuzzy slippers embroidered with a pink skull. "Serious jets, too. There was an A380 which was converted to include a pool and basketball court—it was ridiculous."
"What I see here is what I imagined must have happened in the U.S. in the 1880s, in the Gilded Age, when it first took over England in terms of wealth," he says. "It is truly shocking how much wealth there is—and how willing people are to spend it."
Welcome to the world's newest Monaco, a haven for the ultra-rich in what until recently was mocked as one of the most straight-laced, boring cities in the world. When most people think of Singapore, if they do at all, they think of an order-obsessed Asian version of Wall Street or London's Canary Wharf, only with implausibly clean, sterile streets and no crime. The southeast Asian city-state of five million people is perhaps best known for banning the sale of chewing gum or caning vandals, including American Michael Fay in 1994 for spray-painting cars. Drug traffickers face the death penalty, and even Ault complains the authorities won't let him import his prized gun collection, which now sits in his other homes in Palm Beach and Manhattan.
But over the past decade, Singapore has undergone a dramatic makeover, as the rich and famous from Asia and beyond debark on its shores in search of a glamorous new home—and one of the safest places to park their wealth. Facebook co-founder Eduardo Saverin gave up his American citizenship in favor of permanent residence there, choosing to live on and invest from the island while squiring around town in a Bentley. Australian mining tycoon Nathan Tinkler, that country's second wealthiest man under 40, whose fortune is pegged at $825 million by Forbes, also chose to move to Singapore last year. They join Bhupendra Kumar Modi, one of India's biggest telecom tycoons who gained Singapore citizenship in 2011, as well as New Zealand billionaire Richard Chandler, who relocated in 2008, and famed U.S. investor Jim Rogers, who set up shop there in 2007. Gina Rinehart, one of the world's richest women, slapped down $46.3 million for a pair of Singapore condominium units last year.
And then there are, of course, your average millionaires—more of whom can be found among Singapore's resident population than anywhere in the world. According to Boston Consulting Group, the island had 188,000 millionaire households in 2011—slightly more than 17 percent of its resident households—which effectively means one in six homes has disposable private wealth of at least $1 million, excluding property, business and luxury goods. Add in property, with Singapore real estate among the most expensive in the world, and this number would be even higher. Singapore also now has the highest gross domestic product per capita in the world at $56,532, having overtaken Norway, the U.S., Hong Kong and Switzerland, according to a 2012 wealth report by Knight Frank and Citi Private Bank.
“But what really checks all the right boxes for many of the world's ultra-rich is Singapore's obsession with order.”
The toys of all these millionaires and billionaires are visible across the city-state. A country roughly the size of San Francisco, it now has 449 Ferraris, up from 142 in 2001, while its Maserati fleet has grown from 24 to 469. Yacht clubs are popping up along with super-luxurious shops, like the Louis Vuitton Island Maison, a flagship boutique of the ubiquitous luxury brand housed in its own floating pavilion. Nightclubs like Pangaea and Filter, which are frequented by the young Saverin and his crew of millionaire party boys, have turned into havens for the wealthy to mingle. Rich out-of-towners play at Singapore's two glamorous new casino resorts, opened in 2010, including the Marina Bay Sands complex with its celebrity chef restaurants and an infinity pool on the 57th floor with palm trees overlooking the skyline. In 2007, Bernie Ecclestone decided that the city-state would be added to the illustrious Formula One World Championship calendar. The race—which is the only Formula One night race in the world and is set to continue annually until at least 2017—has emerged as one of the most glamorous Formula One events, broadcasting the impressive Singapore night skyline to millions globally.
Singapore has long been a magnet for rich expatriates and multinational corporate executives. They are attracted to the city-state's low taxes, virtually crime-free streets, pro-business policies and predictable government, with one political party in power since it gained independence in 1965. But the onetime British trading post's ascent into the stratosphere of the world's ultra-wealthy cities in recent years reflects a momentous shift in the global economy, as wealth settles in Asia after more than a decade of booming emerging-market growth. Asia now has more millionaires than anywhere else, according to consultancy Capgemini and RBC Wealth Management. While the rich lick their wounds in Europe and North America, the net worth of individuals in countries like China and Indonesia are up 6 percent to 7 percent annually.
Danny Quah, professor of economics and international development at the London School of Economics, has calculated that the world's economic center of gravity—measured by looking at income averages across more than 700 places worldwide—has shifted east over the past 30 years, from the Transatlantic Axis to somewhere across the Arabian Peninsula. If current growth trends continue, this center will move in another three decades to a resting point between India and China—just about where Singapore is, meaning its potential as the world's economic center may not even be fully realized.
Unlike the West or even places like the Middle East, though, much of the new wealth being created in Asia is emerging in countries where rich people see their assets at risk, either because of unreliable governments or unloved ones. The Chinese alone are reportedly exporting billions of dollars, saying they no longer trust their government and want to put their money elsewhere. Indians and Indonesians have likewise been looking for a place where they can stash cash to avoid high taxes or work with international-class wealth managers, while steering clear of the unpredictable policy shifts in their rambunctious—and some say, corrupt—democracies. Many Americans and Europeans just want a place where their investments can keep growing—hardly a problem in Singapore, smack in the middle of the fast-growing Asia.
"This kind of sharp change [in the global economy] brings with it an emergence of the very rich, who seek security and stability and a pronounced need for financial services in wealth management, investment, and facilitating and guiding decisions," Quah says. "A place like Singapore has developed both the reputation and the expertise along every single one of these dimensions."
But what really checks all the right boxes for many of the world's ultra-rich is Singapore's obsession with order, predictability and control, all of which give comfort to individuals whose fortunes have recently gone down the drain in many parts of the world. It doesn't hurt that Singapore has some of the lowest taxes in the world, including none on capital gains and most foreign dividends. But it also has relatively secretive private banking laws and zero harassment from paparazzi or protesters, whose activities are narrowly proscribed by Singaporean authorities, further creating an aura of order and stability. Ronen Palan, a professor of international political economy and an expert on offshore wealth and tax havens at City University in London, believes that while Switzerland is "clearly suffering" from the pressure put on its private-wealth sector from the European Union and the U.S., Singapore is a "very secretive location" where many—Asians in particular—believe their wealth will be spared scrutiny from Western regulators.
"For all the flack that Singapore has gotten for chewing gum and caning, it shows that things are orderly here. Corporate governance is in order, the ruling party is stable and is not going anywhere, things actually function—everything works," says Indonesian-born millionaire Frank Cintamani, as he sits in front of gold-embellished couture dresses, wearing a three-piece gray Lanvin suit paired with black brogue shoes. It is Haute Couture Week in Singapore, an event he leads after luring it away from Paris. A Singaporean citizen who has spent a large part of his life living in hotels and who frequently dons diamond brooches, he also leads Men's Fashion Week and Women's Fashion Week, and has a host of other interests and investments, including in publishing.
"Rich people can have fun anywhere," he says, as the sound of a Ferrari zooming past distracts his train of thought, while he directs a stream of models, designers and fashion writers coursing through a tent next to the Marina Bay Sands, where his fashion show is being held. Though sitting down, he constantly has to stand up briefly to greet the ultra-wealthy fashion aficionados who recognize him. "But over here they know they will always be safe, their privacy respected and their investments solid," he says.
Cintamani, 36, interrupts the discussion on Singapore's economic environment, drawing attention to two men—one in a three-piece black suit, and another in a futuristic-looking white top embellished with silver at its collar and reaching past his knees over skinny white pants with platform shoes—and a woman in a white two-piece, loose-fitting suit with silver heels.
"See those guys over there? The three people in the corner? Their combined worth is between six to seven billion U.S. dollars—and I know this for a fact," he says. "This is why we need to do this here," referring to his fashion ventures. He then points out that one of Mongolia's richest men, with wide interests in property and a keen investor in Singapore's real estate, is also in attendance at the couture show. Cintamani, whose business card carries several logos from ventures in magazine publishing to fashion shows, declines to say where his family's wealth comes from, describing it as "sensitive." (His spokesperson says much of it comes from the oil and gas business.)
The irony, as with other earlier boomtowns, is that the very sources of Singapore's success may ultimately prove its undoing. The gushers of cash that have flooded Singapore in recent years have put relentless upward pressure on property prices, with private-home prices rocketing 59 percent higher since the second quarter of 2009, even as real-estate prices have tumbled or gone sideways in much of the rest of the world. Prime Minister Lee Hsien Loong was only admitting the obvious, some analysts say, when in a recent interview he said that the country's property boom is "almost a bubble."
Singapore's "Gini coefficient"—the best-known economic measure of income disparity—is the second highest in the developed world. Wealth-X, a private consultancy that provides intelligence on the world's uber-rich, estimates some 1,400 ultra-high-net-worth individuals now hold more than $160 billion of wealth in Singapore. Even upper-middle-class natives find themselves unable to afford houses in some parts of the city-state, such as Sentosa Cove, where more than 60 percent of the houses are owned by foreigners. Some are put off by flashy displays of wealth, particularly when it is the wealth of foreign nationals.
The dazzling party scene, meanwhile, has brought a new kind of anything-goes culture to Singapore that is threatening the sense of order that helped make it so alluring in the first place. One of the more disturbing examples came in May 2011, when a Ferrari driver from mainland China, traveling at more than 110 miles per hour, crashed into a taxi after running a red light and killed himself, the taxi driver and a passenger. The accident triggered an outburst of anti-foreigner sentiment online, with some Facebook users creating a fake profile for the dead Ferrari driver with derisive comments against mainland Chinese. Although authorities have largely succeeded in keeping out the kinds of criminal elements that populate the shadows of casino capitals like Las Vegas and Macau, local papers don't shy away from reports of problem gambling in Singapore's two new casinos, with one local middle manager reportedly losing $400,000 in a single bet. On a recent Saturday night near Pangaea, seven police officers were seen arresting a topless Caucasian male for alleged drunken and disorderly behavior.
“The irony, as with earlier boomtowns, is that the very sources of Singapore's success may ultimately prove its undoing.”
Public expressions of anger or dissatisfaction with Singapore's transformations are limited, since protests for the most part are prohibited. Yet signs of unhappiness are multiplying. The city-state's ruling party retained power with its lowest percentage of votes in Singaporean history in 2011, and a thriving blog culture is prodding officials to consider some changes to the country's economic model, including the creation of a bigger social safety net for the poor, which likely would require higher taxes. Indeed, several of the country's leaders—who for decades staunchly defended long-standing policies of prioritizing economic growth above personal freedoms and welfare—seem to be doing some soul-searching. In his New Year's Day message, Prime Minister Lee called on the nation to balance material goals with its "ideals and values. We are not impersonal, calculating robots, mindlessly pursuing economic growth and material wealth," he said.
The rich in Singapore now find themselves with "new avenues to display their wealth," according to Garry Rodan, a fellow at the Asia Research Center at Murdoch University, while "aged Singaporeans with grossly inadequate savings can be seen on the streets collecting plastic bottles for recycling." Opportunities to move up the ladder, he says, are shrinking.
On the real-estate front, meanwhile, lawmakers have tried to deal with sky-high prices by introducing a 15 percent stamp duty on foreign purchases of private residential homes. Last year, the government also removed a program that allowed wealthy foreigners to "fast track" their permanent residency if they kept at least $8.1 million in assets in the city-state for five years, though investors who plan to dedicate a few million to help companies in Singapore grow are still welcomed. Authorities have repeatedly tightened the city-state's tight casino-control laws, already among the strictest in the world, to restrict some locals from patronizing gaming floors and to punish casinos if they fail to keep problem gamblers away.
Optimists say those steps may, in the long run, prevent Singapore from going down the same road as earlier cities-of-the-moment that burned bright and then flamed out, like Dubai. "The writing was on the wall in Dubai in 2007—we had made our money and it was time to move on," says Chris Comer, a property developer who is bringing the exclusive Nikki Beach franchise—a global chain of beach party clubs in St. Tropez, Miami and St. Barts, with girls in elaborate bikinis and patrons who show up in Caribbean pirate outfits or zebra body paint—to Singapore. Having lived in and out of Singapore for 17 years, Comer now resides in an oceanfront condominium in Sentosa Cove, a gated enclave of ultra-wealthy residents on an island 20 minutes from Singapore's city-center. His beach club venture—one that he insists is "recession-proof"—is particularly well-matched for the city-state, he says, nodding at the seven pages of used Lamborghini listings in the online auto classifieds.
"Singapore is my home, this is my base, this is where I feel safe," says Comer, speaking in the loft of his four-story office in a shophouse on Singapore's Ann Siang Hill precinct, a preserved historic area just off Chinatown.
Others aren't so sure about the future. They see youths burning through cash, and rich people who are totally oblivious to the sacrifices made by earlier generations that helped places like Singapore climb from Third World to First World status in just a few decades. "You see this happening often, one generation would make the wealth, and the next two or three will lose it," Ault says. Moreover, "there is a mathematical certainty that there is going to be an economic tsunami" at some point, adds Ault, who trained as an economist with degrees from Oxford and the London School of Economics and worked on Wall Street before becoming a nightclub owner.
Others are worried secretive Singapore won't be able to stay that way. The city-state, defiant against the label "tax haven," has taken steps to ensure its tax treaties allow for more information exchange on tax dodgers, most recently firming a double-taxation agreement with Germany. (A spokesperson from the Monetary Authority of Singapore says it works hard to report any "suspicious transactions.") Singapore is also forced to comply with new financial regulations—including the Foreign Account Tax Compliance Act, a way for the U.S. to ensure its taxpayers do not shirk payments through offshore holdings. This, Palan says, is a "game changer" for the private-wealth industry and will be used as a model by other countries.
Still, in the nightclub business—in which there's always another night, and more models and rich kids waiting in line for an exclusive party—it pays to be positive. At least that's how Ault, the highflying owner of Pangaea sees it. He figures that even if things do go awry, "Asia is better positioned." Singapore, his city of choice, he says, is "doing all the right stuff to stay on top."
—Sam Holmes contributed to this article.
