In a push to strengthen its status as a premier investment destination, Hong Kong is taking significant steps to expand tax concessions for single-family offices. This strategic move, coupled with the increasing wealth among the affluent in China and Asia, positions the city as an attractive hub for families looking to manage their assets effectively.
Tax Concessions Are on the Horizon
During his policy address in October, Chief Executive John Lee Ka-chiu committed to enhancing tax benefits for single-family offices. As part of this initiative, the government is currently consulting with industry stakeholders ahead of any legislative changes.
Anthony Lau, the head of Deloitte Private in Hong Kong, expressed enthusiasm for the proposed broadening of tax-exempt investments. He highlighted that this would embrace a wider range of assets, including loans, private credit, and virtual assets. Lau noted, “The inclusion of virtual assets sets Hong Kong apart, especially given that Singapore’s similar regime does not encompass these assets.”
A Growing Family Office Ecosystem
The interest in family offices is steadily on the rise, with the latest reports indicating that Hong Kong boasted over 2,700 single-family offices last year. This growth reflects the increasing trend of wealthy families opting for these bespoke investment firms that focus on various aspects like succession planning, charity, and art collections.
UBS’s Koh Liang Heong remarked that the attractive tax framework will bolster Hong Kong’s appeal to those establishing family offices. “With the combination of favorable tax measures and other incentives, we anticipate continued interest from affluent families looking to set up their family offices here.”
Wealth Creation Continues
Despite a slowdown in growth, the creation of wealth in mainland China endures. Koh pointed out that billionaires in China are keen on fostering innovation and wealth creation for both society and their personal ventures. The Chinese government’s stimulus efforts are further fueling the demand for family offices, making Hong Kong a logical choice for families residing in Greater China or foreign families seeking investment opportunities.
Deloitte’s Anthony Lau also suggested that further enhancements to tax incentives could include exemptions for art and collectibles, which have been gaining traction among family offices. Recent statistics from Statista revealed that Hong Kong’s auction sales at major houses like Christie’s, Sotheby’s, and Phillips ranked second only to New York, outperforming London.
Embracing Charitable Endeavors
In addition to investment management, many family offices are also keen on establishing foundations to engage in charitable activities. Melissa Fung, leader of the Deloitte China Consulting Business in the southern region, noted this growing trend, emphasizing the importance of philanthropic endeavors among wealthy families in Hong Kong.
Regulatory Framework Matters
According to Alex Wolf, managing director and head of Asia investment strategy at JP Morgan Private Bank, Hong Kong’s strong regulatory environment greatly attracts overseas clients looking to establish family offices. “Adhering to robust regulatory compliance is vital as clients prioritize the safety of their assets,” he affirmed.
BNP Paribas’s global wealth management CEO, Vincent Lecomte, praised Hong Kong’s vibrant family office ecosystem, pointing out that it creates numerous opportunities for expansion in Asia. He emphasized the bank’s commitment to supporting successful entrepreneurs in the region by providing comprehensive financing capabilities.
The Future of Wealth Management
With plans for growth, BNP Paribas announced a significant acquisition of HSBC’s private banking operations in Germany, aiming to elevate its assets under management beyond 40 billion euros (approximately 44.64 billion USD) in that market. Lecomte noted that Asia, particularly mainland China, is a critical growth engine for their wealth management services.
Manulife Hong Kong’s CEO, Patrick Graham, echoed this sentiment, highlighting the rapid increase in the high-net-worth population in Asia. He underscored Hong Kong’s strategic position within the Greater Bay Area, suggesting it could become a vital connector and destination for affluent individuals seeking wealth management and estate planning solutions.
As Hong Kong embarks on these ambitious changes, the city is poised to not only attract family offices but also solidify its status as a global leader in wealth management.
