Situated on the doorstep of China, the second-biggest and fastest-growing global superpower, Hong Kong is a two-way gateway between the West and Eastern economies. This insight explores why Hong Kong is a leading location for family offices and highlights some of the largest local family offices in the region.
A Brief History of Hong Kong
Hong Kong has a rich history, most recently reaching the 19th century. Its natural harbour made it the contentious battleground between the British and the Chinese government. The opium wars in the late 1800s ultimately ceded the region to British rule on a 99-year lease. Under the lease, Hong Kong underwent a significant transformation. It deployed a capitalist economic system, which saw the rise of its modern society. As a free port, Hong Kongers freely facilitated international trade without tariffs, and its global commerce flourished. The unique blend of Eastern and Western influences drove the region’s metamorphosis from a simple fishing village to a highly developed financial centre district.
Current economic climate
In 1997, when the lease ended, the Chinese government made a new agreement with Hong Kong called the “One country, two systems” policy. The policy ensured that Hong Kong would continue to operate under the capitalist system for the following 50 years. Today, Hong Kong remains a free port for international trade and is one of the leading financial centres in the world. It maintains its own independent economic and legal system. And can also freely establish and maintain economic relations with other regions and countries.
New family office policies in Hong Kong
With this background in mind, the Hong Kong government is shifting gears to bolster its image as the financial hub for the Asia-Pacific region. With competing countries on the rise, such as Singapore, it is implementing new legislation to attract high-net-worth individuals and single-family offices to its shores. The new legislation provides family offices with tax exemptions and other benefits for conducting investment activities. The government is also funding various initiatives to accelerate these efforts, including a dedicated $100 million to InvestHK to attract 200 more family offices to the city by the end of 2025.
Measures to attract family offices
The Financial Services and the Treasury Bureau is leading an initiative in Hong Kong called “Wealth for Good in Hong Kong.” This program is dedicated to promoting technology, philanthropy, green finance, and art in family office businesses. Other measures to encourage family offices to come to the area include:
Hong Kong created the Capital Investment Entrant Scheme (CIES) to make it easier for wealthy individuals and family offices to immigrate. By investing in Hong Kong’s asset markets, like equities, government and corporate bonds, applicants can get permanent residency for themselves, their spouses, and their children under 18. The minimum asset threshold is HK$10 million (around $130K) for an eligible applicant. The aim is to attract young HNWI and a talent pool to the region.
Hong Kong has passed a tax concession bill offering a tax exemption for eligible family offices. The bill exempts tax from profits earned by family-owned investment holding vehicles (FIHV). The FIHV must be managed or controlled in Hong Kong during the assessment year’s basis period and meet the minimum asset threshold of HK$ 240 million (around $30 million). The move is to foster Hong Kong’s position as an international asset and wealth management centre.
Philanthropy and art
The government plans to develop Hong Kong into a philanthropic centre for global family offices and philanthropists. The dedicated FamilyOfficeHK, another government-led initiative, has expanded its role to cover services like facilitating philanthropic endeavours of wealth owners and assisting in education-related matters. In addition, the Hong Kong Airport Authority is exploring establishing storage, display, and appreciation facilities for art and treasures at Hong Kong International Airport.
Hong Kong – leading the way for family offices
Due to its advantageous location, robust financial infrastructure, and favourable economic policies, Hong Kong is championing the cause of the family office industry. Its history as a free port and financial centre, along with the “One country, two systems” policy, has attracted many wealthy individuals from mainland China seeking stability and autonomy.
The government leads various initiatives, including tax exemptions, funding opportunities, and philanthropic support, to further encourage the establishment of family offices in the city. With its continuous efforts, Hong Kong could quickly become a top choice for family offices looking to safeguard and expand their wealth in the Asia-Pacific region.
The largest family offices in Hong Kong