Hong Kong, already a key wealth hub for ultra-high-net-worth individuals (UHNWIs worldwide), is growing its position as a prime destination for inflows from further afield, challenging traditional financial centres.
Geopolitical tensions and banking system turmoil are understandably of great concern to UHNWIs. Locations such as Switzerland, which also imposes a wealth tax, are no longer a guaranteed ‘safe haven’, and wealth and assets are shifting from West to East.
Hong Kong stands out for its neutrality, stability and respect for privacy, and UHNWIs are realising that a Hong Kong-based family office can be a powerful tool to diversify investments, preserve wealth or protect assets in politically and economically unstable times. Indeed, the number of single family offices in Hong Kong reached 2,700 in 2023.
When selecting a location for their headquarters, family offices will likely consider a variety of factors, including the regulatory environment, the economic and political situation, investment opportunities, availability of talent and expertise, and quality of life.
Javier Romero, a native of Malaga, Spain, is the chairman of Shanghai-based ChinaLink ESG T, a venture capital firm that invests in companies in the technology and renewable energy sectors, among others. He is also on the board at Hygreen, Sermatec, Chase Therapeutics and CleanAir Spaces.
He chose Hong Kong for his family office as part of an overall wealth plan and in preparation for the first handover of family wealth within the next 10 years.
‘Hong Kong offers a combination of access to China, a robust financial ecosystem, favourable tax policies and high living standards,’ Javier Romero.
‘It’s a compelling option for family offices with global aspirations and a focus on Asian investments,’ Romero says.
‘It’s the ideal location for us, especially given the access to talent that can help with the planning, as well as knowing that the tax regime and stable regulatory environment will make the transfer of family wealth efficient and legally secured.’
Increasingly appealing to ultra-high-net-worths
In addition to Hong Kong’s political and economic stability, rule of law protects investors. The ‘One Country, Two Systems’ principle ensures that investors have access to transparent and independent legal processes, and the regulatory system aligns with major overseas markets.
It has also been noted, including by the CEO of UBS, Sergio Ermotti, that Hong Kong could surpass Switzerland as the world’s top cross-border wealth management centre by 2027.
‘Hong Kong has developed into a mature financial hub with advanced banking, asset management and investment services,’ Romero says. ‘Its legal and regulatory framework is evolving to accommodate the unique needs of family offices, demonstrating its commitment to this sector and making it more attractive to ultra-high-net-worth individuals and their families.’
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There is a tax concession for single-family offices in Hong Kong. This, combined with the fact that only income earned within Hong Kong is subject to tax, and there are no capital gains, inheritance or sales taxes, means Hong Kong is a tax-efficient location for investment activities and wealth preservation.
A strategic centre for investment activity
Given its proximity to and connections with Mainland China and other Asian markets, Hong Kong offers unique access to the vibrant Asian investment ecosystem.
‘Hong Kong’s geographic position is ideal. It has unparalleled access to the Chinese market, which continues to offer vast growth potential, as well as proximity to other major Asian economies, making it a strategic centre for managing investments across the region,’ Romero explains.
The Greater Bay Area initiative links Hong Kong with Macau and nine major cities in Mainland China’s Guangdong province, including Shenzhen and Guangzhou, creating an economic zone with more than 87 million people and GDP of around USD2 trillion that enhances cross-border investment and business opportunities for family offices.
There are more than 2,600 listed companies in Hong Kong (Main Board and GEM). Market capitalisation reached $4.4 trillion as of the end of November 2024, while the average daily turnover for the first 11 months of 2024 was $16.8 billion, an increase of 24 per cent over the same period in 2023.
Hong Kong additionally has a strong track record as an international IPO centre, particularly for Chinese and Asian companies, and now ranks among the top five global IPO venues.
It is also at the forefront of regulation in new investment themes and asset classes, Romero says, such as sustainable and impact investing; digital assets, cryptocurrencies and blockchain; and tokenised assets and decentralised finance.
Family offices will find a strong network of support
Having been a hub for family offices for over a century, Hong Kong is well experienced in supporting family offices to operate and grow.
The Global Financial Centres Index (GFCI), which evaluates the competitiveness of 121 financial centres around the world, ranked Hong Kong first in Asia and third globally in its 2024 report, behind only New York and London.
‘With a concentration of top financial institutions, asset managers and advisory firms, Hong Kong enables family offices to access a wide range of tailored financial services,’ Romero says. ‘This support network is crucial for implementing sophisticated investment and wealth management strategies, and having access to a highly qualified talent base is critical for family offices looking to establish a team that understands both the global and Asian investment landscapes.’
High quality lifestyle and connectivity
From a lifestyle perspective, Hong Kong offers high-quality healthcare and education, low crime rates, excellent connectivity and infrastructure, and world-class arts, sports and entertainment, appealing to families prioritising both lifestyle and business needs.
Furthermore, Hong Kong’s international and multicultural environment allows family members to integrate smoothly into the community, something Romero has experienced. ‘My family is mixed Chinese and European; my wife is Shanghainese and my children are bilingual, in terms of both language and culturally. So for us it is of the utmost importance that Hong Kong acts as a bridge between China and the rest of the world.’
Hong Kong offers a secure, self-governing and stable platform for wealth management, making it an ideal destination for UHNWIs seeking a reliable financial hub for their family office activities.
The city’s tax regime is attractive, ensuring that wealth can be preserved and passed on efficiently, and its financial professionals are highly skilled and able to communicate with clients from around the world.
This flexibility, combined with the city’s global connectivity, ensures that Hong Kong continues to be a strategic link between East and West.
