In his policy address in October, Chief Executive John Lee Ka-chiu pledged to expand tax concessions for single-family offices. The expansion plan is now being consulted with industry players before a change in law is made.
“We are thrilled with the proposed expansion of the scope of tax-exempt investments to cover a wider range of assets, such as loans, private credit investments and virtual assets,” said Anthony Lau, the Hong Kong leader of Deloitte Private, an advisory platform for high-net-worth individuals.
“The expansion of the tax concession to cover virtual assets is very much welcomed as this makes Hong Kong one of the first movers, considering that a similar tax concession regime in Singapore does not specifically cover virtual assets,” he said.
Koh Liang Heong, UBS’s head of global family and institutional wealth, also said the new tax concessions will enhance the city’s attractiveness as a family office hub.
“On the back of an attractive tax-concession regime and other relevant measures, we believe Hong Kong will continue to attract wealthy families to establish family offices,” he said.
Family offices are companies set up by wealthy individuals to handle investments, succession planning, charity or art collections. The city had more than 2,700 single-family offices last year, according to a report by Deloitte.
In May 2023, Hong Kong introduced tax incentives for family offices, though they were mainly focused on more traditional assets like stocks and bonds.
Hong Kong is a good base for family offices because of its proximity to mainland China, Koh said.
“Despite a slowdown in growth, wealth creation in China continues,” he said. “As we have observed in the past, billionaires in China are always looking to innovate and create wealth for society and themselves. The Chinese government’s stimulus and recovery efforts have increased the need for family offices.”
“Hong Kong, being the first port of call in Asia for families residing in Greater China or for foreign families seeking to tap into investment opportunities in China, remains an attractive destination.”
Deloitte’s Lau said the tax incentives could be enhanced if the government considered expanding exemptions to cover art and collectibles, which are growing in popularity among family offices.
In 2023, the combined auction sales of Christie’s, Sotheby’s, and Phillips in Hong Kong trailed only New York and were ahead of London, Lau said, quoting data from Statista.
“More family offices come to Hong Kong to set up foundations or treat it as an [non-governmental organisation] and start doing charitable activities,” said Melissa Fung, southern region leader of Deloitte China Consulting Business.
Alex Wolf, managing director and head of Asia investment strategy at JP Morgan Private Bank, said Hong Kong’s strong regulatory regime makes wealthy customers from overseas want to set up family offices in the city.
“Ensuring strong regulatory compliance will remain crucial, as clients prioritise the security of their assets,” Wolf said.
Vincent Lecomte, the global wealth management CEO at French lender BNP Paribas, lauded Hong Kong’s family office ecosystem and said the bank will have a lot of opportunities for expansion in Asia next year.
“There are many successful entrepreneurs in this region,” he said. “Our job at BNP is to make sure that we can [help] them by bringing all the financing capabilities to support these investments and expansion.”
In September, BNP said it would buy HSBC’s private banking business in Germany, which should close in the second half of next year. It will also push the bank’s assets under management over the 40-billion euro (US$44.64 billion) mark in Germany.
“The acquisition will expand our balance sheet to support our expansion in the coming years,” he said. “We believe that there are real opportunities to be seized in our wealth management business globally, with Asia and mainland China to be one of the key driving forces.” He added that the lender now has 20 per cent of its assets under management in Asia.
Manulife Hong Kong CEO Patrick Graham agreed that Asia’s family offices and wealth management businesses are growing.
“The high-net-worth population is rapidly growing in Asia, particularly in mainland China and Hong Kong,” Graham said.
“Hong Kong, with its proximity to mainland China within the [Greater Bay Area], has the opportunity to position itself as a superconnector and a prime destination for affluent individuals seeking insurance policies for wealth management and estate planning.”
