Hong Kong is witnessing a remarkable surge in the growth of family businesses, particularly from the Asia-Pacific region. According to global real estate consultants Knight Frank, the number of ultra-high-net-worth (UHNW) individuals in the region is growing faster than anywhere else in the world, creating more wealth for their families – and Hong Kong is at the forefront of that growth. These families have a common desire to establish a family office where they can leverage local infrastructure and resources to look after and grow their wealth.

The appeal of Hong Kong lies in its strategic location and position as Asia’s premier financial centre, as well as having a government that is highly supportive of the family office sector. That support extends across the city’s financial and business ecosystem, addressing the core needs of family businesses, as well as driving creativity, innovation and entrepreneurship – all key factors for a dynamic international city, adding to the range of investment opportunities offered.

As the number of family businesses in Asia has grown, so has Hong Kong’s role as a home for family offices. In addition to a strong macro environment, family offices also demand a robust and transparent market infrastructure, favourable government policies and an opportunity for new wealth creation. Foreign businesses can incorporate their operations in Hong Kong, register branches and set up representative offices without encountering obstacles or undue regulation, and there are no restrictions on ownership.

According to a survey conducted by the Commerce and Economic Development Bureau, published in December 2023, the number of Hong Kong businesses with parent companies in mainland China or overseas stood at more than 9,000, with a total of 468,000 staff in the city. Hong Kong is home to more of the world’s top 500 family enterprises than any other territory in Asia-Pacific, including mainland China, India and South Korea. The city benefits from being part of the Greater Bay Area (GBA), with a population of more than 86 million and 20 per cent of China’s UHNW and high-net-worth (HNW) households.

New scheme aims to attract capital

Hong Kong is now set to attract more global talent and HNW individuals with the introduction of the New Capital Investment Entrant Scheme (CIES), with details announced at the end of last year. The scheme, which will process applications starting later this year, aims to draw individuals from various sectors.

The city has long been recognised as a global financial hub, attracting businesses and investors from around the world. Its strategic location at the heart of Asia, coupled with its well-established legal and regulatory framework, has made it an ideal destination for international companies and individuals looking to tap into the vast opportunities offered by the region.

The New CIES provides a pathway for residency in Hong Kong and is expected to further enhance Hong Kong’s appeal to global talent and family offices. This will not only attract HNW individuals but also encourage them to bring their expertise and resources to the city, contributing to its economic growth and development.

The financial services sector is expected to be one of the main beneficiaries of the new scheme. Hong Kong is already Asia’s largest financial centre, home to numerous multinational banks, asset management firms and insurance companies. The influx of global talent is likely to further strengthen the city’s position in the financial services industry, attracting more businesses and investors to set up their operations in Hong Kong.

The CIES Investment Portfolio will be set up and managed by the Hong Kong Investment Corporation, to make investments in companies and projects that have a Hong Kong nexus. This will support the development of innovation and technology industries and other strategic industries beneficial to the long-term development of the city’s economy.

New CIES to boost Hong Kong’s liquidity, strengthening its status as a financial hub

The New CIES is set to make Hong Kong a magnet for family offices globally, promising to spur the city’s economic growth, energise its capital markets and bolster the asset and wealth management sectors. It aims to fuel economic expansion by attracting affluent families whose expertise, networks and capital can catalyse comprehensive economic development. This initiative is not only about increasing wealth but also about harnessing the skills and connections that come with it.

The New CIES is also poised to shape Hong Kong’s investment landscape. Targeting foreign UHNW individuals, the scheme encourages investment in various sectors, from cutting-edge technology to burgeoning start-ups, further invigorating the city’s robust capital markets. This strategic diversification of investments fosters innovation, job creation and economic resilience in the long run.

The scheme will strengthen Hong Kong’s position as a premier financial nexus. The influx of UHNW individuals and their investments amplifies the city’s reputation as a global financial centre. This further expands Hong Kong’s capital markets as increased investment generates demand for financial products and services.

Furthermore, the New CIES is anticipated to fortify the city’s asset and wealth management industry. The expected surge in demand for bespoke asset management services, private banking and family office solutions will not only grow but also diversify the sector, positioning Hong Kong as a top-tier hub for global family offices.

The anticipated growth of Hong Kong’s family office ecosystem will also catalyse an uptick in demand for professional services, including private banking, trust management, accounting, legal and wealth management. This expansion is set to enrich the local service industry, creating a cycle of growth and innovation.

The implementation of the New CIES in Hong Kong has the potential to enhance the city’s economy by attracting investments, broadening the investment sphere, amplifying capital markets and cultivating the asset and wealth management industry. This will help position Hong Kong as the ideal location for global family offices to settle and thrive.

A family office intending to set up, operate or expand in Hong Kong can rely on the support of the FamilyOfficeHK team, which is an integral part of InvestHK, the government department responsible for attracting and facilitating foreign direct investment in Hong Kong. The team can also connect family offices with relevant government departments to help them establish and operate their businesses in Hong Kong. It can also guide global entrepreneurs through the process of setting up a family office in the city.

Last year, FamilyOfficeHK announced the launch of the Network of Family Office Service Providers, a platform specially designed to help promote Hong Kong as a preferred destination of choice for global family offices. It was established to cultivate an ecosystem that continues to support local and global family offices as they set up or grow in Hong Kong.

Sources: SCMP