New wave of family offices poised to set up or expand operations in Hong Kong

More than 130 family offices were currently poised to set up or expand their operations in Hong Kong as of the end of March, according to Christopher Hui, Secretary for Financial Services and the Treasury, in a written reply to the Legislative Council on 24 April.

They comprised 82 family offices based in mainland China, 13 from the rest of Asia, 27 from Europe, nine from the Middle East, four from Oceania and one from North Africa.

He also said the dedicated team at FamilyOfficeHK, part of the city’s investment promotion agency InvestHK, had helped 64 family offices to set up or expand their operations in Hong Kong over the same period. Of these, 49 were from the mainland China, eight from the rest of Asia, four from North America and three from Europe.

As a result, Hui said, InvestHK was confident it could achieve the target of assisting at least 200 family offices to establish or expand their operations in Hong Kong by the end of 2025, a goal outlined by Hong Kong Chief Executive John Lee in his 2022 policy address.

“The government welcomes all lawful and rule-compliant family offices to set up in Hong Kong and will provide them with necessary and appropriate assistance, thereby promoting local financial, professional services and economic development,” said Hui.

“The procedures of establishing a family office are no different from those of establishing a company in Hong Kong,” he added. “Professionals of various sectors providing services concerned to family offices will conduct necessary due diligence in compliance with the statutory requirements and relevant guidelines.”

In addition to its competitive tax regime, the Hong Kong government has introduced a number of additional incentives for family offices. These include the new Capital Investment Entrant Scheme (CIES), which aims to enrich the talent pool and attract more new capital to Hong Kong, and special tax concessions for Family-owned Investment Holding Vehicles (FIHVs), which provide profits tax exemptions for eligible FIHVs and eligible special purpose entities (FSPEs) in respect of assessable profits derived from qualifying and incidental transactions carried out by eligible SFOs in Hong Kong.

A ‘Market Study on the Family Office Landscape’, recently published by consultant Deloitte in collaboration with FamilyOfficeHK, identified that around 2,700 single-family offices were operating in Hong Kong at the end of last year. More than half of these were set up by ultra-high-net-worth (UHNW) individuals whose wealth reached or exceeded USD50 million.

The study defined ‘single-family office’ as an independent, private business entity with the sole purpose of managing various needs of a single family such as financial needs, family governance, wealth planning, wealth preservation, wealth transfer and philanthropic endeavours.

In addition to those family offices that had been newly established with the help of FamilyOfficeHK, many UHNWs had been bringing their own professional and sophisticated teams to establish family offices in Hong Kong while keeping an extremely low profile.

The study said that if multiple-family offices had been included, the total number of family offices in Hong Kong would be even higher than 2,700. It further anticipated that the newly introduced family office regime and the favourable measures introduced by the HKSAR government would take Hong Kong to the next level as the world’s pre-eminent centre for family offices.

“The growing interest for establishing a family office in Hong Kong is a testament to the city’s status as an international finance centre, which offers a strong infrastructure for family offices to operate and grow,” said Alan Fong, Managing Director of Sovereign Trust (Hong Kong) Limited.

“Besides the favourable tax concessions, Hong Kong has a pool of highly skilled and qualified professionals within the financial, legal and wealth management sectors to ensure the smooth management of a family office. Along with the support from the HKSAR Government, I have no doubt that the government will achieve its target of helping to establish at least 200 family offices by 2025.”