Hong Kong attracts 30 family offices amid 100 enquiries
Hong Kong has attracted about 30 family offices to set up shop in the city this year amid 100 enquiries, after launching a major marketing campaign in March, according to the government’s FamilyOfficeHK team.
The new family offices hail from markets including mainland China, Southeast Asia, Europe and the Middle East, Jason Fong, global head of family office at Invest Hong Kong, told AsianInvestor.
As of the end of May, FamilyOfficeHK fielded 100 family enquiries about opening a Hong Kong office. About 30% have already committed or started the process.
The team previously also helped 14 family offices set up base in Hong Kong between June and October 2022.
Fong said the biggest draw for families was the tax benefits.
The concessions not only drew new family offices butprompted existing ones to consider repatriating overseas assets for tax benefits.
“The number is very encouraging, and we are pumped up with confidence that we will make the KPI sooner than it was mandated,” Fong told AsianInvestor.
The government set a target in late 2022 to attract at least 200 family offices to the city by 2025.
The FamilyOfficeHK team operates under Invest Hong Kong, which is a government department for foreign direct investment.
BROAD INTEREST
Of the 100 enquiries, more than half have a Chinese background, including executives from Chinese companies in life science, fintech, and green tech.
This is followed by Southeast Asian families, while the rest come from Australia, Europe, UK, and the Middle East.
The confirmed 30 family offices have a similar geographic mix from diverse backgrounds and generations.
So far, commitments from the Middle East were not as strong as expected. Benefiting from improving political relations between China and Persian Gulf countries, the region remains one of the priority markets for further outreach, according to Fong. FamilyOfficeHK has planned more engagement activities there later this year.
THE CATALYST
Fong noted that families found tax incentives in Hong Kong the most appealing, which came into effect on May 19 and apply to any year of assessment commencing from April 1, 2022.
Hong Kong adopted a rule-based, or whitelist-like tax break regime where an eligible single family office in the city that has a minimum asset threshold of HK$240 million ($30.7 million) will be exempt from profits tax for qualifying investments.
“That gives the biggest flexibility for family offices to consider setting up in Hong Kong,” Fong said. “It grants the tax certainty they need.”
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He gave the example of a Southeast Asian family, which has had a business presence in Hong Kong for about four decades, and which is now pointing to “good timing” to reorganise their portfolios under the new tax rules.
Previously, they managed their private wealth and corporate wealth together with most investments outsourced to external managers. But the process got complicated over the years from a tax perspective. Hong Kong’s tax incentives give them a good reason to evaluate and consider separating their private and corporate wealth, Fong said.
Tax policy is not only effective in attracting new family offices, but also in prompting established family offices to consider bringing some overseas-managed assets back to Hong Kong for tax exemptions, he noted.
HIRING PLAN
In the annual budget announced in February, the government said it would allocate HK$100 million ($12.8 million) over the next three years to Invest Hong Kong to woo more family offices to the jurisidiction.
Currently, the FamilyOfficeHK team is comprised by six people under the leadership of Fong. Considering the amount of work, Fong said the team is “very shorthanded”.
He plans to hire a head of Southeast Asia based in Singapore to look after the ASEAN markets, and a head of Middle East, who will likely be based in Dubai.
The team already has a head of Europe, Zipo Lai, based in Belgium.
In China, Fong said they plan to hire another co-head in Shanghai to manage the “huge market” together with current China head Anna Liao, who is based in Beijing.