Hong Kong Is The Family Office Hub Of North Asia
Concentration of family wealth in Hong Kong
A study in 2018 showed that Hong Kong had the highest density of UHNW individuals (i.e. with wealth above USD 30m) among all countries and areas in the world, with the second largest population of UHNW individuals among cities around the world (only behind New York)
Strong growth of family offices in Asia
As of 2019, about 39% of the world's wealth came from Asia, and about 28% of the world's ultra-high-net-worth individuals lived there. 13 In contrast, only about 18% of all family offices were located in Asia (which is 21 percentage points and 10 percentage points lower than total wealth and total number of UHNW individuals respectively).
According to a report by Forbes, these differences are mostly due to the fact that many of these UHNW people are still in their first generation, and waves of intergenerational wealth transfer can be expected. Market practitioners think that these waves could lead to a high potential growth in demand for family offices in Asia.
Development of the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”)
The Outline Development Plan for the Guangdong–Hong Kong–Macao Greater Bay Area, which came out in February 2019, has a number of policies that aim to make it easier for financial services to cross borders.
After the Leading Group for the Development of the Guangdong-Hong Kong-Macao Greater Bay Area met in November 2019, the Central Hong Kong Government took a number of steps, such as "exploring the establishment of a cross-boundary wealth management scheme" in the GBA.
As one of the most successful and wealthy places on the Mainland, the GBA was home to 19,300 of the 84,000 UHNW families in the country (23% of the total). As the need for cross-border asset allocation and policy breakthroughs grows in the region, market participants expect that Hong Kong's UHNW families will want to use the services of family offices a lot.
Dynamic investment opportunities reeling in family offices
Mainland China is still one of the fastest-growing economies in the world, and many families from Europe, North America, and the Middle East want to participate in this growth. This means that Hong Kong will continue to act as a way for foreign investors to get into the market. Hong Kong is the largest private equity (PE) market outside of Mainland China and the largest hedge fund hub in Asia.
This shows that investors see opportunities to make money by investing directly in start-ups through their businesses in Hong Kong. With a steady flow of investment projects, family offices looking for long-term investment opportunities would be drawn to the area.
The fast growth of UHNW families in the Mainland gives Hong Kong a lot of chances to serve this family office ecosystem, which has a lot of room to grow and could become the best place for these families to manage and diversify their capital.
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