Since coronavirus entered the scene in 2019, there has been a David and Goliath battle disrupting the Family Office world and it has always been about one victory: Being crowned the number one destination for Family Offices in Asia.
The two countries battling it out for the crown, Hong Kong and Singapore, have for three years introduced a series of incentives aimed at attracting wealthy families to their shorelines and until now, Singapore has been leading the race.
Singapore has steadily become one of the most popular jurisdictions for Family Offices with political stability, a high standard of living and various tax incentives attracting UHNW Families from the rest of the world.
There were thought to be 200 new Single Family Offices established in Singapore in 2021, collectively managing more than $20BN in AUM. This is the only official figure quoted by the Monetary Authority of Singapore (MAS) however our own research suggests there could be a considerable amount more.
While the billionaire population across Asia has increased by 39%, Singapore has gained at least four billionaires in the last year alone. It has proven itself to be a well-established country with a strategic location, stable economy, balanced political system and robust regulatory framework. It has a well-regulated financial center, a selection of trust and corporate services providers and the simplicity of a shared language.
Despite all of this, Hong Kong has continued to do everything it can to rival the Garden City.
In 2021 we reported that the Hong Kong government was rolling out a red carpet to Family Offices. The Legislative Council had passed a law for companies to set up Limited Partnerships, a popular format for Family Offices which was soon followed by the establishment of the Family Office Association (FOA). A body led by five of Hong Kong’s largest Family Offices.
Weeks later, the government agency InvestHK introduced a portal to provide key information for Family Offices while the Securities and Future Commissions agency issued guidance on Family Office licensing.
Moving into 2022 and InvestHK took this one step further by sending their staff to Abu Dhabi and Dubai to recruit new Family Offices to their shorelines. The attraction, they hoped, would come in the form of a newly devised plan for tax exemptions for certain Family Offices, following in the footsteps of Singapore who offered the same incentive some time ago.
The Hong Kong government is targeting 200 Family Offices to be in motion by the end of 2025. It has not only its own reputation to contend with and that of Singapore but existing plans already in place within Middle Eastern hubs such as Dubai promoting its own financial epicentre for Family Offices. Dubai has recently welcomed many European expats in the wake of the Russia-Ukraine conflict and the number of Family Offices in the region has continued to grow.
Despite the efforts, Hong Kong has failed to keep up and with a mass exodus of wealthy families and the professionals who serve them supposedly taking place, it is thought the Hong Kong government is considering another drastic move.
In January 2015, the Hong Kong Government announced that it had suspended its Capital Investment Entrance Scheme (CIES). The scheme was earlier launched in 2003 a bid to facilitate the entry for residence in Hong Kong by capital investment but would not be engaged in the running of any business in the country.
Despite sitting redundant for eight years, Hong Kong is thought to be listening to calls to reinstate the scheme in a bid to keep up with Singapore’s growing Family Office hub.
Singapore’s Global Investor Programme offers permanent residency for wealthy families to relocate with pre-set investment and hiring requirements. It is this offering alongside various tax incentives that is making Singapore an incredibly attractive destination for Family Offices and Hong Kong are once again trying to stay in the competition.
Katerine Kou, the CEO of Victory Securities, has publicly argued that it is time for Hong Kong to make up for lost time by reviving its investment-based migration programme. In an interview with South China Morning Post, she said: “For wealthy families who want to relocate, Singapore is currently the top choice as it wraps its investment migration programme by promoting Family Offices, Hong Kong needs to catch up.”
Reinstating the CIES would support Chief Executive John Lee Ka-chiu’s aim to attract 200 Family Offices to the city by 2025. The implementation of his plan unveiled in October “will attract both talents and money to Hong Kong”, Kou added.
The Secretary for Financial Services and the Treasury, Christopher Hui Ching-yu last month said the Hong Kong government is looking into calls to reinstate the CIES to attract private investment from Family Offices and increase its toolkit against Singapore but in our opinion, in order to be successful, Hong Kong will certainly need to move fast.