Legislative changes, new licensing guidelines, government support, COVID-19 and existing ecosystem have driven growth in Family Offices in Hong Kong
The number of millionaires in Hong Kong has grown in 2020, according to Citibank’s Hong Kong Affluent Study 2019/2020. As of May, Hong Kong had almost 504,000 multimillionaires with net assets of HK$10 million or above, forming 8.4% of the population.
This growth in High Net worth Individuals (HNWIs) has also seen a boom in wealth management services including Family Offices which have seen their numbers grow to 50 thanks to a number of legislative and other changes.
On 31 August 2020 the Limited Partnership Fund Ordinance commenced which allowed private funds to be registered in the form of limited partnerships. This new regime sought to establish Hong Kong as a PE and VC hub, allowing investors to take advantage of the concentration of fund managers and other service providers in the city and allowing investors to channel funds into corporations and start-ups.
The LPF structure is popular among Family Offices who have also benefited from new licensing guidelines which helped clarify licensing requirements within the industry. Furthermore, a new industry body, the Family Office Association Hong Kong (FOAHK), was established in November 2020 with government backing.
The FOAHK will aim to drive dialogue between industry participants, legislative and regulatory advocacy as well as knowledge sharing and represent the interests of family office operators in Hong Kong.
New guidelines, legislation and organisational support have helped position Hong Kong as a preferred location for setting up a Family Office. Hong Kong also benefits from a mature and sophisticated wealth management ecosystem that includes a wide and deep range of service providers and experts available to help HNWIs manage their wealth.
COVID-19 has also played a part, with many wealthy individuals taking this opportunity to rethink their wealth management strategies and calling on the knowledge of experts who can help with legacy and succession planning.
Lastly, increased international rules and regulations surrounding transparency has increased interest in Family Offices, with many HNWIs and their businesses and families located in multiple jurisdictions, increasing the complexity of managing their wealth and needing the services of tax and other experts.
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