Over 2,700 Family Offices in Hong Kong, Dubai’s Leading Family Sets Up $500 million Office

Hong Kong naturally is a regional base for family offices due to its unique combination of being strategically located in the middle of the Asia Pacific region, next to the world’s largest trading nation and having an unrestricted economy with low and simple tax regime; in additional to such assets the government has been proactive in creating the ideal conditions for Hong Kong to solidify its role as the regional’s asset management and investment hub with measures such as tax incentives for family offices.

A recent study on the family office market in Hong Kong estimated a total of 2,703 single-family offices. Family offices are categorized into single-family and multi-family, where the former serves just one family and is a private business entity while the latter serves more than one family and considered a profit-seeking business; both types operate in Hong Kong.

It should be noted that there is no mandatory approval process for setting up family offices, so there are no official data regarding the number of family offices in the city, the study assumes ultra-high-net-worth individuals (“UHNW”) and their family possess a family office to serve their wealth management needs. The data thus should be treated as approximations as there is a notable margin of error as some UHNW families may opt for multi-family offices and private banks rather than having their own single-family office.

Nonetheless, insights into the number of UHNW families in each of the four wealth levels indicate the levels of wealth located in Hong Kong.

Wealth Tier Estimated Number of Single-Family Offices in Hong Kong

USD10m-USD30m     535

USD30m-USD50m     601

USD50m-USD100m   682

USD100m+                 885

Total                            2,703

Such levels of wealth are matched only by a very few cities in the world and Hong Kong, with its open and sophisticated capital markets, which is supported by developed banking and legal systems and infrastructure, continues to attract new investors.

Case in point is the establishment of a family office in Hong Kong by Sheikh Ali Al Maktoum, the nephew of Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum. This US$500 million family office will focus on investments in artificial intelligence, electric vehicles, tourism and fintech.

Sheikh Ali visited Hong Kong on December and explains why he chose the city: “I got to see a lot of similarities with Dubai. Hong Kong is very advanced in so many aspects and has so much to offer in terms of investment opportunities and business expansion. It’s known that Mainland China and Hong Kong are some of the leading players in terms of investment and opportunities, so I want to take advantage of that.”

Hong Kong competes with Singapore in the regional family office space with some sources predicting that the number of offices in Hong Kong could surpass Singapore in a few more years. Hong Kong has the added advantage of being China’s international financial and investment hub, thus the ideal base for Chinese capital seeking international opportunities as well as international capital finding Mainland Chinese investments. Middle Eastern capital has been entering Hong Kong since last year and Sheikh Ali’s new family office in the city should encourage more capital to call Hong Kong home.