Hong Kong Government's Efforts to Attract Family Offices Yield Results
The Hong Kong government has been actively working to attract family offices, and by the end of last year, over 140 new family offices had been established or expanded in the city. The financial sector expects that the government will meet its target of attracting at least 200 family offices by the end of 2025. However, experts have raised concerns that many of these new family offices are primarily focused on investment activities. Should the investment environment change, there is a risk that funds may be withdrawn, potentially causing economic fluctuations.
Scholars studying family office culture highlight that these institutions do more than "manage money" — they also play a crucial role in "managing the family." They argue that, after achieving key performance indicators, the government should encourage family offices to focus on cultivating future generations, maintaining family harmony, and preserving legacies. They also recommend leveraging initiatives like "Study in Hong Kong" to help family members establish roots in the city, ensuring that both money and people remain.
Over 140 new family offices in Hong Kong have come from Mainland China, Europe, the US, and ASEAN countries including the Xu family from the Philippines, whose business spans natural resources, real estate construction, and investment management. According to a recent survey, by the end of 2023, Hong Kong had 2,703 single-family offices. Since family offices are typically low-profile and not required to disclose investment details, estimating the total investment in Hong Kong is difficult. Some local banks and law firms assist family offices in settling in Hong Kong, so the actual number of new family offices could be even higher. If a family office needs to invest at least HKD 240 million to receive tax incentives, significant funds have already been introduced.
Hong Kong on Track to Meet the 200 Family Office Target by Year-End
Zhai Chong, Head of Capital Markets and Investment Services at Colliers Hong Kong, stated that family offices are seeking opportunities to grow family assets, often investing in stocks, real estate, art, and cryptocurrencies. He cited the example of a family office from Singapore that recently invested HKD 1.1 billion in purchasing an entire commercial building on Queen's Road Central for long-term investment. This transaction stands out as one of the rare full-building purchases in Central in recent years, showing that even in a global economic downturn, many investors still view Hong Kong real estate as a safe haven.
Another analysis pointed out that family offices, which once preferred lower-risk assets like bonds, have recently moved towards more aggressive investments in sectors such as new energy and technology.
Karen Cheung, Director of Business Development at Equiom Hong Kong, noted that new family offices are less focused on promoting family succession. She observed that family offices in Europe and the US have a long history, with frameworks spanning ten key areas. These frameworks are interconnected. A well-established family office should have a holistic approach, managing not just financial assets but also establishing a family charter, implementing governance, preserving traditions, cultivating successors, and managing crises to ensure the family's long-term health.
Some industry professionals understand the short-term focus of family office teams, who are under pressure to deliver quick returns. "In comparison, training successors and maintaining family harmony are more abstract goals that may take decades to realise." They believe that the future should involve strengthening the role of family offices in succession planning to ensure that more family members remain in Hong Kong.
Concerns About Economic Shifts Impacting Family Office Investments
Professor Peng Qian, Director of the Asia Family Business and Family Office Research Centre at the Hong Kong University of Science and Technology Business School, emphasised that "managing money" for wealth growth is just one aspect of a family office’s role; the primary task is "managing the family." She explained that family succession involves the transfer of wealth, family harmony, reputation, and values. Many of Hong Kong's wealthiest families have established family offices to manage succession plans. Some of the city’s oldest families have used family offices across multiple generations. She described the family office as a long-term, steady endeavour where the family head must have a forward-looking vision to guide its future planning.
Peng further explained that family harmony is closely tied to the transmission of family values. She likened family values to a behavioural guide, stating that when family members adhere to shared values, they can maintain harmonious relationships and take pride in being part of the family. When family relationships fracture, succession becomes more challenging. Karen Cheung added that family offices in Europe and the US develop comprehensive plans to train successors, observing their personalities over time and assigning tasks according to their abilities. This ensures that family members serve the family and share its honour, fostering unity.
Family Offices: Key to Continuity and Long-Term Success
Dr. Kwan Ka-chi, Co-Director of the Chinese Family Legacy Research Centre at Hang Seng University, stressed that the younger generation is the most valuable intangible asset of a family, and they are the true target of family office services. He added that Chinese families often worry that "wealth will not last beyond three generations." There have been instances where disputes among family members have led to inheritance lawsuits and family divisions, weakening the family’s long-term stability. This highlights the critical role of family offices in ensuring smooth succession.
Kwan explained that family offices act as "family butlers," executing collective decisions, establishing family charters, and organising family meetings to discuss key developments. In maintaining the family’s reputation and values, he noted that both local and international family offices focus on charitable work, education, and healthcare—for example, donating to educational or medical institutions, setting up scholarships for disadvantaged students, and even creating museums where family members can learn about their history and values, thus strengthening family identity and pride.
"Keeping Money and People": A Key Strategy to Maintain Hong Kong's Competitiveness
Kwan also mentioned that some family offices have been helping the next generation start second businesses. He gave the example of a traditional electronics family business in Taiwan, where the family office helped the second generation diversify into the new energy industry, preserving the family’s wealth.
He noted that countries like Singapore are also prioritising the development of family office services. To maintain its competitiveness, Hong Kong could adopt a "keeping money and people" strategy. Family office teams are responsible for executing family investment plans. If the investment environment in Hong Kong worsens, these teams may seek better returns elsewhere, potentially withdrawing their funds and causing financial instability. However, if family members are already familiar with Hong Kong, have made private investments, or see the city as a key business hub, they are less likely to withdraw their investments in haste.
Kwan also pointed out that the government’s strong promotion of the "Study in Hong Kong" initiative is beneficial, as five local universities are ranked among the top 100 in the world. This is especially attractive to Southeast Asian countries and overseas Chinese families, who place significant value on the education of the next generation. The government’s push to position Hong Kong as a hub for international students will undoubtedly help attract "potential successors" to study in Hong Kong, providing them with a better understanding of the investment environment in Hong Kong and the Greater Bay Area. This could eventually encourage them to establish family offices in the city, yielding long-term benefits for Hong Kong’s growth.
Conclusion
Overall, the Hong Kong government's efforts to attract family offices are producing substantial results. However, experts continue to emphasise the need for a broader focus beyond immediate investment returns to include family governance, succession planning, and the preservation of long-term family legacies.
For businesses seeking expert Private Wealth and Family Office services or guidance on establishing robust family office practices in Hong Kong, Equiom is ready to help navigate this evolving landscape.
This translation is a faithful representation of the original text. This article was first published in the Sing Tao Daily Newspaper.
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