The scion of one of Hong Kong’s richest families said he expects the city to become the world’s top destination for family offices, as it steps up efforts to lure and retain more billionaires and their heirs. 

“I’m very confident we will be number one for family office wealth management in the future,” said Adrian Cheng, the chief executive officer of property firm New World Development Co and the chairman of the recently created Hong Kong Academy for Wealth Legacy. The institute was set up by the city last year to help develop and promote Hong Kong as a global hub for the super-rich.

Cheng didn’t specify a time frame for the goal, which is to be the biggest in terms of the number of family offices and assets under management, adding that it could be in the “medium term”. Hong Kong had more than 2,700 single family offices at the end of 2023, according to estimates in a government-commissioned study by Deloitte published earlier this year. About a third of them managed at least US$100 million in assets, the study said.  

The semi-autonomous Chinese territory is trying to regain its stature as a global financial hub following years of draconian Covid-19 restrictions and a sweeping crackdown against political dissent. Rival Singapore has benefited from expatriates and international businesses that have shifted away from Hong Kong, and is also a popular regional base for family offices. The Southeast Asian nation had about 1,400 single family offices that had been awarded tax incentives at the end of 2023, more than triple the total at the end of 2020.

Hong Kong has introduced a slew of tax and residency incentives to attract more money management firms, including family offices, but it faces headwinds ranging from geopolitical risks tied to China, and Beijing’s crackdown on the country’s billionaires. 

Family offices and private trusts in Hong Kong made up roughly HK$2 trillion (US$257 billion or RM1.14 trillion) in assets under management at the end of 2023, according to government figures. The overall asset and wealth management business oversaw more than HK$31 trillion at year end. 

Hong Kong is home to about tens of thousands of wealth management practitioners that have been serving generations of wealthy families for decades, which gives it an advantage over other financial hubs, Cheng said. “It’s not just about the capital, it’s about the values too,” he added. 

Cheng said the new Hong Kong academy hopes to be a “super connector” for family offices seeking to establish a presence in the city, with a particular focus on second-generation wealth owners as well as governance issues. The entity will hold a summit next month that is expected to attract more than a hundred family offices, he added. 

Family offices managing over HK$240 million are exempted from profit taxes on their qualified financial investments. The government could also implement better tax rules for philanthropic activities, Cheng said. “I think we can improve that,” he added, pointing to other cities that have tax exemptions for charitable contributions. Singapore, for instance, currently allows 100% tax deduction for overseas cash donations made by family offices.

Hong Kong is also trying to establish itself as a top global venue for trading and storing art, and is building a tax-free art hub near its airport. That could help bring more wealthy people to Hong Kong regularly, Cheng said. 

Cheng is one of the heirs of a prominent real estate clan that also owns a stake in Chow Tai Fook Jewellery Group Ltd. His late grandfather, Cheng Yu-tung, founded New World Development in 1970, and his father, billionaire Henry Cheng, is its chairman. The Hong Kong-based company owns hotels, shopping malls and other properties. The Cheng family is worth more than US$20 billion, according to the Bloomberg Billionaires Index. 

Wealth preservation has been a major challenge for Hong Kong’s property tycoons and their families, as many of them have been caught up in the city’s real estate slump. New World Development shares have lost more than half their value over the past year, significantly underperforming the Hang Seng Index’s 8.5% decline over the same period. 

Hong Kong has previously drawn controversy in its public quest to woo more family offices. Earlier this year, Bloomberg News and other media outlets reported on a Dubai Sheikh’s pledge to invest up to US$500 million in a Hong Kong family office. He also attended an invitation-only wealth summit hosted by the government, but it later turned out that officials hadn’t vetted his identify and financial background. The investment has yet to happen. 

Succession within the Cheng clan has also been a hot topic. Cheng was widely seen as the leading candidate to take over his family’s business group, but he’s been facing increasing uncertainty over his heir-apparent status after his father said last year that he was still looking for a successor.

Cheng didn’t address his own family’s succession plans in the interview. He said wealth management professionals can advise on how to preserve capital for the generations to come, but it is up to the family members to stay together. “Once you preserve the values, you will have harmony,” Cheng added.

  - Bloomberg