Hong Kong stands out as a pivotal global financial hub and international asset management centre with its robust regulatory frameworks, resilient capital markets, and crucial connectivity to mainland China, a new report finds.

Renowned for its expertise in wealth management, fintech innovation, and green finance, China’s special administrative region continues to attract substantial investment and business, bolstered by its strong rule of law and reputation as a major global financial and business hub, real estate consultancy Knight Frank says in the latest edition of its Rise of the Super Wealth Hub report series.

The report assesses the habitability and attractiveness of burgeoning wealth hubs such as Hong Kong using a comprehensive method that investigates six core areas: including urban prosperity, governance and talent, legal framework, enterprise excellence, lifestyle, and opulence. These indicators have been used to build a proprietary model that evaluates cities based on the “live, work, and play” paradigm, with each individual component rated on scale of 0 to 1, with 1 being the highest score.

Hong Kong has achieved exceptionally significant scores in the work domain. It stands out for its legal framework (0.91) and enterprise excellence (0.80), cementing the city’s globally renowned business and investor-friendly status, says Christine Li, head of research at Knight Frank Asia-Pacific.

Performances of global wealth hubs

Source: Rise of the Super Wealth Hub, Knight Frank

Vibrant urban environment

According to the report, Hong Kong stands out as a premier global destination, seamlessly integrating “work, live, and play” into its vibrant urban fabric. Strategically located in Asia, the city serves as a gateway to mainland China, making it an ideal hub for multinational corporations and entrepreneurs. Its low-tax environment, with progressive rates from 2% to 17%, attracts skilled professionals worldwide, offering a competitive advantage over jurisdictions like Singapore.

The city’s dynamic workforce is driven by a thriving service sector, including trading, logistics, financial, and professional services, contributing over 90% to its GDP.

Hong Kong, widely recognized for its vibrant urban landscape and bustling streets, offers a dynamic living environment amidst its dense cityscape with 75% of its land dedicated to protected countryside, including beaches, woodlands, and mountains.

This balance enhances its appeal as a liveable city, with rich cultural experiences, diverse culinary options, modern amenities, and efficient public transportation, the report says.

The city's vibrant arts scene, highlighted by major events like Art Basel Hong Kong, underscores its role as a regional arts hub, attracting global artists and collectors. With numerous galleries, museums, and a zero-tariff art market, Hong Kong fosters a thriving arts and culture environment, making it a distinguished destination for both business and leisure.

Burgeoning family office business

The city’s family office sector is thriving. According to a recent study by Deloitte in collaboration with FamilyOfficeHK, Hong Kong is home to over 2,700 single-family offices at the end of 2023. Its wealth management sector boasts a compound annual growth rate of 7.6% and is on track to surpass Switzerland by 2027. As Asia's leading hedge fund centre and the second-largest private equity hub in the region after mainland China, Hong Kong is poised for continued expansion in the family office business.

“Hong Kong has a long-standing and proven history as a global financial hub. The city’s connectivity to the Chinese mainland, robust infrastructure, and extensive experience with legislation and compliance have fostered stability, making it an attractive destination for family offices to establish themselves,” says Ho-Pin Tung, head of private office at Knight Frank Hong Kong.

“Amidst ongoing turbulence, changes in legislation, and subsequent new barriers for family offices in other locations, we anticipate that Hong Kong’s position as a global hub for family offices will continue to grow,” Tung adds.

Moreover, despite a challenging macroeconomic environment, the city has witnessed significant growth in wealth among its residents. According to Knight Frank's 2024 Wealth Report, Hong Kong’s ultra-high-net-worth individual population saw a 2.5% annual increase in 2023, reaching 5,957 individuals.

Projections suggest this figure could rise to 7,290 UHNWIs by 2028, a 22.4% surge from 2023, outpacing growth rates in other Asian markets like Japan, Singapore, Taiwan, and Thailand, says Li.

Robust luxury residential market

Following the Hong Kong government's decision to withdraw property-cooling measures in February 2024, developers swiftly responded by launching new sales. Further motivated by a price decline of up to 10% since 2021, buyer activity throughout March and April sharply rose, exhibiting robust performance for the luxury residential market. Amongst the notable transactions, a HK$1 billion (US$128 million) sale of a house in Mont Verra, Beacon Hill was recorded, which set a new Kowloon record at HK$86,289 per square foot. Similarly, a property in Deep Water Bay sold for HK$468 million or HK$92,257 per square foot.

Mainland buyers, particularly from the financial sector, have played a pivotal role in the market's resurgence. Furthermore, according to Knight Frank’s latest Global Super-Prime Intelligence Report, Hong Kong recorded 36 property transactions valued at US$10 million or more in the first quarter of this year, more than double the 15 transactions in the previous quarter.

For the year ending in March, Hong Kong saw 132 such super-prime transactions, maintaining its position as the leading market in Asia. Going forward, while Dubai is projected to see a 5% price growth in prime homes, and Singapore's prime home prices are projected to grow by -2% to 1%, Hong Kong’s residential landscape is expected to remain resilient as its prime residential prices are forecast to remain stable for 2024 due to its scarcity.