Rapid expansion in Asia of ultra-high net-worth individuals is set to redefine global wealth.
The region’s total ultra-wealthy population is expected to grow by nearly 40% to 230,000 in 2027, compared to 2023.
The dramatic growth in UHNWIs will make Asia the second largest concentration after North America. At the rate at which the growth is currently occurring, Asia may soon take the number one spot.
Hong Kong and Singapore are battling it out for supremacy
The competition for these UHNWIs is increasing as Asia’s wealth grows. Hong Kong and Singapore lead the way, each using its own strengths to establish themselves as the leading wealth management hubs in the region.
Knight Frank report says Singapore, which has benefited from tax incentives, enjoyed a more business-friendly environment and attracted over 1,100 families offices that manage $4 trillion, up from 100 ten years ago.
Hong Kong is also fighting to maintain its dominant position in Asia’s wealth management industry.
In the five-year period leading up to the year 2022, the wealth management sector in this city saw the largest growth in its assets managed.
Recent changes in the geopolitical landscape and economy have led some individuals with large assets to relocate to Singapore.
Hong Kong has responded by introducing new incentives aimed towards family offices as well as residency options for those who invest at least HK$30million into the city.
Singapore as a hub of wealth
Singapore’s growth as a hub for wealth management can be traced to the strategic efforts it has made to lure family offices. The city-state may have increased the number family offices but the impact of this on local investments is unclear.
The Monetary Authority of Singapore has adjusted incentives last summer to encourage investment by family offices in Singapore’s equity market and climate projects.
The influx of private family offices on the housing market has been minimal, which indicates that they have not yet established a strong foothold in the local economy.
The wealth management sector in Singapore will grow despite these obstacles.
Singapore’s financial wealth is expected to grow at a rate 9% by 2027. This will make it one of three global wealth management centers, along with Hong Kong and Switzerland.
Hong Kong’s response to the crisis and its future prospects
Hong Kong’s Wealth Management Sector isn’t sitting around. Family offices in Hong Kong, which currently numbers around 400 people, are set to grow with the addition of 200 more family offices by the year 2025.
Hong Kong will introduce a new policy in October 2022 to encourage individuals with wealth to invest at minimum HK$30,000,000 in stocks and assets in the local market. This is part of the Capital Investment Entrant Scheme. The scheme should play a key role in boosting the city’s industry.
Hong Kong is still a bright spot for experts. Success as a wealthy hub in Hong Kong is directly linked to China’s economic expansion and the city’s ability to draw wealthy people from the mainland.
Hong Kong is likely to achieve its ambition of becoming the leading global wealth management hub in 2027 by leveraging these rates, which are expected to be down to 4.5% from 8.4% by 2020.
Hong Kong and Singapore are competing on an equal basis
Hong Kong’s and Singapore’s competition for Asia’s super-rich isn’t necessarily zero-sum.
Both cities are strengthened by the rapid creation of wealth in their region. Singapore attracts emerging wealth from nations like Indonesia, Thailand Malaysia and Vietnam while Hong Kong is the main hub of wealth created in mainland China.
Both cities face a major challenge in implementing regulatory structures to encourage investment into their local economies.
Hong Kong and Singapore both have attracted successful family offices. However, their true success will only be measured by whether they contribute to local economic growth via substantial investments.
Future of Wealth Management in Asia
Hong Kong and Singapore are both facing the challenges of remaining competitive in Asia’s growing wealth management industry.
Focus will be placed on creating an environment in each city that attracts wealthy individuals and encourages them not only to invest locally but also in their local economies.
Singapore may need to refine its incentive structure to make sure that family offices are contributing to the long-term growth of their economy. Hong Kong will have to use its strong ties to mainland China in order to attract wealth.
The success of these two cities depends on the ability of the governments to strike a balance between the UHNWIs’ needs and the larger economic goals.
Hong Kong and Singapore are likely to intensify their competition as Asia’s wealth grows. Both cities will be vying to become Asia’s top wealth management hub.
The post Asia’s ultra-wealthy rise: Hong Kong and Singapore compete for dominance could be updated as new information becomes available
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