London – the destination of choice for Hong Kong HNWI migration
By Simon Voisin, Forward Group Limited
Uncertainty continues to surround the introduction of Chinese national security law and unsurprisingly there has been considerable impact on Hong Kong’s future as one of the Asia Pacific’s leading financial centres. This is especially true of Hong Kong’s traditional role symbolising a bridge between China and the rest of the world.
China’s potential powers to freeze or confiscate assets has led an increasing number of Hong Kongbased HNWIs, UHNWIs and family offces to move assets (and themselves) outside the political and financial reach of the new laws.
Singapore is one highlighted destination, but there is an increasing trend of high-net-worth individuals moving to, and investing in property in, the UK and London specifically. In the first ten months of 2020 the Home Offce issued over 200,000 BN(O) passport applications from Hong Kong, higher than any period stretching back to 1997. In addition, twenty tier-one investment visas were also granted – the highest number since 2008 – based on the investment criteria, which means that an estimated GBP 40 million was ploughed into London’s blue chips during that period.
Members of Hong Kong’s high-networth community have identified the current political risk and unrest as a threat, so these moves are not just about showing support for protesters against change; they also highlight the realisation that they can still benefit from diversifying links with Hong Kong and continue to make money. London has become more than just an investment relocation, with entire family offces being transferred and the purchase of prime location property as an inherent part of that. One example of this is the Rutland Gate mega-mansion purchased for more than GBP 200 million in January 2020. The trend continues with high-net-worth individuals buying the best in class property, not just for investment purposes, but also for personal use while maintaining residency in Hong Kong which allows them to diversify their assets geographically.
Statistics show that the biggest winners of the global economy at this point are liberal western democracies while more authoritarian regimes lose out. Despite this, Hong Kong remains one of the wealthiest cities in Asia with over 140,000 HNWIs.
HNWI migration continues to be a good marker of the current economic and political climate. High-net-worths tend to be the first to leave and identify lucrative future opportunities, so the question currently is how long will HNWI migration continue and how much more will the UK, and London especially, see the benefit?
As with any movement of assets across jurisdictions, fair tax planning opportunities exist, especially for the non-domiciled. Ahead of any relocation of a person, family or even just assets, it is worth giving consideration to structuring through a suitable international finance centre. Jersey is regarded as one of the pre-eminent finance centres globally, due to the standing of its judiciary, its approach to financial regulation, and the depth and quality of its fiduciary service offering. These factors combined offer a level of security and peace of mind that is unsurpassed and available to clients and professional advisers with concerns. In particular, an irrevocable trust structure may offer a solution worth exploring – this was an effective solution in protecting family wealth when the UAE faced a similar change of power dynamics within their regime. Those families that did not plan effectively lost out. As with many things, these strategies are best implemented when the threat is perceived rather than when it is realised, as otherwise it can be too late.
Simon VoisinGGI member firm
Forward Group Limited
Fiduciary & Estate Planning
T: +44 1534 721420
Forward Group Limited is a regulated Trust and Company services business located in Jersey. Jersey is a top-tier, low-tax jurisdiction. Forward provides regulated corporate and trust services to a broad spectrum of clients, including listed companies and high-net-worth individuals.
Simon Voisin, Director with Forward Group, has over 30 years’ experience in providing professional fiduciary wealth management services to private and corporate clients. He has worked for both independent and institutional trust companies and was previously head of a single-family office.
Published: Trust & Estate Planning Newsletter, No. 07, Spring 2021 l Photo: pcruciatti - stock.adobe.com