Uncertainty continues to surround the introduction of Chinese national security law, unsurprisingly there has been considerable impact on Hong Kong’s future as one of the Asia Pacific’s leading financial centres; especially as the bridge that Hong Kong traditionally represented between China and the rest of the world.
China’s potential powers to freeze or confiscate assets has led an increasing number of Hong Kong-based HNWIs, UHNWIs and family offices 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 10 months of 2020 the Home Office had issued over 200,000 BN(O) passport applications from Hong Kong, higher than any period stretching back to 1997. In addition, 20 tier one investment visas were also granted -the highest number since 2008 – based on the investment criteria, that would mean an estimated £40m was ploughed into London’s blue-chips during that period.
The Hong Kong high net worth community has identified the 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 making money. London has become more than just an investment relocation with entire family offices being transferred and the purchase of prime location property is an inherent part of that. One example of this is the Rutland Gate mega-mansion purchased for more than £200m in January 2020, and the trend continues with high-net-worth individuals buying best in class property, not just for investment, but for use themselves whilst also maintaining residency in Hong Kong which allows them to diversify their assets geographically.
Statistics show that the biggest winners at this point are the liberal western democracies whilst the more authoritarian governments 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 worth’s tend to be the first to leave and identify lucrative future opportunity, 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 planning opportunities exist, especially for the non-dom. Ahead of any relocation of a person, family or even just assets, it is worth giving some 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, approach to financial regulation and depth and quality of its fiduciary service offering. Those factors combined can 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 as effectively lost out. As with many things, they are best implemented when the threat is perceived rather than when it is realised otherwise it can be too late. Forward is, of course, always ready to assist any prospective clients that are looking at ways to protect their family wealth and assets when relocating.