Hong Kong and Singapore have long been premier destinations for the world’s wealthiest individuals. However, recent data reveals a significant shift: Hong Kong is swiftly regaining its foothold as the preferred haven for China’s affluent elite. But what’s driving this renewed interest in Hong Kong, and how has Singapore’s crackdown on financial misconduct reshaped the migration strategies of the wealthy?

Increasing Popularity of Hong Kong Over Singapore for Chinese HNWIs

Hong Kong and Singapore have been top choices for Asia’s financial elite. In recent years, Singapore has surpassed Hong Kong in several key metrics, including GDP per capita, industry and ethnic diversity, and global competitiveness rankings. Singapore has also focused on expanding its family office sector by offering more tax exemptions and supportive measures. In 2022, Singapore’s asset management firms attracted SGD 435 billion in foreign investments, nearly doubling since 2017. By the end of 2023, around 1,400 Single Family Offices (SFOs) had secured tax incentives, marking a 27% annual increase.

However, recent insights from Bloomberg, sourced from anonymous private bankers and immigration experts, show some of the latest shifts. Hong Kong’s attractive incentives, such as tax benefits for family offices and new investment immigration programs, make it more appealing. Private bankers report a double-digit growth in their Hong Kong divisions this year, attributing this surge to affluent mainland Chinese clients with net assets between USD 5 million and USD 10 million.

Interestingly, many initially eyeing Singapore are now pivoting back to Hong Kong, as Singapore is dealing with the aftermath of a major money laundering case, leading to stricter checks on wealthy mainland Chinese individuals. This has caused many to rethink their choice of residence.

Singapore’s Tightening Grip and the Double-Edged Sword Impact

Singapore has earned a reputation for its clean financial environment and intelligent economic policies. However, the SGD 3 billion money laundering case in 2023 was a significant setback. This case involved ten Chinese nationals who used fraudulent methods to launder money through Singaporean banks by legitimizing illicit funds through family offices. In response, the Monetary Authority of Singapore introduced stricter regulations, requiring detailed disclosure of beneficial ownership and increased scrutiny of family offices.

Singapore was once a preferred location for establishing family offices due to its favorable tax policies and supportive infrastructure. However, recent regulatory crackdowns have made many reconsider. As the head of a family office affiliated with Peter Thiel mentioned, some view Singapore as a backup plan, a “financial insurance” against potential issues in Hong Kong.

These necessary measures to fight financial crimes have unintentionally made Singapore less attractive to the ultra-wealthy. The stricter regulations deter those who value privacy and minimal bureaucracy. Additionally, Singapore’s requirement for second-generation immigrants to serve two years of military service adds complexity, making it less appealing compared to the more flexible environment in Hong Kong in the eyes of some Chinese HNWIs.

Singapore Still Among Top Three Global Destinations

Despite the shifting tides, Singapore remains a powerhouse that attracts high-net-worth individuals (HNWIs). According to a recent survey by investment immigration consultancy Henley & Partners, Singapore ranks among the top three global destinations for millionaire migrants. This year, Singapore is projected to attract 3,500 affluent individuals with net assets exceeding USD 1 million, placing it just behind the United Arab Emirates and the United States in the global hierarchy.

In contrast, Hong Kong is experiencing a stabilization after years of outflow. The same survey estimates that Hong Kong will attract only 200 millionaire migrants this year. However, this figure represents a significant turnaround from the past five years, when Hong Kong consistently saw a decline in wealthy immigrants. The improvement signals the effectiveness of Hong Kong’s recent policies in retaining and attracting affluent individuals.

The Hong Kong government’s strategic initiatives to attract talent and wealth are beginning to bear fruit. Financial Secretary Paul Chan highlighted in a recent publication that Hong Kong’s managed assets grew by 2.1% in 2023, reaching HKD 31 trillion. A significant portion of this growth—over threefold—increased net capital inflows into private banks, underscoring the city’s enhanced appeal to HNWIs.

Moreover, Hong Kong has made substantial strides in facilitating the entry of skilled professionals. The Top Talent Pass Scheme has seen its approved applications soar to 68,000, with 95% of these applications coming from mainland China. This influx of skilled talent boosts Hong Kong’s economic landscape and strengthens its position as a premier financial hub.

The initial response to the Hong Kong investment immigration program, relaunched in March 2024, has been promising. Although the Immigration Department approved only three applications in the first four months, it simultaneously received 339 applications. These applications are expected to inject approximately HKD 10 billion ($1.28 billion) into Hong Kong’s economy.

However, investment banks have raised concerns regarding the origin of these applicants as data disclosed by the Hong Kong government indicates that many of the applicants hail from countries like Guinea-Bissau and Vanuatu. Many of these individuals are mainland Chinese holding residency in foreign nations, and some were linked to last year’s money laundering case in Singapore involving passports from smaller countries like Vanuatu and St. Kitts. This raises potential red flags about the risk of illicit money flowing into Hong Kong’s financial system.

Conclusion

Hong Kong is swiftly reestablishing itself as the premier destination for China’s wealthy elite, leveraging strategic tax incentives, robust financial services, and deep cultural ties with mainland China. In contrast, Singapore’s stringent regulations following high-profile money laundering cases have dampened its appeal despite remaining a top global contender. Both cities are adapting to the evolving demands of the worldwide elite, fostering environments that support growth, security, and comprehensive wealth management.