Notably, we have witnessed a shift in booking-center dynamics, with some domiciles growing at a stronger pace than others. Such repositioning has been partly propelled by an accelerated level of wealth creation outside Europe, as well as by a significant exodus of Russian assets from Europe to the Middle East. Given the somewhat volatile landscape of booking centers, several domiciles—namely, Switzerland, Hong Kong, Singapore, and the United Arab Emirates (UAE)—merit a closer look at this juncture (see Exhibit 2).
Switzerland
This traditional powerhouse of wealth management continues to play to its strengths: its deep experience and enormous level of assets under management (AuM). The country remains a highly attractive financial hub that is still perceived as a safe haven in turbulent times, setting the bar in terms of wealth management products, investment expertise, and depth and diversity of its client base. Switzerland also remains the leading booking center for EU and Middle Eastern cross-border investors, with ongoing growth in the latter region poised to provide a strong lift.
Nonetheless, slower asset shifts from EU countries, along with the repatriation of assets back to Asia-Pacific booking centers such as Hong Kong and Singapore, are weighing somewhat on Switzerland’s competitiveness. This dynamic was reflected by a challenging 2022 and first quarter of 2023, in which some clients domiciled abroad moved assets back to their home countries—and not to another Swiss wealth manager. Indeed, Switzerland is expected to be overtaken by Hong Kong as the world’s largest booking center by the end of 2025.
Hong Kong
Hong Kong, for its part, achieved the highest AuM growth rate among top booking centers from 2017 to 2022, posting a CAGR of 13%. Yet, the wind changed in 2022, with Singapore profiting from outflows from the city.
Although Hong Kong has matured significantly as a booking center over the past decade—and is the preferred domicile for wealthy mainland Chinese—several factors are impacting its status. One is its heavy reliance on Chinese wealth flows, which are growing less strongly than in recent years owing to the slowdown of the Chinese economy.
Reacting to these headwinds, Hong Kong is making moves to regain traction. For example, the booking center has launched an initiative to attract additional single-family offices by 2025, not only from mainland China but also from the UAE. Other initiatives include favorable tax and investment migration schemes, art storage, and platforms for cross-border payments via digital currencies.
Ultimately, Hong Kong’s future growth as a booking center will depend largely on two factors: the expansion of the Chinese economy and Hong Kong’s ability to continuously attract asset inflows from mainland China.
Singapore
Singapore, benefiting from its growing reputation as a safe haven closely aligned with the West, is increasingly being perceived as a gateway to the Asia-Pacific region. Its political stability, forward-looking government policies, and business-friendly environment are serving as a drawing card for new asset inflows, helping the country establish itself as a hub for Southeast Asian investors.
The country is becoming even more attractive in these turbulent times. Financial wealth booked in Singapore is expected to post a CAGR of 9% through 2027, partly spurred by family offices, which have grown in number from below 100 to roughly 800 over the past five years— with many more awaiting regulatory approval. Accordingly, major banks are ramping up teams to compete in the highly fragmented external asset manager space.
United Arab Emirates
The UAE has gained respect in recent years as a booking center that provides an attractive playing field for banks and investors alike. As a result, it is receiving greater asset inflows. In 2022, AuM grew more rapidly in the UAE than in any other booking center, as the country attracted assets not only from other Middle Eastern domiciles but also Asia-Pacific, Africa, and Eastern Europe—notably from Russia. Its projected growth rate for financial wealth through 2027 is a healthy 10% per year.
Among the UAE’s attributes are low regulatory barriers for launching businesses (such as family offices) and for investing in real assets (such as real estate). Some multinational banks are already setting up hubs in the UAE, anticipating strong growth in terms of both onshore and cross-border wealth. Interestingly, local UAE banks have been seeking opportunities to increase booking capabilities outside the Middle East. Operating in a market that is fiercely competitive and dominated by international players, these financial institutions are targeting Switzerland, the UK, and Singapore as cross-border hubs to elevate their service offering to local clients.