Overseas investment may become more of a choice for China's richest families as foreign private bankers are looking at offshore opportunities for their Chinese customers to avoid tougher regulations in the country, a PricewaterhouseCoopers survey said.

The report, published on Wednesday, surveyed 200 institutions from more than 50 countries, with 24 percent of the respondents coming from the Asia-Pacific region, including four to five major banks on the Chinese mainland with private banking business.

Although the report found that the Chinese mainland is the leading market for private banks targeting new clients over the next two years, 88 percent of the respondents said that they regarded offshore transactions as a first choice for potential Chinese clients.

"This is a result of the larger number of high-net-worth individuals (those with investable assets exceeding $1 million), and an increasing need to allocate their assets globally," said Patrick Zhou, a financial service partner at PwC China.

Meanwhile, he added, tougher capital supervision on the mainland is also fueling that trend.

In comparison, in Hong Kong, the third destination market for private banks and where there are fewer restrictions on capital flow, only 14 percent of the private banks said they would recommend offshore investments to their clients.

In this year's survey, compliance is the top risk concern for private banks, as they struggle to keep pace with the scale, speed and costs of current and planned regulatory changes. The cost of regulations is expected to continue to rise. Cross-border banking regulations and greater tax transparency will increase risks, according to 94 percent of the respondents.

"Offshore strategy must be water-tight and not expose clients and the organization to risk," said the report.

"We hope that the private banking activities on the mainland would increase in the wake of a more convenient cross-border capital flow," said Jimmy Leung, banking and capital markets leader at PwC China. "But China is not yet comparable to the United States or Europe in this area."

Leung said that some foreign banks are now retreating from China or have marked the country as an "inactive" market, because they found it's hard to develop new customers or launch new products.