Lombard Street’s China forecast: 'not our view'

Shortly after Lombard Street Research startled more than 350 delegates at the PERE Summit: Asia by forecasting real GDP growth in China of only 5 percent over the next decade, PERE pulled aside one GP with a focus on the country for his reaction.

Charles Cosgrove, chairman of the investment committee of Hong Kong-based private equity real estate firm Arch Capital, was unconvinced China would record just 5 percent real GDP growth over the next decade, as predicted by Lombard Street Research on the first day of the PERE Summit: Asia in February.

Diplomatically describing the startling research and argument put forth by Lombard Street director Diana Choyleva as “a view”, he said another question would be whether firms such as his, which has a strong China focus, would use it as a “planning parameter” for their strategies.

“As of today it’s not the house view with us”, he stated, adding that he was confident China’s economy had been, and would likely continue to be well managed by the government.

Entertaining the negative forecast for a moment (effectively that China would produce half the growth it has produced at its peak over recent years), he maintained there would nonetheless still be opportunities for firms such as Arch, particularly given the crunch on credit real estate players in the country are currently facing.

He also added his views on how private equity real estate firms should position themselves and their strategies in China and how Chinese housing would once again become a viable investig line.

The two-day PERE Summit: Asia took place at the Conrad Hotel in Hong Kong at the end of February.

Look out for further coverage of the event in the April issue of PERE.