[SAO PAULO] Brazil's residential real-estate bubble may deflate slowly, not pop, as speculators abandon the market and builders such as Rossi Residencial SA sell off less-profitable homes ahead of more lucrative sales.

Prices are levelling off this year, rising about one-third as fast as in 2011, when developers were offering homes due for completion now, according to data compiled by economic researcher FIPE and real-estate website Zap Imoveis. Short-term investors and some individual customers are backing away from their deals.

"We're seeing an excess of new home deliveries, so the market is adjusting," Rossi chief executive officer Leonardo Diniz said in an Aug 27 interview at Bloomberg's Sao Paulo office. "For investors to take on the risk, they have to see a high return, so they're increasingly choosing other opportunities."