News: Brazil-based real estate companies Gafisa and PDG Realty have posted mixed financial results for Q313, the Wall Street Journal reports. Gafisa posted net profit of US$7mn in Q313, up from US$1.8mn in Q312, while PDG reported a loss of US$48.5mn in Q313, compared with a profit of US$11.8mn in the same period in 2012. Gafisa, which posted a 15.5% drop in net revenue, saw its operational costs decline by 22.5% in Q313, to US$198.9mn. Revenue for PDG fell 34% to US$469.1mn in Q313, while operational expenses fell just 7% in the period to US$113.2mn.
BMI View: Blessed with favourable demographics, a wealth of natural resources and a stable banking sector, long term potential continues to drive the commercial real estate market in Brazil. Nevertheless, consensus is becoming increasingly bearish towards the Brazilian commercial real estate markets as key fundamentals - such as the economy and construction sector - continue to underperform. In spite of these downside risks, we believe that the outlook for the CRE segment is still positive - particularly across the country's prime locations - with a wealth of opportunity across the office, retail and industrial segments.