Market
Underwrite absorption, not appetite
6 April 2022 · 6 min read
Interest is easy to gather and impossible to bank. Absorption is a rate, measured in units per quarter, at a stated price.
Almost every feasibility we review overstates velocity and understates the price elasticity behind it. Both errors come from the same place: measuring appetite in a room rather than absorption in a market.
The discipline is to build the model around three numbers — units per quarter, average realised price, and the discount actually given at contract — then stress each one independently.
Comparable evidence should come from the last four quarters within a fifteen-minute drive, not from the last cycle across the governorate. Egyptian submarkets diverge faster than regional averages suggest.
If a scheme only works at the top of the observed absorption range, it does not work. It is a bet on conditions rather than a plan for them.