Glossary
What is absorption rate?
Absorption rate is the share of released units a developer sells in a given period. A phase that releases 200 units and contracts 40 in a quarter has a quarterly absorption rate of 20%. It is the primary measure of whether a project's pricing and release plan are working.
How it is calculated
Absorption is units contracted in a period divided by units released and available in that period, expressed as a percentage. The denominator is the part people disagree about: counting total project units rather than released units flatters slow phases, and counting only actively marketed units flatters everything.
A developer comparing absorption between phases must fix the definition first. Sakneen publishes the definition alongside the measure for exactly this reason — an absorption number without its denominator is not comparable to anything.
What it is used for
Absorption drives three decisions: when to release the next tranche, whether the current price is right, and how much construction the sales pace can fund. A phase absorbing far above plan is usually underpriced; a phase absorbing below it is either mispriced, badly positioned in the mix, or competing with the developer's own adjacent release.
Because it is a rate, it is only meaningful with a period attached. Monthly absorption is the working measure for an active launch; quarterly is the reporting measure.
Common mistakes
Counting reservations as sales inflates absorption, because reservations cancel. Counting only the units a sales team is actively pushing hides ageing inventory. And comparing absorption across developers without checking either definition produces confident nonsense — which is most of the absorption comparison published in the Egyptian market.
Frequently asked questions
- What is a good absorption rate?
- There is no universal figure. It depends on price point, unit mix, delivery horizon and how much was released. The useful comparison is against the project's own plan and its previous phases, not against another developer's published number.
- Is absorption the same as sell-through?
- Sell-through usually means the cumulative share of a release that has sold to date. Absorption is a rate over a period. A phase can be 80% sold through with an absorption rate that has fallen to near zero.
Related
See it against your own inventory
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