HVAC market in GCC region likely to grow at a compounded annual rate of 7.4 per cent

The global heating, ventilation and air conditioning (HVAC) market is expected to generate over $68.93bn value by 2022 at an estimated CAGR of 4.34 per cent from 2016 to 2022, as per the forecasts of the Global HVAC Market – Forecast & Analysis, 2016-2022.

Rising population, revival in the housing markets, increases in income levels in emerging markets, development of reliable energy resources and growing industrial units are some of the key drivers pushing towards the growth of global HVAC market. While robust demand is anticipated to come from the Americas over the forecasted period, Asia-Pacific continues to be the leading revenue generator in the global HVAC market. Split air conditioners are forecasted to remain on high demand for various residential end-use applications.

The governments, emerging green/smart building criterions and growing consumer concerns across the world are pushing global HVAC manufacturers, developers and system integrators to build and provide energy efficient,

technologically advanced HVAC units for major commercial, residential, institutional and industrial applications, among others. The different types of HVAC products include window & portable air conditioners, split air conditioners, single packaged units, chillers and fan coil unit (FCU) and air handling unit (AHU). Further, the global HVAC market is fragmented into different geographies such as the Americas, Europe, Asia-Pacific and Middle East and Africa (MEA).

In 2015, global HVAC market volume was highest for split air conditioners. The high demand is mainly anticipated to come from rising residential developments taking place around the world which has prompted consumers to install energy efficient split units in homes, apartments and high/low end buildings, among others. In terms of value too, Asia-Pacific region is leading the HVAC market followed closely by the Americas.

Asia-Pacific is leading the global HVAC market mainly because of high demand coming from emerging economies like China, India and South East countries like Indonesia and Thailand, among others. The Americas is also expected to show robust demand for HVAC products and equipment over the forecasted period (2016-2022).The HVAC market growth in the MEA region is propelled by increasing demand for HVAC products and equipment in the commercial and residential applications.

The Middle East constitutes one of the largest markets for HVAC in the world. For the Middle East, HVAC systems are more of a necessity than a luxury, mainly due to the extreme climatic conditions. With many mega construction projects on the anvil and a growing and affluent population, the demand for such systems is set to grow. The HVAC market in the Gulf Cooperation Council (GCC) region is likely to grow at a compounded annual growth rate (CAGR) of 7.4 per cent until 2016. A combination of factors appear to be further strengthening the popularity of the GCC’s HVAC sector. Increased competition in other segments, technological advances, and landmark events are serving to attract fresh faces. Of course, established names within the Middle East’s HVAC sector have no intention of relinquishing their market shares, but neither are they surprised by the influx of newcomers.

A report by Infiniti Research says that one of the main factors contributing to this market growth is the increasing number of construction activities in the region across the key sectors of commercial, residential, hospitality and retail. The HVAC market in the GCC has also been witnessing an increasing use of energy efficient systems. In the GCC market, centralised, split, packaged and ducted split ACs have together captured majority of the market share in 2015 and would lead through the forecast period. In the overall, GCC air conditioner market, share of window AC is expected
to decline.

On the go

In Oman, the air-conditioner and refrigerator market account for a whopping 65 to 70 per cent of all business in the white goods market while the market size of air-conditioning products is around 200 K units a year. Also due to a very fertile commercial / industrial projects scenario, there is also a great business opportunity for different air-conditioning concepts like chiller, ducted type or DVM (Digital Variable Multi).

Traditionally, the Sultanate has been a market for window ACs. That trend is rapidly changing as improved standards of living and more sophisticated lifestyles push customer preference to split and ducted air-conditioners. This is in line with global trends. Apart from lifestyle changes and economic development, price reductions in split units have driven demand for these models of air-conditioners. What’s more, the air-conditioner which was earlier regarded as a seasonal product now boasts decent sales figures even during off-season.

In Oman, extreme temperatures and high levels of humidity have spurred the demand for high quality, energy efficient, environment friendly and reliable cooling solutions. The Omani government, in keeping with these trends and demands, has established the highest standards in setting requirements for all new projects being developed for both the tourism and real estate sectors. In order to meet these requirements and to reduce the demand on the governments for energy the District Cooling solution has been developed and implemented throughout the GCC.

Over the past few years, Oman’s air conditioner market has witnessed a significant growth in demand across diverse sectors. Rising number of housing units, expansion of commercial and institutional spaces and extreme weather are the major growth drivers for the country’s air-conditioner market. Centralised air-conditioning units such as chiller and VRF (variable refrigerant flow) systems are expected to gain a stronger foothold in Oman over the next five years. However, the share of window air-conditioners is expected to witness a decline during the same period.

Government and private companies have announced various mega development projects such as educational institutions, hotels, office spaces, and expansion which is expected to create a lucrative market for air-conditioner manufacturers and suppliers over the next five years. In addition, the booming hospitality and tourism industry in the country is also anticipated to trigger the demand for air-conditioners during 2014-19.

Energy efficient

HVAC is the single largest energy-consumer in buildings by accounting for nearly 60 per cent of the total energy cost. HVAC equipment consumes a substantial portion of energy in commercial buildings—roughly 40 per cent of total building energy consumption depending on climate and other factors. Moreover, commercial buildings consume a significant proportion of the world’s energy supply, approximately 12 per cent according to estimates from Oak Ridge National Laboratory. As concerns about the environmental impact of energy generation and uncertainty over future energy prices increase, efficiency improvements in HVAC equipment become more enticing.

Nearly seven years into the recovery from the 2009 financial crisis, persistent weakness remains in the commercial HVAC market. However, improvements in the economy and an increased focus on efficiency are driving increases in the market for energy-efficient HVAC equipment. In the near term, growth will be buoyed by the continuing economic rebound, together with concurrent increases in new commercial building starts, including green and efficient buildings. Over the mid-term, however, increasingly stringent regulatory environments will also drive growth in energy-efficient commercial HVAC markets globally, especially in Europe and Asia Pacific but also in North America. According to Navigant Research, global revenue for energy-efficient commercial HVAC systems is expected to increase from $22.8bn in 2015 to $47.5bn in 2024.

Deployments of specific efficient commercial building HVAC technologies vary considerably by region. Due to a combination of continuing economic development and increasing interest in energy efficiency, Asia Pacific has emerged as the global leader in the deployment of efficient HVAC systems for commercial buildings. Navigant Research forecasts that worldwide revenue from energy efficient HVAC systems will reach $33.2bn annually by 2020.

An efficient HVAC system can reduce power consumption by 35 to 40 per cent.

Given this scenario, it is not surprising to see the shift in trend in the GCC construction sector towards the internationally popular Leadership in Energy and Environmental Design (LEED) certification of projects by adopting better HVAC design standards. The region owing to extreme climatic conditions of the desert, ongoing drive towards diversified businesses away from the traditional petro based economy, growing capital investment in infrastructure development as well as a rising population with high standards of living, constitutes one of the largest markets for HVAC in the world. Moving ahead, smart buildings and environmentally sustainable HVAC systems across commercial, residential, hospitality and retail user segments in this region will aid in further driving the HVAC market.

The upcoming smart building projects in the Middle East will significantly drive the demand for state-of-the-art HVAC systems. It is true that the concept of smart building projects will boost the need for more energy efficient HVAC systems. The UAE is leading in this concept especially with the announcement of Mohd Bin Rashid City in Dubai. Other projects such as Renaissance City are being envisaged by an Italian company in collaboration with Masdar City, which will be spread across 300 hectare of land and will consist of all the amenities. Saudi Arabia has planned at least six smart cities, with one in Mecca. Qatar is working on three of its smart city projects such as Lusail Smart and Sustainable City, Pearl Qatar Island and Energy City. Dubai Sustainable City project of 500 villas is designed to generate its own electricity with the help of solar panels; even the air conditioning systems are powered by solar panels. LG, with its market leading multi VIV VRF system and energy efficient products, has bagged the project. Such projects will fuel the need for energy efficient products by at least 50 per cent compared to the existing demand in the next two to three years.

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