HVACR stands for Heating, Ventilation, Air Conditioning, and Refrigeration, which describes the industry & technology related to the design, installation, and maintenance of systems that control indoor environmental conditions, including temperature, humidity, air quality, and refrigeration. These systems are used in various settings, such as residential, commercial, and industrial buildings, as well as in vehicles, to provide thermal comfort & regulate air quality.
Market Insights & Analysis: GCC HVACR Market (2023-28):
The GCC HVACR Market size is valued at around USD 6.2 billion in 2022 & is estimated to grow at a CAGR of about 5.32% during the forecast period, i.e., 2023-28. The market growth imputes to the increasing investments by the local real estate developers in housing schemes to enhance home-ownership rates, coupled with rising government spending on the tourism sector. In 2021, the Housing Ministry of Saudi Arabia approved nearly 218 projects, comprising about 180,000 houses for construction in several areas of the Gulf region, in line with the strategy to boost housing ownership to nearly 70% by 2030. Under this, the ministry aimed to deal with the issue of the housing crisis in the country. In addition, commercial, oil & gas, and government & transportation sectors are major contributors to the growth of the GCC HVACR Market.
|Study Period||Historical Data: 2018-21|
|Base Year: 2022|
|Forecast Period: 2023-28|
|Country Covered||The UAE, Saudi Arabia, Qatar, Kuwait, Oman, Bahrain|
|Key Companies Profiled||LG Electronics, S.K.M. Air Conditioning, Carrier Corporation, Gree, Samsung, Daikin Industries, Mitsubishi, Trane Inc., Johnson Controls Inc., Zamil Air Conditioners Holding Co. Ltd., Others|
|Market Value (2022)||USD 6.2 Billion|
Moreover, the surging demand for air conditioners in the region is encouraging manufacturers to launch technologically advanced ACs, like those consuming less electricity, are integrated with image sensor technology, and have 4D swing functions, among others. Besides, the rising demand for energy-efficient air conditioners is leading to increasing collaborations among competitors to develop energy-efficient residential ACS to reduce energy consumption, which, in turn, is creating lucrative opportunities for the HVACR Market growth. For instance:
Besides, economic diversification plans like the UAE Vision 2021, Saudi Vision 2030, Kuwait Vision 2035, etc., to reduce the economy's dependence on hydrocarbon exports are contributing to the expansion of the logistics sector for long-term sustained economic growth. Thus, the increasing need for refrigeration systems in the GCC, owing to the flourishing logistics sector, is spurring the HVACR Market growth in the region.
GCC HVACR Market Driver:
Expansion of Tourism Sector to Augment the Market Growth – Tourism is one of the fastest-growing sectors in the GCC region. Countries like the UAE, Oman, and Saudi Arabia, actively encourage medical tourism, business & leisure travel, etc., by providing easy visa clearance, world-class hospitality services, etc. Consequently, there's a mounting influx of foreign visitors to these countries. For instance, in 2022, the UAE welcomed nearly 14.36 million visitors, i.e., a rise of approximately 7.28 million visitors in 2021, and the hotel occupancy rate was more than 70% in 2022, cites the Dubai Department of Economy and Tourism.
These developments have been encouraging the establishment of new hotels & resorts for commercial & cultural purposes by hotel groups like Ciel, Jumeriah, and others, thereby pushing the demand for HVAC systems, eventually aiding in enhancing the GCC HVACR Market share.
Furthermore, Saudi Arabia & Qatar have set the target of increasing their tourist footfall annually by around 100 million & 6 million, respectively, by 2030 & for it, they are encouraging leisure activities, adventure sports, etc. As a result, Aman Hotel, Armani Hotels, etc., are expanding their hotel chains in these countries.
Also, as per the announcements from the Future Hospitality Summit 2023, Saudi Arabia is leading in terms of hotel construction with an investment of approximately USD1 trillion & around 315,000 hotel rooms in the pipeline, thus, likely to be completed by 2030. It would then amplify the demand for centralized air conditioners and, in turn, fuel the HVACR Market growth in the upcoming years.
GCC HVACR Market Opportunity:
Growth of Food Processing Activities to Generate Higher Demand for Refrigeration – GCC is an import-driven region in terms of food products. It relies heavily upon countries like the US, Brazil, the Netherlands, India, etc., to fulfill its domestic food requirements. The region witnessed a massive shortfall in its domestic food supply during 2020-21, driven by supply chain disruptions due to the COVID-19 pandemic. Therefore, the UAE & Saudi Arabia announced their aims to ensure food security for their citizens by locally producing food products, thus creating opportunity for the GCC HVACR Market.
Governments are acting proactively to attract private players & foreign investments to establish food processing units in the region. In 2023, the Saudi government announced that it aims to attract nearly USD20 billion in investment by 2035 to develop food processing plants in the country. This is a lucrative prospect for manufacturers of large refrigerators like Everest Industrial Co., Zecorp, etc., as these food processing plants require constant refrigeration & freezing to ensure product freshness.
Since frozen food products are mandatorily kept at -18 degree Celsius or lower to ensure quality food, it would positively impact the demand for industrial refrigerators in the region over the coming years. Hence, the growing establishment of food processing units in the region is creating a conducive environment to boost the GCC HVACR Market during 2023-28.
GCC HVACR Market Challenge:
Shortage of Semiconductor Chips is Hampering HVACR Imports – The global shortage of semiconductors, especially initiated during COVID-19 due to the reduction in wafer fabrication units, hampered the growth of the GCC HVACR Market. Most companies involved in wafer fabrication of semiconductor chips, such as Global Foundries, United Microelectronics Corporation (UMC), etc., paused their production processes due to reduced demand, which, in turn, negatively affected AC manufacturing worldwide, as semiconductor chips are their integral part.
Semiconductor demand is also being created from a diversified range of product categories, including smartwatches, remotely accessible medical devices, etc., due to a structural change in consumer behavior, which, in turn, is causing delivery delays. Hence, the diversification of semiconductors in different product categories, coupled with the existing shortage in their supply, is creating a demand-supply gap. Consequently, delaying deliveries across the GCC region further creates a challenge for the GCC HVACR Market growth.
GCC HVACR Market Trend:
Preference for VRFs Over Chillers in the Commercial Buildings – With growing concerns over climate change & the optimum utilization of the available resources, there is a shift towards sustainability, i.e., encouraging the adoption of energy-efficient products like VRF for air cooling purposes. Along with this, the high energy consumption in commercial buildings of the GCC region, such as hotels & office complexes, is also elevating the demand for energy-efficient HVACs and, in turn, pushing the adoption of VRFs.
According to Kuwait Institute for Scientific Research, HVAC & lighting systems consume almost 65% of the annual electricity generation and about 85% of the yearly peak load. Hence, GCC’s commercial sector is witnessing the increasing adoption of VRFs as they are almost 30% more energy efficient than air-cooled chillers & packaged & mini-split systems. Therefore, the rising demand for energy-efficient HVAC systems is set to augment the GCC HVAC Market revenue growth in the years ahead.
GCC HVAC Market (2023-28): Segmentation Analysis
The GCC HVAC Market study of MarkNtel Advisors evaluates & highlights the major trends & influencing factors in each segment & includes predictions for the period 2023–2028 at the regional & national levels. Based on the analysis, the market has been further classified as:
Based on End User:
The residential sector accounted for a considerable market share owing to the mounting expansion of residential buildings in countries like the UAE, Saudi Arabia, etc., backed by the upgrade in the expatriate population. Further, governments have prioritized the development of more & more housing units for their employees, which would boost the demand for air conditioners in these countries.
Increased government efforts toward attracting expatriates are likely to positively impact the establishment of new residential units in the country. In 2022, the UAE’s Federal Authority for Identity, Citizenship, Customs, and Ports Security (ICA) announced to implement new regulations for entry permits & long-term residence for expatriates.
Also, the government of Saudi Arabia has taken several initiatives like the Housing Program Vision 2030, the Sakani Program, and the Ministry of Housing Infrastructure Program, which has heightened the establishment of new residential units in the country. Hence, these new policies & initiatives are anticipated to increase the number of housing units across the region & further the demand for HVACR systems in the years to come.
Based on Sales Channel:
Authorized Distributors captured a significant share of the GCC HVACR Market during the historical period as they provide customers with numerous brand options in air conditioners. Moreover, the ease with which air conditioner & refrigeration companies can sell their products without incurring large investments to cover the region's vast population spread across various geographical locations is another aspect that contributed to supplementing the market growth. The increase in the number of residential units in the region is thus set to push the demand for HVACR systems from authorized distributors in the coming years.
GCC HVACR Market (2023-28): Regional Projection
Geographically, the GCC HVACR Market expands across:
The UAE HVACR Market witnessed notable growth in the past, which was backed by rapid urbanization & an increased number of infrastructure development projects in the country. According to the World Bank, the annual urban population experienced year-on-year growth of nearly 1.1% in 2022, compared to 2021, which resulted in a rise in residential & industrial construction projects. As a result, the demand for air conditioners, ventilation units, refrigeration equipment, etc., in residential & commercial buildings was high in the previous few years.
Along with this, growing environmental concerns in the UAE associated with rising levels of carbon emissions are pushing HVAC manufacturers to introduce energy-efficient & ozone-friendly products. In 2022, Royal Electronics, a UAE-based manufacturer, launched Royal Signature, an energy-efficient split AC, in Dubai.
Moreover, the ever-increasing pharmaceutical production activities & the rising number of hospitality development projects in the country, driven by increasing government initiatives toward promoting GDP growth through the service & manufacturing sector, would also create growth opportunities for the HVACR Market in the years to come.
GCC HVACR Industry Recent Development:
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Frequently Asked Questions
A. The GCC HVACR market is predicted to showcase a CAGR of around 5.34% during 2023-28.
A. The expansion of tourism sector to drive the GCC HVACR Market during 2023-28.
A. LG Electronics, S.K.M. Air Conditioning, Carrier Corporation, Gree, Samsung, Daikin Industries, Mitsubishi, Trane Inc., Johnson Controls Inc., Zamil Air Conditioners Holding Co. Ltd., etc., are some top players in the GCC HVACR Market.
A. Authorized Distributors is the leading sales channel in the GCC HVACR Market.
A. The UAE would present high growth prospectus in the GCC HVACR market during 2023-28.
A. The rising preference for VRFs over chillers in the commercial buildings is a new trend shaping the market growth.
A. The growth of food processing activities to generate higher demand for refrigeration to open new doors for HVACR market.
A. The shortage of semiconductor chips, which lead to slow the production & meeting the desired demand to hamper the growth of the GCC HVACR Market.
A. Residential, commercial buildings, retail, health care, hospitality, government & transportation, oil & gas, industrial facilities, etc., are some potential end users of the GCC HVACR industry.