HVAC Market Overview
The HVAC market is estimated at a value of $108.1 billion in 2018 and is poised to register a CAGR of 3.9% during 2019-2024. Factors including overall growth in construction sector predominately office and buildings and hotels is the major driver exhibited in the market. Moreover, increasing focus toward using environmentally friendly refrigerants is propelling the demand for HVAC systems.
Based on HVAC type, the HVAC market is categorized into heating, ventilation and cooling. Of these, cooling category is estimated to account for the largest market share in 2018. Rising temperature and growing disposable income have been major factors for increase in demand for ACs across the globe, during the historical period 2014-2018. Also, according to Institute of Civil Engineers (ICE), global construction market is set to be valued at around $8 trillion by 2030, primarily driven by U.S., India, and China.
Based on end-user, the HVAC market has been categorized into commercial, industrial, and residential. Among these, commercial was the leading end-user category, mainly propelled by the rising number of offices and buildings and growing hospitality sector, across the globe. Global events such as ICC World Cup 2019 in the U.K., World Expo 2020 in U.A.E., FIFA World Cup 2022 in Qatar, FIFA World Cup 2026 in the U.S., Canada, and Mexico, are expected to drive the hospitality industry in the forecast period. Commercial category is further projected to remain as the largest revenue generator, during the forecast period.
On the basis of region, APAC accounts for highest revenue share in the HVAC market in 2018. This regional share can be attributed to increasing urban population coupled rising disposable income. According to World Bank, urban population in India has increased from 27.8% of the population in 2011 to 34% in 2017. Similarly, urban population in Thailand and Indonesia has grown from 45% and 51% in 2011 to 49% and 55%, in 2017, respectively. Also, rising disposable income of the populace, predominantly in developing countries such as China and India is also pushing the market growth, as customers are now spending more on appliances such as air conditioning systems, and refrigerators, which are no longer a luxury, especially in India.
HAVC Market Dynamics
The overall growing construction industry is observed to be the major driver for the HVAC industry. In 2017, the overall spending on the global construction sector reached about $11 trillion, and is further expected to cross $13.5 trillion by the end of 2024, growing at a CAGR of 3% from 2019-2024. India, China, U.S., U.A.E., Saudi Arabia, and Qatar are the key markets accounting for majority of the spending. These countries are recording several construction projects including major upcoming events (like World Expo, FIFA World Cup), skyscrapers, and construction of new hotels and shopping complexes owing to rising number of tourists in these countries.
In the construction industry, office and buildings as well as hospitality are estimated to be the two major revenue generating categories in the HVAC market in 2018. Furthermore, in North America, the coming years would prove to be one of the most crucial years for OEMs to derive huge chunks of revenues from the hospitality industry. In Q3 2018, around $96.6 billion was spent on the construction of lodging infrastructure across the region, witnessing a growth of 1.1% in comparison to Q3 2017. International tourism is a key factor for the growth of hospitality sector, which in turn is supporting the rising demand for HVAC systems.
Integration of HVAC equipment with home automation technology is increasingly being recorded. With home automation, the functioning of HVAC equipment such as temperature control and energy saving through smart HVAC system can be achieved. Moreover, these systems provide better temperature variability as compared to the conventional systems. For instance, with smart HVAC system, one can pre-set the temperature when the house is unoccupied, which would lead to energy savings for customers.
Moreover, the adoption of smart HVAC systems in industries and commercial areas, provides the ability to control from smartphone, thus leading to high energy saving costs for the company. For instance, Green Field factory, which is located in Dubai Investment Park has adopted building management system which provides HVAC control of all the facilities and energy monitoring in the entire factory.
HVAC Market Competitive Landscape
HVAC market is concentrated with top three players including Johnson Controls International PLC, Daikin Industries Ltd, and Gree Electric Appliances, Inc. of Zhuhai. Competition in the market is based on price, energy efficiency, reputation, and quality. Globally, HVAC companies witnessed a decline in sales of HVAC systems due to oil crises, during 2014-2016. However, the market recovered during 2017-2018, with mega events including 2018 FIFA World Cup Russia, PyeongChang 2018 Winter Olympic Games, ASIAN Games 2018 in Jakarta and Palembang, XXIV Winter Olympic Games 2019 in Beijing, and The World Games 2017 in Wroclaw, Poland, expected to drive the market.
Some of the major players in the global HVAC market include Johnson Controls International PLC, Samsung Electronics Co. Ltd., Lennox International Inc., Ingersoll-Rand plc, United Technologies Corporation, Daikin Industries Ltd., Mitsubishi Electric Corporation, Toshiba Carrier Corporation, LG Electronics Inc., Fujitsu Limited, Midea Group Co. Ltd., Gree Electric Appliances, Inc. of Zhuhai, and Danfoss A/S.