Middle East and Africa HVAC Market Overview
The Middle East and Africa (MEA) HVAC market is estimated to generate revenue of $7.8 billion in 2018 and is predicted to witness a CAGR of 4.9% during 2019-2024. Adoption of energy efficient systems in response to strict government regulations was the major trend exhibited in the market.
Based on HVAC type, the Middle East and Africa HVAC market has been categorized as heating, ventilation, and cooling, wherein cooling category accounted for largest market share in 2018. Moreover, ducted split/packaged contributed largest market share in the cooling segment in 2018. Presence of numerous high-rise buildings in countries such as Saudi Arabia and U.A.E. has been a major contributor for large-scale adoption of ducted split/packaged units in the region. Besides this, efficient functioning of packaged unit, where it is combined with ducts for controlled distribution of air, is one of the prime factors for its mass scale adoption in manufacturing facilities and data centers/server rooms.
Based on end-user, the Middle East and Africa HVAC market is segmented into commercial, industrial, and residential. Of which, commercial segment stood at top in 2018, predominately led by the rising number of commercial offices/buildings and growing hospitality sector. Additionally, rising infrastructure investments especially in Saudi Arabia is expected to further support market growth in the forecast period. The infrastructure investment includes various projects like expansion of grand mosque in Mecca for $26.6 billion, and Haramein high speed railway ($16.5 billion) connecting Mecca and Medina.
On the basis of country, Saudi Arabia is estimated to be the largest HVAC market in 2018. Slump in oil prices during the period 2014-2015, had a negative impact on the economy of oil producing countries including Saudi Arabia, U.A.E., Iran, and others, affecting the growth of HVAC market, during the historical period. However, factors such as stabilization of oil prices, events in countries such as U.A.E, Qatar, and rising religious tourism in Saudi Arabia, is projected to revive the economy of these countries, which in turn will propel the demand for HVAC systems in the coming years.
MEA HAVC Market Dynamics
The growth in construction industry in MEA is expected to support Middle East and Africa HVAC market growth. At present, construction sector is surging at an exorbitant pace in the MEA region. Global events such as World Expo 2020 in U.A.E. and FIFA World Cup 2022 in Qatar, is anticipated to drive the tourism industry in GCC countries. Moreover, Qatar’s hospitality sector is registering unprecedent growth year-over-year (YoY), as the country gears-up for National Vision 2030 and FIFA World Cup 2022.
According to Qatar’s Ministry of Development Planning and Statistics, in Qatar, there are about 106 hotels, including 4-star, 5-star, and 7-star, and 13,733 guestrooms are under-construction, which is projected to be completed by 2020. Additionally, 8 football stadiums are also under-construction which is set to be completed during 2021-22. This would propel the demand for HVAC systems in Qatar.
The Middle East and Africa HVAC market is witnessing a growth in demand for VRF systems in high- rise buildings, owing to the flexibility and lower utility cost benefits it offers. With multiple tenants, an inefficiently designed HVAC system may result in poor air-quality, and inconsistent airflow, resulting in high maintenance cost. VRF systems offers healthy air, personalized control, flexibility in installation, and eliminates the need for water piping. Additionally, it provides solution to complex installation of ducted split systems in high-rise buildings, where a single outdoor unit is deployed with multiple indoor units forming an efficient ductless multi-split system.
As Middle East and Africa HVAC market is projected to grow positively in coming years, the adoption of energy efficient HVAC systems is a major trend observed in the region. For instance, to achieve Vision 2021 launched by U.A.E government, HVAC market players introduced energy efficient systems which consumes less energy. Adoption of such energy efficient systems is very crucial in order to curb CO2 emission and reduce the impact of global warming. Gulf Cooperation Council (GCC) and African Union are the bodies looking after sustainable development policies.
Furthermore, GCC countries have strict regulations for energy efficient products. For instance, in 2017, Saudi Arabia’s custom team seized 759,000 products for violating the standards of Saudi Energy Efficiency Center. Hence, with strict government regulations, adoption of energy efficient HVAC systems is on the rise in MEA region.
High upfront cost and trained personnel requirements is a constraint hindering Middle East and Africa HVAC market growth. In buildings requiring deployment of multiple HVAC systems, the complexities associated with the installation process are significant. The pipework and specific installation requirements of ducted systems which vary based on different manufacturers, make initial installation a complex, tedious, and a costly job. Furthermore, life expectancy of HVAC system depends on its proper installation, which is the most complex step of the whole process.
HVAC systems especially VRF systems require regular inspection and maintenance by trained personnel due to their complicated designing. Moreover, with superior control of these systems, piping and control systems must be installed as per manufacturers’ specific instructions. Pressure testing, changing of filters, and cleaning of fan coils are very critical for the maintenance of HVAC systems. Thus, high maintenance due to complicated designing of HVAC systems may restrict market growth during the forecast period.
Middle East and Africa HVAC Market Competitive Landscape
Middle East and Africa HVAC market is a highly fragmented and competitive market with competition based on price, energy efficiency, reputation, quality, and technical know-how. Oil crisis during 2014-2016 had a major impact on the sales of HVAC in the region. However, major upcoming events such as AFCON 2019, World Expo 2020 in U.A.E., and FIFA World Cup 2022 in Qatar, are expected to revive the demand for HVAC systems in the region.
Johnson Controls International PLC, 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, Danfoss A/S are some of the major players in the Middle East and Africa HVAC market.