Saudi Arabia Residential AC Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

Saudi Arabia Residential AC Market Analysis

The saudi arabian residential AC market generated a revenue of $574.7 million in 2023, and the market size is predicted to reach $917.8 million by 2030, advancing at a CAGR of 7.2% during 2024–2030. The industry is driven by the increasing heat and humidity in the environment, the rising disposable income, the changing lifestyles, and the surging investment in the housing sector in the country.

Moreover, Saudi Arabia is one of the fastest-growing economies in the world. The noticeable rise in the national income of the Kingdom of Saudi Arabia over the last few years has resulted in an increasing number of buildings, which, in turn, drives the demand for ACs.

In addition, the residential, government, and commercial sectors witness significant growth in the country. Among these, the residential sector is growing at the highest pace, with an obvious increase in the number of small villas and relatively large apartments used by small Saudi families. These small to medium-sized houses use central or package air conditioning systems. This resulted in about 75% of the electric energy consumption in buildings in the residential (52%), government (11%), and commercial (11%) sectors, with about 70% of that load being consumed by air conditioning systems. This means that about 52% of the electric energy produced in Saudi Arabia is consumed by air conditioners.

The high need for ACs in Saudi Arabia occurs due to extreme solar heating. It is one of the countries with much-blessed energy wealth, mainly fossil fuels, where the accessibility of energy supplies has been an essential factor in all sectors that still have and maintain low energy costs for years.

Moreover, the increasing preference for energy-efficient air conditioners is a key trend in the nation. The preference for the installation and use of air conditioners that are energy-efficient is increasing among people. Most air conditioners run on electricity in the country, and due to high temperatures, the constant use of air conditioners leads to high energy consumption. Electricity in the country is mostly produced by burning fossil fuels, and to ensure lower consumption of electricity, manufacturing, selling, purchasing, and using air conditioners with a higher energy efficiency ratio (EER) value is being promoted. Energy-saving air conditioner units are preferred to ensure the saving of resources.

Under Saudi Vision 2030, the country has invested heavily in the housing sector. Also, there is a separate section named housing program, which focuses on providing appropriate housing solutions, i.e., making required changes in the existing houses and building new housing units, customized as per the financial and other personal requirements of people. This program would ensure that more residential units are built, thereby increasing the demand for residential air conditioners in the country.

Announcements regarding investments have been in the news for a few months now. For instance, the country would invest about $10.6 billion (SAR 40 billion) in developing local infrastructure projects, which include 150,000 housing units for accommodating 750,000 people. The CEO of a housing company suggested that in the past few years, the country has invested approximately $133.3 billion (SAR 500 billion) into the housing sector and may spend about $53.3 billion (SAR 200 billion) for 300,000 units by 2025.

Saudi Arabia Residential AC Market Trends & Drivers

Increasing Preference for Energy-Efficient Air Conditioners

• The preference for the installation and use of air conditioners that are energy-efficient is increasing among people. Most air conditioners run on electricity in the country, and due to high temperatures, the constant use of air conditioners leads to high energy consumption.
• Electricity in the country is mostly produced by burning fossil fuels, and to ensure lower consumption of electricity, manufacturing, selling, purchasing, and using air conditioners with a higher energy efficiency ratio (EER) value is being promoted. Energy-saving air conditioner units are preferred to ensure the saving of resources.
• The country also offers a refund of about $240 for each unit of high-efficiency split air conditioner bought, i.e., with an EER of 13.8 or more for up to six units per household, under the High-Efficiency Air Conditioning (HEAC) program.

Increasing Heat and Humidity in the Environment

• The increasing heat and humidity in the environment of the country have led air conditioners a necessity product from being a luxury. A significant increase in the minimum and maximum temperature of the country is being witnessed, and the temperatures are expected to rise explicitly in the next few years if sustainable measures are not implemented. This scorching temperature can impact the health and well-being of people.
• Moreover, there is usually a high temperature during the day, especially during summer, the temperature ranges from 27 oC to 43 oC depending upon different parts of the country, and thus, people avoid being under direct sunlight. To combat the hot and humid conditions, people are investing in necessary equipment such as air conditioners at their residences. The rapid change in climatic conditions of the country is leading people to invest in infrastructural facilities to have comfortable conditions at their residences. Hence, this factor is an essential contributor to the growth of the market for air conditioners.

High Maintenance Cost of Air Conditioners

• Maintenance services are essential to ensure the efficiency of air conditioners and the costs associated with these services have been one of the key factors that inhibit the growth of the market. The various components that an air conditioner unit comprises need regular servicing to function well.
• The maintenance services include cleaning, charging, and repairing components of air conditioners, and delays in the same can lead to repairs as well as replacements, which can be quite costly compared to maintenance costs.
• Depending on the type and size of the unit, maintenance cost varies across the country. These services are necessary to ensure that the air conditioner can work efficiently for a longer period and are hence crucial.
• Thus, the need for regular spending on maintenance services, i.e., every few months or annually, can somewhat have an impact on the growth of the market.

In-Depth Segmentation Analysis

Distribution Channel Insights

• The e-commerce category held the largest share, of around 55%, in 2023. This channel offers products at relatively lower prices, which makes it a good option to buy ACs online. The convenience of electronic payment and doorstep delivery, extensive product lists with their features and technical specifications in detail, and the availability of a range of discounts and promotional offers lead to the popularity of online shopping.
• Moreover, online stores do not have space constraints and a wide variety of products can be displayed on websites. It helps analytical buyers purchase a product after a good search. Also, e-retailers and marketers offer discounts to customers, as they have cut down on real estate and other costs.

Distribution channel covered in the report include:

• Multi-Brand Stores
• Supermarkets/Hypermarkets
• E-Commerce (Largest and Fastest-Growing Category)
• Others

Product Type Overview

• Split ACs held the largest market share, of around 60%, in 2023. These can provide cooling and heating to homes and offices, and thus, they are preferred over window ACs. As a single outdoor system can control multiple indoor units, split ACs are accomplished to offer even cooling throughout the home. This also means that split ACs can offer significant savings for larger home cooling projects.
• In addition, split ACs are mounted high and designed for cooling larger spaces, and further, it is possible to get split ACs of a high tonnage, of above 2 tons. Moreover, split systems can provide both heating and cooling and are well-known for their uniform distribution of hot and cold air when appropriately controlled via a thermostat.

The following product types are included in the report:

• Split (Largest and Fastest-Growing Category)
• Window
• Others

Western Region is the Largest Revenue Contributor

• In terms of volume, the western region accounted for the largest revenue share in 2023, and the demand for ACs in the region is projected to grow at a CAGR of around 6.2% during the forecast period, in the Saudi Arabian residential AC market.
• The growing development of housing units in the area makes it the largest shareholder among all the regions.
• Also, the western part of the Kingdom is home to some of the largest cities, including Jeddah, Makkah, and Medina, which are witnessing a huge influx of people from rural areas of Saudi Arabia and visitors from other countries, thus driving the residential construction boom.
• Moreover, the country is also trying to promote energy-efficient residential air conditioners, to ensure the saving of resources. The air conditioners are provided with their energy efficiency ratings and the ones that have higher ratings get monetary incentives from the government.
• For instance, the country offers a refund of about $240 for each unit of high-efficiency split air conditioner bought, with an EER of 13.8 or more, for up to six units per household.

Further, regions analyzed for this report include:

• Central
• Eastern
• Western (Largest and Fastest-Growing Market)
• Southern

Saudi Arabia Residential AC Company News

• In September 2022, Al Salem Johnson Controls signed an MoU with real estate developer Almajdiah Residence. As per the agreement, the company will provide VRF systems for the residential projects of Almajdiah Residence.
• In April 2022, Zamil Air Conditioners in partnership with Samsung Electronics Saudi Co. Ltd. took part in the Big 5 Saudi exhibition. Both companies in partnership launched the latest edition of variable flow conditioning (VRF) that would be suitable for high-rise apartment buildings.
• In July 2021, LG Electronics introduced a new range of air conditioners in the Gulf region. The air conditioners are based on dual inverter compressor technology for increasing cooling efficiency and saving energy use.
• In May 2021, LG Electronics and Al Hassan Ghazi Ibrahim Shaker Co. (Shaker) announced their investment in a joint venture for a new production unit of air conditioners in Riyadh, Saudi Arabia. This unit would use industrial robots and AI to automate production procedures.