Southeast Asia HVAC Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Southeast Asia HVAC Market Data

Southeast Asia HVAC Market Trends & Drivers

Adoption of Energy-Efficient and Smart HVAC Systems

• One of the key trends in the Southeast Asian HVAC market is the adoption of energy-efficient and smart HVAC systems. They are becoming popular as they consume less energy compared to conventional systems, which reduces the greenhouse gas emissions from fossil-fuel-based power plants. Moreover, Energy Star-qualified HVAC systems cut down on energy costs.
• To reduce energy consumption and improve system efficiency, a large number of buyers are adopting smart HVAC systems. These systems offer better internet of things (IoT)-integrated controls, building automation, and advanced real-time performance monitoring. They also provide better temperature variability, remote access, and preventive maintenance and related services, thus resulting in improved efficiency and lifespan.
• In this regard, regional countries’ increasing focus on smart cities is bolstering this trend. For instance, the main objective of the Malaysian government behind the Economic Transformation Programme (ETP) is to build smart cities using advanced digital technologies and strengthen the focus on the 12 National Key Economic Areas (NKEAs) identified in the 10th Malaysia Plan.
• Moreover in 2021, in Vietnam, three South Korean companies entered into a strategic partnership to build a smart city platform to help tackle the problems caused by the rapid urbanization in the country. This fuels the demand for energy-efficient HVAC devices that can reduce the energy consumption, at the same time catering to the rapid urbanization.

Growing Hospitality Industry Drives Market

• The growing hospitality industry is also driving the HVAC market in the region. Due to the presence of beaches and heritage places, Southeast Asia is one of the most-famous tourist destinations. Moreover, it is preferred since it is cheaper than other travel destinations, especially those in Europe and North America.
• Many countries are revoking the travel restrictions imposed during the pandemic and promoting tourism. For instance, Thailand’s government planned to revise immigration rules to make it convenient for long-term tourists to stay in the country, as part of a strategy to boost investment and tourism revenue once the pandemic eased.
• Similarly, in Malaysia, tourism accounts for the third-largest share in the gross domestic product (GDP). In 2020, the government announced the National Tourism Policy (NTP) 2020–2030, which aims to ensure the country's tourism industry's long-term viability and make Malaysia a preferred tourist destination worldwide. The effective recovery of the tourism industry via the new norms, enhancing competitiveness, sustainable and equitable tourism development, and disaster risk management are all key methods to fulfilling the NTP's agenda. The expected revenue increase will be USD 110 billion by 2030 as per the recent estimates by the government.
• Moreover, the Philippines is famous for its pristine white beaches. With the lifting of travel restrictions, over 100,000 fully vaccinated tourists arrived in the country from visa-free countries and regions in March 2022. With the gradual reopening of tourism, thousands of Filipinos found employment. Moreover, as per the data of 2022, tourism’s contribution to the Philippines’s GDP is approximately 6.2%, which hints at a high job potential for residents.
• South Korea is also a desired destination for tourism, recording a total of 3.19 million tourists in 2022, ranking 58th in the world in absolute terms. The tourism industry alone brought in roughly USD 11.78 billion to South Korea. This amounts to 0.72% of the country's GDP and around 36% of all international tourism receipts in East Asia. Moreover, with the reduction in the infected people count, the country is reopening to tourists, which hints at a massive demand for HVAC systems at hotels, resorts, entertainment venues, amusement parks, and other facilities associated with recreation and leisure.

High Installation Cost

• The installation cost of HVAC systems is generally high as it depends on the room size, equipment capacity, efficiency, and location. Further, the installation cost of HVAC ductwork is high. Moreover, the installation cost of variable refrigerant flow (VRF) systems is also high due to their specific installation requirements and design complexities. VRF pipework and specific installation requirements, which vary based on the systems offered by different manufacturers, make installation a complex, tedious, and costly affair.
• Furthermore, the life expectancy of a VRF system depends on its installation, which is the most-complex step in the whole process. Though the installation process is flexible in terms of connecting multiple indoor units to a single condensing unit, if done improperly, the overall functioning of the system may be affected. Hence, the high installation cost is one of the key factors hindering the HVAC market growth in Southeast Asia.

Southeast Asia HVAC Industry Outlook

Type Insights

• The cooling category is projected to grow at the highest CAGR, of 7.4%, during 2024–2030, as well as hold the largest market share. This is attributed to the regional climate, which is characterized by hot and humid summers. These weather conditions create a strong need for room ACs, VRF systems, split units, and ducted splits, thereby propelling the Southeast Asia cooling system market growth.
• Moreover, in regional countries, as per the International Energy Agency (IEA), only 15% of the households have an AC, thus indicating a significant potential for further growth in the major markets.
• Further, with the rise in the income, affordability will increase and lead to a substantial rise in the demand for ACs.

During the study, we have analyzed the following types of systems in the report:

• Heating
  • Furnaces
  • Heat pumps
  • Boilers
  • Unitary heaters
• Ventilation
  • Humidifiers/dehumidifiers
  • Air cleaners
  • Ventilation fans
  • Air handling units (AHUs) and fan coil units (FCUs)
• Cooling (Largest and Fastest-Growing Category)
  • Variable refrigerant flow (VRF) systems
  • Ducted splits/packaged units
  • Split units
  • Chillers
  • Room air conditioners

End User Analysis

• The commercial category held the largest revenue share, of around 50%, in 2023, mainly due to the rising number of commercial offices and buildings and the growing hospitality sector. Tourism activities in Southeast Asia are on the rise, which leads to high investments in related infrastructure, such as airports, hotels, and entertainment centers.
• Further, the government initiatives for infrastructure development have been expanding rapidly in the region since the halt in the construction sector in 2020 due to COVID-19.
• For instance, the Capital Spring project in Singapore is a vertically connected integrated complex that will provide working and recreational spaces. This USD 1.3-billion project was 93% complete as of February 2022. It has a total area of 635,000 square feet, with central air conditioning. It consists of 29 office floors, along with eight floors of serviced residences and ancillary retail spaces, which hints at a significant Southeast Asia HVAC market growth potential.
• Furthermore, the tourism sector is registering unprecedented growth year-on-year due to the region’s shimmering, white beaches, spicy cuisine, and cultural heritage. This is projected to drive the demand for HVAC systems in the hospitality sector in the coming years. Therefore, the hospitality subcategory held the largest Southeast Asia HVAC market share in 2023, and it is projected to witness the highest CAGR, of 7.2%, during the forecast period.
• For instance, in Indonesia, by 2024, 120 new hotels, the majority (75) in the four-star segment and 45 in the five-star category, are scheduled to open. The country has over 17,000 islands that offer a massive potential for adventure and a huge growth opportunity to the country’s tourism sector. This is projected to drive the demand for HVAC systems in hotels and resorts in the coming years.
• The residential category is projected to witness the highest CAGR, of 7.5%, during 2024–2030 in the market. This will mainly be due to the increasing number of residential construction projects in Southeast Asia.
• For instance, South Korea has planned to develop 830,000 housing units by 2025 under the housing redevelopment projects undertaken by state-run agencies. Such projects will provide stability in the housing market and increase the demand for HVAC systems.
• Moreover, in December 2021, the Myanmar government planned several infrastructure projects with China, Japan, and Thailand. China has pledged USD 596 million in financial aid for environmental infrastructure, rural transportation, and medical facilities. Along with this, the government is focusing on developing special economic zones (SEZs), which is likely to propel the market for HVAC systems.

Below are the major end users covered in the report:

• Commercial (Largest Category)
  • Office and buildings
  • Supermarkets/hypermarkets
  • Government
  • Healthcare
  • Hospitality
  • Transportation
  • Others
• Industrial
  • Oil and gas
  • Food and beverage
  • Automotive
  • Energy and utilities
  • Others
• Residential (Fastest-Growing Category)

Geographical Analysis

• Based on country, Indonesia is the largest adopter of HVAC systems, holding a market share of around 30% in 2023. The Indonesian HVAC systems market growth is driven by the rising number of commercial buildings and its energy-saving policy, which is making people replace their conventional HVAC appliances with energy-efficient ones.
• Further, Indonesia generated the highest revenue in 2023, primarily due to the extreme climatic conditions and growing real estate sector in the country. For instance, the One Avenue Mixed-Use development project in Batam, Riau Island, worth USD 350 million, involves the construction of four luxury apartment towers and an office tower on a five-hectare piece of land. It began in the fourth quarter of 2021 and is projected to be completed in the first quarter of 2025. In this regard, the HVAC market is booming in the country due to the increasing construction investment by the government.

The countries analyzed for this report include:

• Indonesia (Largest Category)
• Thailand
• Vietnam
• Malaysia (Fastest-Growing Category)
• Singapore
• Philippines
• South Korea
• Cambodia
• Myanmar

Competitive Analysis

Players in the Southeast Asia HVAC industry are involving themselves in acquisitions and product launches to gain a significant position. For instance, in February 2022, Carrier Corporation agreed to acquire the ownership stake of Toshiba Corporation in Toshiba Carrier Corporation (TCC), a joint venture with Carrier that manufactured VRF and light commercial HVAC equipment. This agreement strengthens Carrier’s HVAC segment and scales up its VRF product portfolio globally. Toshiba retains a 5% ownership stake in TCC, and Carrier expected to consolidate over USD 2 billion in unconsolidated revenue in the deal, which was expected to close by Q3 2022.

Similarly, in February 2022, Johnson Controls International plc launched the OpenBlue indoor air quality (IAQ) service solution to help organizations optimize IAQ and energy costs. This service will help organizations keep their employees healthy, aid in annual IAQ assessments, and pinpoint the risk areas, for better IAQ and energy efficiency.

Southeast Asia HVAC Industry News

• In April 2022, Trane Technologies plc launched Air-Fi wireless sensors for Mitsubishi/Trane Electric CITY MULTI VRF system. This sensor can detect and monitor humidity, temperature, carbon dioxide, and occupancy from a single device, thus reducing the need for multiple sensors and, in turn, the energy consumption of the appliance.
• In December 2021, Carrier Malaysia launched a VRF system for commercial buildings and spaces. These systems are capable of serving varying temperature requirements, while maintaining building aesthetics and optimizing operational efficiency. This HVAC system is designed for offices, hotels, and retail stores.
• Daikin Industries Ltd. and Singapore Power (SP Group) established a joint venture to create a district-level centralized cooling system for Tengah Town, a smart energy town project being promoted in Singapore by the government. For this project, collaborating with SP Group, Daikin supplied advanced centralized cooling systems for residences.