Last edited 22 Nov 2019

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Global growth in 2019 air-conditioning market

Air-conditioning-233953 640.jpg

In September 2019, BSRIA published its latest air-conditioning report update on splits, chillers and rooftops for 21 countries, covering four regions:

  • Americas: Argentina, Brazil, Mexico and USA
  • Asia Pacific: Australia, China, Indonesia, Japan, Philippines, South Korea and Thailand
  • Europe: France, Germany, Italy, Russia, Spain, Turkey and UK
  • Middle East & India: India, Saudi Arabia and UAE.

BSRIA’s summer 2019 update data showed that the world air-conditioning market is expected to grow for another year, which means the market has been growing five consecutive years now. The global air conditioning market is expected to reach US$ 115.8bn by the end of 2019, which represents 4% of growth by value.

While sales across all product segments have increased, splits were the main category driving growth, expanding slightly above the average 4%, with chillers and rooftops showing a more modest progress under 3% in value terms.

By region, Americas was the largest contributor to global growth, expanding above the world average 5%, followed by the MEIA region at 4.5%, while both Asia Pacific and Europe saw their markets rising below average 4% and 3% respectively.

In the Americas, Brazil and USA (the latter being by far the largest geographical market in the region) were the main contributors towards growth rising 7% and 6% by value, respectively. Sales in the USA were boosted by demand from the residential sector, contrasting with a much more modest growth in non-residential applications. The opposite situation was witnessed in Argentina and Mexico, both affected by their struggling economies; including currency depreciation, rising interest rates and sharply declining construction activity.

The Asia Pacific region accounts for more than 50% of the global air-conditioning market. All the updated markets in the region showed varying degrees of growth, except for Australia. Australia is expected to decline again in 2019 by 2% in volume terms, affected by a considerable drop in the residential segment due to changes in laws and stricter lending regulations. Growth in China, the world's largest AC market, slowed down considerably to 4%, down from 9% in 2018, mostly affected by the slowdown seen in the single split market, reflecting the situation seen in the residential real estate market.

Philippines shows the exact opposite trend, with the market gaining momentum at 14% expected growth in value terms, after a 9% expansion in 2018, thanks to the uptake of single splits replacing window units in the residential market, and chiller sales expected to remain flat compared to 2019. Despite being a very mature market, AC sales in Japan rose close to the regional average of 4% by value, with the market being driven by demand for splits and chillers, and with sales boosted by the Olympics and the Rugby World Cup. South Korea, the third largest market in the region, is expected to grow below the regional average of 2.7% overall by value, with mild progress in the AC residential segment.

The European AC market is expected to grow by 3.4% in 2019 in value, with all the countries in the region performing in a positive way, except for Turkey and the UK. The two largest AC markets in Europe, Italy and France are showing a remarkable expansion of 12%, something unusual for a relatively mature market, while Spain and Germany progressed broadly in line with the regional average.

In Italy the market continued to be driven and dominated by single- and multi-splits sales, resulting from a large residential market. Most Italian businesses and industries are small- and medium-sized family-owned businesses scattered around the northern part of the country, and the market is dominated by the below 100kW range. Weather conditions and stricter energy-efficiency regulations are the main market drivers in Italy.

In France, in addition to hot weather conditions, a growing new-build residential market, the uptake of R32, and the need to replace the large installed base of electric radiators and old AC units, have boosted split sales by 15% in value terms. Turkey and UK (to a lesser extent) were the counterpoint to an otherwise healthy performance of AC markets in Europe. The Turkish market is being affected by elections, military and political conflicts, all of which affected the Turkish Lira and boosted inflation.

In the UK, despite a slowdown in construction building permits, the splits and VRF market have proved more resilient than had been hoped, given the current poor economic environment. The residential sector is now reported to be driving sales of multi splits which are installed as a cheaper alternative to mini VRF. The chiller market is slowly falling by volume. The commercial market (offices) is reported to be performing poorly. Sales to hotels are not as strong as they were. The overall splits market is expected to grow by around 4% by volume, whereas the chillers market is expected to decline by around 3% in 2019.

One of the largest AC markets in the Middle East, Saudi Arabia, is expected to grow around 2% by volume but to contract by 3% in value. The UAE market remains flat. In Saudi Arabia, the chiller market has been underperforming for several years and is currently affected by a lack of large private and public projects and a subdued construction sector. A similar situation occurs in UAE, where fluctuating oil prices affected government revenues, triggering a reduction in government spending and investment, impacting also on the construction sector. Splits sales remained flat while chiller sales dropped by 2% in volume.

However, India shows a remarkable performance. The country is expected to join the leading group of nations in terms of the number of AC units installed, with a rapidly expanding demand resulting in a growing middle-class, increasing urbanisation rates and rising temperatures. Sales of splits are expected to rise by almost 10% in 2019, while the chiller market is also expected to close the year with an increase of 7% by volume, with industry, hospitality and transport infrastructure all being major factors.

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This article was written by BSRIA and previously appeared on its website in November 2019. It can be accessed HERE.

BSRIA is a non-profit, member-based association, providing specialist services in construction and building services. More information at www.bsria.co.uk.

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