Growth Drivers & Challenges in the

HVAC marketMiddle East & Africa

by Global Research Manager -Saziye Dickson

Why should we care? • Extreme weather conditions

• Disruptions to everyday work and life

• Economic losses

• Prolonged draughts

• Severe water shortages

• Agricultural draughts – famine

• Influx of refugees

• Political unrest

Agenda

Global AC Middle East Africa Special SMART HVAC

Intro to BSRIA

BSRIA VALUES

Building Services Research & Information Association

BSRIA WMI• Consultancy, Test, Compliance and Research

• Promotes best practices in building

• Est. 1955, 800+ members

• Non-profit association

• Over 30 years of Market Intelligence

• Independent, authoritative studies

• Unrivalled technical expertise

• Research in 90+ countries

55

Airtightness

Sound insulation testing

Thermal Imaging of Building Fabric

Ventilation Testing

Construction Compliance

Information & Membership

Technical publications

Training

Membership

Test

Standard testing

Bespoke testing

Witness and on-site testing

Product development, research and

troubleshooting

Instrumentation

Hire, Sales and Calibration of test and measurement

instruments

World Market Intelligence

Market Briefings

Market Reports

Private ClientResearch

Market Consultancy

Intro to BSRIA

6

World HVAC Market

Climate

Change

Urbanisation

Refrigerants

Energy

efficiency

Mergers,

acquisitions

& alliances

Smart revolution

& Hybrid solutions

7

Source: BSRIA

7

CAGR3.7% Vol + 4.5% Val

CAGR4.1% Vol + 5.2% Val

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

2017 2018 2019 2020 2021 2022 2023

Global AC Forecast (2017-2023), by volume

Americas Asia Pacific Europe Middle East India Africa

>70% China

How did the products perform in 2019?

• Growth is apparent across all product areas

• Albeit smaller growth then 2018

• Available projects in residential and light commercial favouring multi splits and VRF

• Growth in Mini-VRF across the globe

• Healthy growth in chillers across the globe with newer lower GWP refrigerants

• Growth in modular/Oil Free Centrifugal Chillers 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

Airside

Chillers

Total Large Packaged

Room AC

VRF

Multi Splits

Ductless single splits

Ducted splits

Growth in 2018 vs 2019, by volume

2019 2018

Source: BSRIA

9%

7.2%

12.6%

9%9.8%

0%

2%

4%

6%

8%

10%

12%

14%

Global Europe MEIA Asia Pacific Americas

Mini & Maxi VRF vs Chillers CAGR (2017-2023), by volume

Mini-VRF Maxi-VRF Total Chillers

• Western Europe and some part of Asia are mature VRF markets – replacement coming through

• Americas is really embracing the VRF technology –adoption by specifiers

• Middle East and India also experiencing rapid growth –skilled installers and training needed

VRF versus Chillers

How is Europe doing?

• Overall healthy growth forecast exceeds Asia Pacific’s

• ErP directive and F-gas Regulations

• Rapid increase in Heat Pump sales

• Limitations on use of refrigerants allowed in buildings started to benefit scroll chillers in France

• Pushing towards more hybrid technologies

• Rental market, S&M and Retrofit

CAGR5.7% Vol + 6.3% Val

CAGR4.4% Vol +5.3% Val

How is Asia Pacific doing?

• Overall healthy growth, 3% in 2019

• Slow down in the Chinese economy & real estate

• Trade war taking its toll on China’s economy

• New energy efficiency document due to be published in China

• Japan leading the way with new technology – AC demand from schools and major sporting events

• Mini-VRFs and & Oil Free Centrifugal chillers are winning

CAGR3.3% Vol + 3.9% Val

CAGR4.3% Vol +4.5% Val

How is Americas doing?

• Mixed picture, overall with the US outperforming the other countries

• The market is shifting away from traditional systems to single ductless splits and VRFs

• Energy Efficiency is driven by each state with California leading the way

CAGR2.9% Vol + 5.4% Val

CAGR3.6% Vol +6.1% Val

Residential Room AC, <17.5kW ducted and ductless splits

CAGR6.3% Vol + 7.6 Val

CAGR4.3% Vol +4.9% Val

• Splits and rooftops being replaced by ducted splits and mini-VRFs in the Middle East

• District cooling/mega projects favouring Centrifugal chillers

• Growing population and urbanisation creating 96 cities

• Forecast growth exceeds the Global Average

Egypt3% Qatar

4%

Kenya11%

Growing AC markets in MEIA, 2019 (volume)

Ghana10%

Algeria9% India

9%

Morocco5%

Nigeria10%

Saudi Arabia2%

Tanzania3%

0

1,000

2,000

3,000

4,000

5,000

6,000

2017 2018 2019 2020 2021 2022 2023

Growth in Commercial AC Systems by value (USD millions)

Airside Chillers Large Packaged Ducted Splits VRF Multi splits

UAE AC market

• Demand from the residential construction which is favouring mini-VRF

• Introduction of VAT (5%)

• Splits market continued to decline

• Over supply of office spaces

• Significant increase in number of delayed projects

$186m$148m

$276m

$205m

$52m

$28m$79m

Total AC Market size: 679,000 Units + USD 733 million in 2019

Please note, the size of each box represents the volume data and values are as inserted. The product that is too small to show is Scroll chillers.

• US sanction on Iranian trade with UAE - Recent disruptions of trade with UAE - USD 17 billion worth!

Challenges in the UAE

Qatar 4 Arab nations

X

• Lack of access to credit for public and private investments

• Bans on imports from four Arab neighbours continues

Global & Regional Players, by volume in 2018

Oth

er

Co

mp

an

ies

Ma

rke

t Le

ad

ers

Gree

Midea

Daikin

Haier

UTC

LG

Panasonic

JCI-Hitachi

Mitsubishi Electric

Samsung

Aux

Chigo

Fujitsu

General Electric

Hisence

Trane

Sharp

MHI

Lennox

>65% <35%

Oth

er

Co

mp

an

ies

Ma

rke

t Le

ad

ers

LG

Daikin

JCI-Hitachi

Samsung

UTC

Voltas

Panasonic

Gree

Midea

Fujitsu

Blue Star

Llyod

Mitsubishi Electric

Zamil

Sharp

Whirlpool

Godrej

Others

Midea

Panasonic

Others

>60% >40%

BACS15%

BEMS6%

Smart HVAC6%

Smart Home73%

BACS

BEMS

Smart HVAC

Smart Home,

Source: BSRIASource: BSRIA

Total Smart Buildings Market, 2019, USD billion (Including Services)

Global Growth 2018-21

Where the Growth is Happening…

Source: Forbes 500 Top Global Companies, Hoovers, Others, BSRIA Analysis

0 50,000 100,000 150,000 200,000 250,000 300,000

Apple

Amazon.com

Samsung Electronics

Alphabet

Microsoft

Siemens

IBM

LG Electronics

Cisco Systems

Honeywell International

Johnson Controls International

Schneider Electric

Million USD Sales 2018

Building automation

Other Smart Buildings

Smart Appliances

Smart Home

The Companies with Deepest Pockets are Entering Smart Buildings

Summary

The economies are diversifying - HVAC business models must follow

New opportunities

In new markets, Retrofit & After Sales Sustainable cooling is achievable in Middle East, but Industry needs to

work together

Saziye DicksonGlobal Research Manager – VAC&R Worldwide Market Intelligence

Old Bracknell Lane West, Bracknell, Berkshire RG12 7AHD : +44 (0)1344 465536 F : +44 (0)1344 465626

E : saziye.dickson@bsria.co.ukW : www.bsria.co.uk

THANK YOUFOR ATTENDING THE PRESENTATION

Please don´t forget to collect your CPD certificate

during the event from the CPD collection area