Market Overview
The Southeast Asia HVAC market size stood at $18,745.5 million in 2021, and it will advance at a CAGR of 6.4% during 2021–2030, primarily due to the increasing infrastructure development and growing hospitality industry.
The pandemic impacted the supply chain of refrigerants and electronic components, such as compressors, embedded systems, and fan units, which, in turn, impacted the manufacturing of HVAC equipment, thus restraining the growth of the market.
However, Southeast Asia's total fiscal response as a share of the GDP in 2020 was 25%, compared to the global average of 13%. Moreover, fiscal spending was much higher in Singapore, Indonesia, Malaysia, and the Philippines, ranging from 15% to 41% of their respective 2020 GDPs, while the fiscal response of the rest of the region averaged below 10% of its GDP in 2020.
Furthermore, Indonesia, the Philippines, and Singapore have achieved a 53%, 60%, and 87% vaccination rate, respectively, as of February 2022. This will accelerate the restoration of operations, thus resulting in the increasing sales of HVAC systems to the country's commercial and industrial sectors.
Cooling Category To Witness Fastest Market Growth
The cooling category is expected to advance at the highest CAGR, of 7.5%, during the forecast period. 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 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 income, affordability will increase and lead to a substantial rise in the demand for ACs.
Commercial Category Held Largest Share in 2021
The commercial category is estimated to have held the largest revenue share, of 45.3%, in 2021, 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, 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 Singapore is a vertically connected integrated complex that will provide working and recreational spaces. This $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 residence and ancillary retail spaces, which hints at a significant Southeast Asia HVAC market growth potential.
Hot Revenue Pocket
- The growing hospitality industry is driving the market in Southeast Asia. Due to the presence of beaches and heritage places, the region 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.
- There is also a growing demand for HVAC products here due to the increasing expenditure on construction activities. Government initiatives for infrastructure development are expanding rapidly since the halt in the construction sector during 2020 due to COVID-19. For instance, in 2021, the Thai government has planned public–private projects (PPP) worth $5.43 billion (THB 163 billion). In total, Thailand’s government has planned PPPs worth $29.68 billion (BHT 1 trillion) between 2020 and 2027.
Hospitality Facilities To Witness Fastest Growth among All Commercial Users
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 category held the largest Southeast Asia HVAC market share, of 37.0%, in 2021 and is projected to witness the highest CAGR, of 7.1%, 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 be opened. 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.
Product Launches and JVs Characterize Market Competition
- In April 2022, Trane Technologies plc launched Air-Fi wireless sensors for Trane/Mitsubishi Electric CITY MULTI VRF system. This sensor can detect and monitor temperature, humidity, occupancy, and carbon dioxide (CO2) 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.
- In November 2020, 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.
