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The air conditioning (AC) systems market size is forecast to increase by USD 47.02 billion at a CAGR of 6.46% between 2023 and 2028. The commercial and industrial air conditioning market is experiencing significant growth due to the increasing demand for energy-efficient cooling solutions. The trend toward sustainable and smart air conditioning systems is gaining momentum, driven by the need to reduce energy consumption and improve indoor air quality. However, the high upfront costs of these systems remain a challenge for many businesses. Commercial and industrial air conditioning systems with high cooling capacities, often measured in BTUs, continue to dominate the market. Packaged air conditioners, which offer energy efficiency and ease of installation, are also gaining popularity. Overall, the market is expected to grow steadily due to these trends and the ongoing demand for efficient and advanced cooling solutions.
The market is witnessing significant growth due to the increasing construction activities in commercial sectors, particularly in the Gulf countries. The demand for energy-efficient products is on the rise, with a focus on HVAC systems that adhere to green building practices. The market is segmented into the residential and commercial segments. In the commercial segment, the unitary segment, which includes rooftop ACs and packaged air conditioners, holds a major share. Energy efficiency and inverter technology are key trends driving the market. Climate change and urbanization have led to a higher demand for cooling systems in data centers, manufacturing facilities, office buildings, retail spaces, and healthcare facilities.
Additionally, the inverter segment is expected to grow at a faster rate due to its energy-saving capabilities. Room air conditioners continue to dominate the residential segment. Smart ACs with advanced features are gaining popularity in both residential and commercial applications. Cooling capacity remains a crucial factor in the selection of air conditioning systems.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The residential segment is estimated to witness significant growth during the forecast period. The residential segment holds a pivotal position in The market, fueling its expansion. Rising temperatures worldwide and escalating disposable income among consumers have significantly boosted the demand for air conditioning systems, especially in the residential sector. Urbanization and population migration towards cities are key factors driving the growth of this segment. As more people move into urban areas, the demand for residential properties, such as apartments, condominiums, and houses, increases, consequently leading to a higher requirement for air conditioning systems.
Furthermore, the shift towards comfort and convenience in modern lifestyles has resulted in homeowners investing in air conditioning systems to ensure optimal living conditions. Climate change adds to the demand as extreme weather conditions become more common, necessitating the use of air conditioning systems for temperature regulation.
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The residential segment accounted for USD 40.88 billion in 2018 and showed a gradual increase during the forecast period.
APAC is estimated to contribute 51% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The Asia-Pacific (APAC) region has witnessed substantial growth in the market due to its expanding population and urbanization. The increasing standards of living and rising disposable incomes in APAC countries have fueled the demand for cooling solutions in various sectors, including residential, commercial, and industrial. Air conditioning systems have become a necessity in APAC as people seek comfort and convenience. The region's urbanization has further accelerated market growth. Two primary segments in the market are the Inverter and Non-inverter segments. Inverter air conditioning systems offer energy efficiency and cost savings, making them increasingly popular. Non-inverter systems, on the other hand, have a simpler design and lower initial investment cost.
Additionally, both segments cater to the unique needs of the residential and commercial segments. The residential segment in APAC is expected to dominate the market due to the growing number of households and the increasing adoption of air conditioning systems. The commercial segment is also a significant contributor, with businesses investing in air conditioning systems to improve productivity and create a comfortable work environment. Climate change and the resulting extreme weather conditions have further highlighted the importance of air conditioning systems in APAC. As temperatures continue to rise, the demand for cooling solutions is expected to increase, driving market growth.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Increasing demand for energy-efficient HVAC systems is the key driver of the market. The market in Commercial Construction is witnessing significant growth due to the increasing demand for energy-efficient solutions. With the Gulf countries leading the way in infrastructure development, there is a heightened focus on implementing sustainable HVAC systems. The Unitary segment, which includes Rooftop ACs, is particularly popular in commercial applications due to their energy efficiency and cost-effectiveness.
Additionally, energy-efficient products are gaining preference as the world addresses the challenges of climate change and resource depletion. Traditional air conditioning systems consume large amounts of energy, leading to high electricity bills and increased greenhouse gas emissions. To mitigate these issues, manufacturers are innovating to produce more energy-efficient solutions.
Increased demand for smart air conditioning systems is the upcoming trend in the market. The market has experienced notable growth in the commercial construction sector, driven by the increasing demand for energy-efficient products. This trend is particularly prominent in Gulf countries, where extreme temperatures necessitate the use of air conditioning systems for comfort. The unitary segment, which includes unitary air conditioners and rooftop ACs, dominates the market due to their efficiency and flexibility in meeting the cooling demands of large commercial spaces. Smart air conditioning systems have gained significant traction in the market, owing to technological advancements and the emphasis on energy efficiency. These systems utilize intelligent sensors, internet connectivity, and automation to optimize energy usage and provide efficient cooling solutions.
Further, technological advancements have enabled the development of intelligent sensors, internet connectivity, and automation, which are key features of smart air conditioning systems. These factors, coupled with the growing awareness about energy efficiency and the need for enhanced comfort and convenience, are expected to drive the market's growth in the coming years.
High upfront costs of energy-efficient and sustainable AC systems is a key challenge affecting the market growth. The market in commercial construction, particularly in Gulf countries, is witnessing a growing trend towards energy-efficient and sustainable solutions. However, the adoption of these systems is hindered by their higher upfront costs compared to traditional unitary segment ACs, such as Rooftop ACs. These energy-efficient products incorporate advanced technologies and components, which increase production costs due to research, development, and manufacturing complexities.
Moreover, the installation process of these systems necessitates professional expertise, adding to the overall cost. Despite these challenges, the long-term benefits of reduced energy consumption and carbon emissions make energy-efficient AC systems an attractive investment for commercial construction projects.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Alfa Laval AB - The company offers air conditioning systems such as window air conditioners, portable air conditioners, and wall hung split or multi head split systems, which provides solutions for major projects such as comfort cooling in skyscrapers.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is witnessing significant growth due to the increasing demand for energy-efficient products in commercial construction, particularly in the Gulf countries. The market is segmented into unitary segment, which includes rooftop ACs, and the ducted segment. The inverter segment is expected to dominate the market due to its energy efficiency and cost-effectiveness. The residential segment and commercial segment are the major end-users, with office buildings, retail spaces, healthcare facilities, manufacturing plants, data centers, and other commercial establishments driving the demand. Climate change and urbanization are key factors driving the market, with a growing focus on green building practices and energy efficiency.
Further, HVAC systems, including cooling capacity measurements in BTUs, are increasingly being adopted to meet the cooling demands of various industries. Energy efficiency standards are being implemented to reduce carbon emissions, leading to the popularity of energy-efficient designs, such as packaged air conditioners, room air conditioners, and ductless mini-splits. Inverter technology is gaining traction in the market due to its ability to save energy and reduce operational costs. Ductless mini-split systems are also gaining popularity due to their flexibility and energy efficiency.
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Market Scope |
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Report Coverage |
Details |
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Page number |
174 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 6.46% |
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Market Growth 2024-2028 |
USD 47.02 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
6.32 |
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Regional analysis |
APAC, Europe, North America, Middle East and Africa, and South America |
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Performing market contribution |
APAC at 51% |
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Key countries |
US, China, Japan, Germany, and UK |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Alfa Laval AB, Carrier Global Corp., Daikin Industries Ltd., Electrolux AB, Emerson Electric Co., Gree Electric Appliances Inc. of Zhuhai, Haier Smart Home Co. Ltd., Hisense International Co. Ltd., Hitachi Ltd., Johnson Controls International Plc, LG Electronics Inc., Panasonic Holdings Corp., Samsung Electronics Co. Ltd., Sharp Corp., Siemens AG, Midea Group Co. Ltd., Toshiba Corp., Trane Technologies plc, Whirlpool Corp., and Mitsubishi Electric Corp. |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Technology
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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