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The Asia Pacific (APAC) commercial air conditioner market size was USD 11.72 billion in 2020. The regional impact of COVID-19 has been unprecedented and staggering, with commercial air conditioners witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the market exhibited a lower growth of 3.1% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 12.16 billion in 2021 to USD 16.28 billion in 2028 at a CAGR of 4.3% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
Governmental plans by countries, such as Indonesia, Vietnam, and others and growing Foreign Direct Investment (FDI) in several South-East Asian countries in the commercial infrastructure sector is set to increase the demand for air conditioners across healthcare facilities, offices, and educational buildings during the forecast period. Moreover, in recent years, the green building concept, i.e., zero-energy consuming building concept, is providing opportunities for commercial builders across Malaysia, Thailand, Singapore, and other Southeast Asian countries to install air conditioners with low global warming effects. Therefore, the fast-tracked green building concept is providing ample growth opportunities in the regional market.
COVID-19 to Hamper Manufacturing Sector’s Trading Activities and Hinder Growth
The COVID-19 pandemic is unprecedented, not only in Asia Pacific but worldwide. The pandemic has placed pronounced stress on manufacturing & political sectors and eventually promoted health emergencies in South-East Asia, sparking uncertainty and vulnerability. In July 2020, the United Nations ESCAP (UN ESCAP) stated that more than half of the sub-region countries, such as Myanmar, Indonesia, Malaysia, and the Philippines, are vulnerable because of weak health systems. The United Nations Conference on Trade and Development (UNCTAD) states that the majorly impacted economies across Asia Pacific are Taiwan-Province of China (office machinery and communication equipment), the Republic of Korea (machinery equipment), Japan (machinery and automotive), and Vietnam (communication equipment).
COVID-19 has moderately affected the air conditioner business across commercial applications in the region. Air conditioning repairing activities such as fixing air-conditioned (AC) units and changing the operation of Heating, Ventilation, and Air Conditioning (HVAC) systems have been on halt for more than six months owing to the unavailability of workers. However, the COVID-19 pandemic has exposed the fragility by interrupting cross-border trades and transport of air conditioner units that resulted in a drastic impact on the number of units sold. The UN ESCAP stated that nearly 40% of Southeast Asia’s exports rely on the global value chain. This has impacted the units sold across the region and globe, as well.
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Utilization of Energy-efficient Inverter Air-conditioners (AC) is a Vital Trend
The utilization of energy-efficient inverter air conditioners is becoming a trend across developing countries, such as Myanmar, the Philippines, India, and others. Installing inverter ACs across commercial spaces resolves difficulties, such as severe energy shortages due to rapid economic growth, and thus, supports in lowering the global warming impacts. Additionally, by utilizing the low global warming refrigerants, such as R-32 and others in inverter ACs, manufacturers can reduce the CO2 equivalent and convey the heat efficiently.
An inverter air conditioner utilizes the inverter technology for controlling the current, voltage, and frequency of the air conditioning mechanisms. As per the secondary resources, it consumes about ~30% less electricity than a non-inverter air conditioner. This very factor is eventually boosting its installation across offices, laboratories, and schools.
Surging Construction Projects to Boost Market Growth
The penetration of air conditioners across the Southeast Asian countries, such as Vietnam, Thailand, Indonesia, Malaysia, the Philippines, and China, is witnessing bolstering growth owing to the augmented constructional development projects. Increasing infrastructural activities, coupled with the emerging tourism industry, is also expected to boost the Asia Pacific air conditioner market. For instance, the World Economic Forum (WEF) stated that in 2019, approximately 40% of the international tourists arrived in Southeast Asia, with Vietnam and Thailand being the most visited countries.
China is one of the biggest markets for packaged air conditioners in the commercial sector. It is attributed to the presence of Chinese manufacturers that offer ACs at a much lower price than the leading manufacturers across the Southeast Asian countries, which is resulting in capturing a large customer base.
Threat of Refrigerants Causing Global Warming May Obstruct Growth
Various harmful refrigerants are utilized in commercial air conditioners (CAC), such as R-410A and R-12. These have a high global warming potential (GWP), which is a serious concern regarding the environment. The high emission ratios and potential greenhouse impact make it even worse for countries, such as India, Myanmar, Thailand, and others with warm environmental conditions throughout the year. As per the secondary resources, one kg of R-410A refrigerant has the same environmental impact as two tonnes of CO2, i.e., equivalent to a running car for almost six months. Considering this, Southeast Asian economies, such as Thailand and Myanmar, have set rules to avoid/minimize utilizing R-410A refrigerant with resulting negative climatic effects. Hence, the utilization of refrigerants with high GWP is hampering the Asia Pacific commercial air conditioner market growth.
VRF/VRV Segment to Show Highest Growth Backed by Usage in Zoning Applications
By type, the Asia Pacific commercial air conditioner industry is bifurcated into packaged AC and VRF/VRV systems. Amongst these, the VRF/VRV segment is expected to grow at an exponential rate in the Asia Pacific commercial AC market, as it has the ability to regulate the refrigerant volume provided to units of fan-coil positioned throughout the buildings. These systems are ideal in the essential requirement of zoning applications. Thus, it is anticipated to witness the highest growth in the forecast period.
The packaged AC segment is estimated to have a major portion of the market revenue share owing to the rising trend of packaged commercial AC implementation, along with the other AC components that offer air conditioning and air handling at the same time.
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R-32 Refrigerant Segment to Witness Highest Growth in the Market
In terms of the refrigerant, the Asia Pacific commercial air conditioner market is further segmented into R-32, R-410A/R-407C, R-600A/ R-290, and others (R-22, etc.). Amongst them, the R-32 refrigerant segment is anticipated to grow at a higher rate in the APAC commercial AC market, as it efficiently conveys the heat and minimizes the electricity consumption, with the least global warming potential (GWP) rate.
The R-410A/R-407C refrigerant segment holds the largest market share in terms of the regional industry analysis, as this refrigerant is highly used for decades across the HVAC industry. Moreover, R-600A/ R-290 and other (R-22) refrigerants are likely to witness stagnant growth in the upcoming years, owing to their harmful emissions becoming a cause for rising global warming.
Healthcare Segment to Grow at Higher Pace in the Near Future
In terms of the end-user, the industry is further segmented into healthcare, educational/institutional, public/government, retail, hospitality, and manufacturing sectors. The healthcare sector is projected to witness exponential market growth in the near future with the rising awareness of healthcare systems in rural and underdeveloped areas. The hospitality sector is anticipated to forecast progressive growth with the surging commercial real estate sector in Indonesia, Vietnam, and Malaysia.
Moreover, the retail segment is anticipated to grow at a higher rate in the regional market due to a rise in the standard of living and dependence on ready-to-eat food products. Furthermore, the educational, manufacturing, and public/government sectors are likely to observe stable growth with limited applications of commercial type of air conditioners.
The APAC region’s commercial air conditioner industry is fragmented and highly competitive in nature, with the presence of many established and emerging players. The market growth is complemented by the rising government incentives, surging demand for energy-efficient solutions, and an increasing trend of green building initiatives. Additionally, the utilization of technologies, such as automated control systems, the internet of things (IoT), and remote control access provides real-time information about the system’s condition to operators.
India to Witness Highest Growth Backed by Rising Demand for Commercial AC in Healthcare & Retail Sectors
India is projected to witness the highest CAGR over the forecast period in the Asia Pacific commercial air conditioner industry, with the increasing healthcare, hospitality, and retail sectors. With unfavorable climatic conditions, commercial AC’s have the highest demand across the country’s commercial applications. Moreover, the growing number of infrastructure projects and building professionals are now emphasizing reducing energy consumption by utilizing building automation systems and technological advancements across VRVs and packaged air conditioners. These include the Internet of Things (IoT), Wi-Fi-enabled systems, smart homes, and industry 4.0.
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DAIKIN INDUSTRIES, Ltd. and Mitsubishi Electric Corporation to Opt for Innovative Sales Strategies for Business Expansion
Leading manufacturers in the Asia Pacific commercial air conditioner industry are enhancing their after-sales service systems to strengthen the product reach across unattainable markets in the region. For instance, in January 2019, DAIKIN INDUSTRIES, Ltd. (Headquartered in Osaka, Japan) attended ‘AHR Expo 2019’ to showcase its advanced residential and commercial HVAC equipment to provide superior air quality to end-users. Similarly, in January 2019, Mitsubishi Electric Corporation’s Indian subsidiary, ‘Mitsubishi Electric India (MEI),’ inaugurated its service showroom named ‘MEQ Senmonka’ to cater to after-sales services and build long-term relationships with end-users.
Also, key players are focusing on enhancing product type offerings through mergers & acquisitions and expansion of production management systems. For instance, in March 2019, LG Electronics Tianjin Appliances Co., Ltd. acquired QINGGONGLIAN ELECTRICAL INSTALLATION ENGINEERING CO., LTD. to shelter the competitiveness of installation and sales of air conditioning systems across applications in China.
An Infographic Representation of Asia Pacific Commercial Air Conditioner Market
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The Asia Pacific commercial air conditioner market report offers an in-depth analysis and further provides details on the adoption across several regions. Information on market trends, drivers, opportunities, threats, and restraints of the market can further help stakeholders to gain valuable insights into the market. The report offers a detailed competitive landscape by presenting information on key players, along with their strategies, in the industry.
Value (USD Billion)
Type, Refrigerant, End-User, Country
Fortune Business Insights says that the regional market size was USD 11.72 billion in 2020.
The market value is projected to reach USD 16.28 billion by 2028.
The market will grow at a CAGR of 4.3% during the forecast period.
The Indian market size stood at USD 0.92 billion in 2020.
The VRF/VRV segment is expected to lead the market during the forecast period.
Increasing infrastructural activities coupled with the emerging tourism industry is expected to boost the Asia Pacific market.
DAIKIN INDUSTRIES, Ltd. and Mitsubishi Electric Corporation are the top players in this market.
China is expected to hold the highest market share.
By end-user, the healthcare segment is expected to lead the market during the forecast period.
Installing inverter ACs across commercial spaces resolves difficulties, such as severe energy shortages due to rapid economic growth. Thus, it supports lowering the global warming impacts, becoming a key market trend.
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