Saudi Arabia HVAC Market Outlook

7. S u s t a i n a bi li t y a n d E n e r g y S av i n g
i n S a u d i H VA C R M a r k e t
S a u d i A r a b i a H VAC M a r ke t O u t l o o k
Market Intelligence . Consulting
Ta b l e o f C o nt e nt
S. No.
Contents
Page No.
1.
Saudi Arabia HVAC Projects to watch out for
2.
Insulation Market in Saudi Arabia
11
2.1.
Market Size & Forecast
11
2.1.1.
11
3.
4.
By Value
5
District Cooling Market in Saudi Arabia
13
3.1.
Market Size & Forecast
13
3.1.1.
13
By Value & Volume
Refrigeration Market in Saudi Arabia
15
4.1.
Market Size & Forecast
15
4.1.1.
15
By Value
5.
Saudi Arabia HVAC R Major Players
16
6
Saudi Arabia HVAC R Market Outlook
18
6.1.
Market Size & Forecast
19
6.1.1.
19
By Value
7
Sustainability and Energy Saving in Saudi HVAC R Market
25
8
About Us & Disclaimer
29
2
© TechSci Research
List of Figures
S. No.
Figure: 1
Figure: 2
Figure Title
Saudi Arabia Building Insulation Market Size, By Value, 2010-2020F (USD Billion)
Saudi Arabia District Cooling Market Size & Forecast, By Value (USD Billion) & Volume
(Million TR), 2010-2020F
Page No.
11
13
Figure: 3
Saudi Arabia District Cooling Market Share in GCC, By Value, 2012
14
Figure: 4
Saudi Arabia Refrigeration Market Size & Forecast, By Value, 2010-2020F (USD Billion)
15
Figure: 5
Saudi Arabia HVAC R Market Size & Forecast, By Value, 2010-2020F (USD Billion)
19
Figure: 6
Saudi Arabia Market Share, By Region, By Volume, 2014 & 2020F
21
Figure: 7
Saudi Arabia Hotel Chains, By City, By Volume, 2013
23
3
© TechSci Research
Li s t o f Ta b l e s
S. No.
Table Title
Page No.
Table: 1
Upcoming Mega Economic Cities in Saudi Arabia
5
Table: 2
Ongoing Mega Construction Projects in Saudi Arabia
6
Table: 3
Ongoing Metro Rail & Railway Projects in Saudi Arabia
7
Table: 4
Upcoming HVAC Projects/Tenders in Saudi Arabia
8
Table: 5
Saudi Arabia Major Upcoming Hotels & Other Details
9
Table: 6
Saudi Arabia Residential Insulation, By City, 2014 (Percentage)
12
Table: 7
Saudi Arabia HVAC R Major Players & Other Details
16
Table: 8
Saudi Arabia EER and Star Ratings for Air Conditioners
25
Table: 9
Saudi Arabia Mandatory Energy Efficiency Ratio, 2013
26
Table: 10
Saudi Arabia Building Thermal Insulation Regulations
27
4
© TechSci Research
1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Standing at about USD38.5 billion, Saudi Arabia’s construction sector contributed around 8% to the
country’s GDP in 2014.
Due to rapidly growing population and increasing religious tourism in Saudi Arabia, the government has
announced a number of construction projects valued at around USD80 billion to be implemented in the
coming years. These include huge projects like construction of Economic Cities, metro rail projects, etc.
These mega projects with huge investments are set to increase the demand for HVAC systems in both
Commercial as well as Residential sectors over the next five to fifteen years.
Table 1: Upcoming Mega Economic Cities in Saudi Arabia
Economic Cities
Location
Year of completion
Investment
Area
King Abdullah Economic City
(KAEC)
Rabigh
2030
USD74.5 billion
168 sq. km
Knowledge Economic City
(KEC)
Madinah
2020
USD6.67 billion
8 sq. km
Jazan Economic City (JEC)
Jazan
2035
USD25 billion
100 sq. km
Prince Abdul-Aziz Bin Mousaed
Economic City (PABMEC)
Ha’il
2025
USD6.67 billion
156 sq. km
5
Source: Organis ation for Economic Co-operation and Development
© TechSci Research
1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Apart from these economic cities, there are various other mega projects that would offer huge opportunities for
HVAC market in Saudi Arabia. These projects include construction of industrial cities, Skyscrapers and various
housing projects across Saudi Arabia.
The housing ministry of Saudi Arabia is set to implement its plan to build 500,000 homes across the country to
address growing housing demand due to the country’s rising population. This is expected to positively affect
the demand for HVAC systems in the coming years.
Table 2: Ongoing Mega Construction Projects in Saudi Arabia
Projects
Location
Year of completion
Investment
Kingdom Tower
Jeddah
2019
USD1.2 billion
King Abdullah City for Atomic and
Renewable Energy (KACARE)
Riyadh
2040
---
Sudair Industrial City
Sudair
2029
USD33.4 billion
Arriyadh Development Authority
(ADA)
Riyadh
Spans over next 15 years
USD54.4 billion
Kingdom City
Jeddah
2018
USD20 billion
500,000 Housing Units in Saudi
Arabia
Saudi Arabia
2025
USD68 billion
6
Source: Organis ation for Economic Co-operation and Development
© TechSci Research
1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Commercial building space has been witnessing rapid growth in Saudi Arabia and this trend is likely to boost
the demand for HVAC units in future. Additionally, various railway projects like Riyadh Metro Rail Project,
Makkah Metro Rail Project and high speed railway projects like Madinah High Speed Railway, Riyadh Dammam
High-Speed Rail and Eastern Province Municipality-Dammam Metro are expected to increase the demand for
commercial air conditioning units in Saudi Arabia. Jeddah Metro Project is expected to be completed by 2022,
and thus is expected to boost the demand for centralized air conditioners in the country.
Table 3: Ongoing Metro Rail & Railway Projects in Saudi Arabia
Project
Length (Km)
Promoter
North – South
2,800
SAR
Jubail - Dammam Railway link
115
SAR
Haramain High-Speed Railway
450
SRO
Landbridge
950
SAR
Riyadh Metro
176
ADA
Makkah Metro
114
MMRTC
Jeddah Metro
108
JDURC
Dammam Metro
150
EP Municipality
SRO Upgrade
450
SRO
GCC (additional Saudi side only)
400
SRO
Source: Middle Eas t Bus ines s I ntelligence
7
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1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Hospitality sector in Saudi Arabia was worth around USD15 billion in 2012. Due to the country’s religious significance, Saudi
Arabia is one of the largest tourist destinations in the GCC region. This has led to increase in number of hotels and other
luxury complexes in the country, which is boosting the demand for HVAC units, especially in the VRF segment, thereby
boosting the market share of hospitality and commercial sectors in the country’s HVAC market.
Table 4: Upcoming HVAC Projects/Tenders in Saudi Arabia
Upcoming HVAC Projects/Tenders
Deadline
Location
Developing The Air Conditioning Electrical Work In The
Ophthalmology Specialist Hospital In Thahran And The Public
Hospital Of Thahran. , Saudi Arabia
29-Jun-15
Thahran, Saudi Arabia
Supply to Replace central air Conditioning Units King Abdullah
cultural centre, Dammam.
28-Jun-15
Dammam
Replacement of air Conditioning for Guest Buildings in King
Khalid Military City
29-Jun-15
Supply and Installation of Air Conditioning Units and a Variety of
Jubail Commercial Port.
04-Aug-15
Jubail
Operation and Maintenance of Air Conditioners and Chilling,
Heating and Ventilation Equipment in Women Colleges
22-Jun-2015
Dammam
18-Jun-2015
Jeddah
Maintenance Services Of Air Conditioning Devices (AC) And
Elevators Of The Amanah Building And Its Municipalities
King Khalid Military City
Source: Global tenders databas e
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1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Table 5: Saudi Arabia Major Upcoming Hotels & Other Details
Hotel
Location
Company
Number of Rooms
Opening
JW Marriott Hotel Makkah
Makkah, Saudi Arabia
Marriott International
639
2016
Accor
77 Apartments
2016
Accor
234
2016
Accor
205
2016
Riyadh, Saudi Arabia
The Rezidor Hotel Group
252
2016
Riyadh, Saudi Arabia
The Rezidor Hotel Group
170
2016
Radisson Blu Residence
Riyadh's Diplomatic Quarter
Riyadh, Saudi Arabia
The Rezidor Hotel Group
110
2016
Four Points by Sheraton
Makkah
Makkah, Saudi Arabia
Starwood Hotels & Resorts
451
2016
Le Meridien Riyadh
Riyadh, Saudi Arabia
Starwood Hotels & Resorts
232
2016
Sheraton Makkah Hotel
Makkah, Saudi Arabia
Starwood Hotels & Resorts
532
2016
The Westin Makkah
Makkah, Saudi Arabia
Starwood Hotels & Resorts
513
2016
235
2016
Adagio Jeddah Malik Road
Ibis Al Khobar
Novotel Jizan Corniche
Radisson Blu Riyadh Ring
Road
Park Inn Residence Riyadh Al
Sahafa
Damac Tower by Paramount
Hotels & Resorts
Midscale Jeddah, Saudi
Arabia
Economy Al Khobar,
Saudi Arabia
Midscale Jizan, Saudi
Arabia
Riyadh, Saudi Arabia Paramount Hotels & Resorts
Ibis Madinah
Madinah, Saudi Arabia
Accor
190
2016
Suite Novotel Yanbu
Yanbu, Saudi Arabia
Accor
120
2016
Ibis Jeddah Malik Road
Jeddah, Saudi Arabia
Accor
177
2016
9
© TechSci Research
1 . S a u d i A r a b i a H VA C P r o j e c t s t o w a t c h o u t f o r
Saudi Arabia Major Upcoming Hotels & Other Details (Contd.)
Number of
Opening
Rooms
Hotel
Location
Company
Park Inn by Radisson Residence
Riyadh Al Sahafa
Riyadh, Saudi Arabia
Carlson Rezidor Hotel
Group
170
2016
JW Marriott Hotel Jeddah
Jeddah, Saudi Arabia
Marriott International
370
2016
DoubleTree by Hilton Makkah
Makkah, Saudi Arabia
Hilton Worldwide
806
2016
Staybridge Suites Jeddah Alandalus
Mall
Jeddah, Saudi Arabia
IHG
164
2016
Courtyard by Marriott Makkah
Makkah, Saudi Arabia
Marriott International
432
2017
JW Marriott Hotel Jeddah
Jeddah, Saudi Arabia
Marriott International
370
2016
Shaza Jeddah
Jeddah, Saudi Arabia
Shaza Hotels
140
2017
Adagio Aparthotel Jeddah Alesayi
Plaza
Jeddah, Saudi Arabia
Accor
200
Apartments
2017
Adagio Aparthotel Riyadh Dhabab
Riyadh, Saudi Arabia
Accor
150
2017
Hilton Garden Inn Riyadh Andalusia
Riyadh, Saudi Arabia
Hilton Worldwide
130
2019
One & Only Jeddah
Jeddah, Saudi Arabia
Kerzner International
150
2019
Millennium Hotel Makkah (Umm Al
Qurah)
Makkah, Saudi Arabia
Millennium &
Copthorne Hotels
1400
2019
10
Source: Hotelier Middle Eas t
© TechSci Research
2 . I n s u l a t i o n M a r k e t S i z e & Fo r e c a s t
0.299
0.316
0.336
0.359
0.385
2010
2011
2012
2013
2014
2015E
2016F
2017F
2018F
2019F
0.452
0.284
By Value: 7.39 %
0.270
By Value: 4.72 %
0.259
CAGR 2015- 20F
0.249
CAGR 2010- 14
0.416
Figure 1: Saudi Arabia Building Insulation Market Size, By Value, 2010-2020F (USD Billion)
2020F
Source: TechSci Res earch
The building insulation market in Saudi Arabia is projected to grow at a CAGR of around 7.39% during 2015-20.
Growth in the market is expected mainly on account of increasing concerns regarding energy saving, as building
insulation saves around 40% energy consumed in regulating air conditioning temperatures.
During 2010-14, the market grew at a CAGR of 4.72%. Higher growth is expected during the forecast period
due to recent regulations imposed by the government of Saudi Arabia on consumption of energy in 23 cities and
towns.
11
© TechSci Research
2 . I n s u l a t i o n M a r k e t S i z e & Fo r e c a s t
About 70% of electricity consumption in Saudi Arabia is on account of air conditioners. To keep pace with
population growth in Saudi Arabia, around 500,000 new homes are required. With rising number of residences,
the demand for energy in residential segment is anticipated to double by 2030.
Only 27% of buildings in Saudi Arabia are thermally insulated. In Jeddah, 85% of the buildings lack insulation,
and the ratio is 72.6% in the Eastern Prov ince and 50% in Riyadh. Lack of thermal insulation causes a lot of
energy wastage in Saudi Arabia.
Table 6: Saudi Arabia Residential Insulation,
By City, 2014 (Percentage)
Thermal insulation prevents the transmission of
heat from exterior building walls which capture
City
% Home Insulated
the heat energy from the sun and inhibits the
Jeddah
15
escape of hot or cool air f rom the interior, thereby
Riyadh
50
saving about 40% energy in air-conditioning by
Qassim
3
Dammam
29
Abha
16
Hail
23
Jizan
24
Overall
26.5
preventing heat loss.
Thermal insulation in buildings in Saudi Arabia has
been made mandatory in 23 cities and towns.
Although, this would increase the construction
cost of buildings,
consumption,
Source: Saudi Center for Energy Efficiency at King Abdulaziz
City for Science and Technology (KACST).
it would reduce the power
primarily
on
conditioners, in these buildings.
account
of
air
12
© TechSci Research
3 . D i s t r i c t C o o l i n g M a r k e t S i z e & Fo r e c a s t
Figure 2: Saudi Arabia District Cooling Market Size & Forecast, By Value (USD Billion) & Volume (Million TR),
2010
2011
2012
2013
2014
Market Size (USD Billion)
2015E
2016F
2017F
2018F
2019F
3.85
2.13
3.27
1.68
2.80
1.34
2.42
1.08
2.10
0.87
1.74
0.67
1.53
0.56
By Value: 25.97 %
By Volum e:
17.25%
1.35
By Value: 22.12 %
By Volum e:
13.15%
0.47
CAGR 2015- 20F
1.20
CAGR 2010- 14
0.40
1.06
0.34
0.93
0.25
2010-2020F
2020F
Market Size (Million TR)
Source: TechSci Res earch
In 2014, district cooling market in Saudi Arabia grew at a CAGR of 22.12%, and is anticipated to grow further at
25.97% through 2020. Growth of district cooling is anticipated on account of its capability to control the internal
temperature in buildings, less noise generation and low electricity consumption as compared to other air
conditioning technologies available in the country.
Emission of harmful gases such as CO2 has been minimized due to environment friendly refrigerants used during
the process of district cooling. Moreover, increase in volume sales and average selling price is contributing to
growth in value market for district cooling in Saudi Arabia. The volume share of this technology grew at a CAGR of
13.15% during 2010-14, and is anticipated to grow at a CAGR of 17.25% over the forecast period due to the
growing construction sector in the country.
13
© TechSci Research
3 . D i s t r i c t C o o l i n g M a r k e t S i z e & Fo r e c a s t
Figure 3: Saudi Arabia District Cooling Market
Share in GCC, By Value, 2012
In 2012, Saudi Arabia district cooling market
accounted for around 26% value share in GCC
district cooling market. This share is expected to
Saudi
Arabia,
26.00%
rise over the forecast period, owing to the rising
adoption of district cooling across commercial
and industrial sector in Saudi Arabia. In addition
to this, residential sector is also adopting district
Rest of GCC
Countries ,
74.00%
cooling air conditioning technology for better,
cheap and effective cooling.
Source: TechSci Res earch
District cooling consumes 50% lesser power compared to regular window ACs, split ACs or rooftop chiller ACs. In
a country like Saudi Arabia, where 70-80% of the total power is consumed for cooling purposes, district cooling is
feasible and also necessary.
14
© TechSci Research
4 . R e f r i g e r a t i o n M a r k e t S i z e & Fo r e c a s t
1.47
2012
2013
2014
2015E
2016F
2017F
2018F
2.33
1.30
2011
1.85
1.16
2010
1.65
1.03
By Value: 12.27 %
0.93
By Value: 11.80 %
0.83
CAGR 2015- 20F
0.74
CAGR 2010- 14
2.08
Figure 4: Saudi Arabia Refrigeration Market Size & Forecast, By Value, 2010-2020F (USD Billion)
2019F
2020F
Market Size (USD Billion)
Source: TechSci Res earch
Ref rigeration market in Saudi Arabia grew at a CAGR of around 11.80% during 2010-14, and is projected to grow
at a CAGR of around 12.27% over the next five years. Growth in ref rigeration market is anticipated on account of
rising demand, particularly from commercial and industrial sector in the country.
There has been considerable rise in the share of refrigeration in HVAC R market, particularly HCFC-free
refrigerants like R134A, R410A, which are energy efficient as well as eco-friendly in nature. The demand is
expected to rise over the forecast period as well.
The replacement market for HCFC-free refrigerants is also contributing towards the growth of refrigeration market
in the country.
15
© TechSci Research
5 . S a u d i A r a b i a H VA C R M a j o r P l a y e r s
Table 7: Saudi Arabia HVAC R Major Players & Other Details
S. No.
Major
Players
1
LG Shaker
2
Zamil
Industrial
Investment
Company
3
Samsung
Regional
Manufacturin
Founded/
Revenues
Headquarte Business Division Key Personnel Joint Venture
g Unit/
Incorporated
(2014)
rs
Distributors
2006
1998
1999
Jeddah
Air Conditioners,
Electrical Products,
Household
Appliances, Home
Entertainment
System
Dammam
Steel Sector, HVAC
Sector, Insulation
Sector, Concrete
Sector
Sheikh Hassan LG & Al Hassan
Manufacturing
Shaker (CEO) Ghazi Ibrahim
USD415.17
plant in
Jameel AlShaker Co. Ltd.
million
Riyadh
Melhem(MD)
Mr. Ahmed
Abdullah Al
Zamil –
President &
Director
Jeddah
Jae Cheon Park
Consumer Goods (GM) Jinhyuk Oh
(AC Business
and Business Goods
Manager)
Mr Dong Ming
Zhu – CEO Zhu
Jiang HongChairman
4
Gree
1991
Khobar
5
Daikin
2013
Riyadh
HVAC
N/A
Two
manufacturing
plants in
Dammam
USD410
million
N/A
Distributor
United
USD357.91
Matbouli
million
Group (UMG)
N/A
Al-Asasyah
Basic
USD286.32
Electronics Co.
million
Ltd
Air Conditioners, Air
Hiroshi Shimada
Purifiers and
RIRAC & Daikin
(GM
Ventilation
---
USD157.48
million
16
Source: Company Webs ites
© TechSci Research
5 . S a u d i A r a b i a H VA C R M a j o r P l a y e r s
Regional
S.
Founded/
Headquar Business Division
Major Players
No.
Incorporated
ters
Key Personnel
HVAC &
Electromechanical
Projects
Ishaat Hussain
Chairman, Anil
George President
6
7
8
9
10
11
Voltas Ltd
Midea
Fujitsu
General
Limited
Toshiba Carrier
Haier Middle
East
Appliances
Hitachi Ltd
2010
Jeddah
1968
Jeddah
1936
Jeddah
1999
1998
1910
Jeddah
Households
Mr Jian Huang –
Products,
President & Director
Commercial
Thomas Hollefeld (VP
Products and
Global Product Line
Solution
Management)
Air Conditioners,
Cameras, Air to
Mr Mitsuhiro Oishi
Water heating
Chairman, Mr Junichi
system, Air
Murashima President
Deodoriser, and
Transmitters
HVAC and Air to Mr. Akira Inoue (CEO
water heat pump
& President
Home Appliances,
Consumer
Dammam
Electronics
Riyadh
Zhang RuiminChairman & CEO
Yang MianmianPresident
Refrigerators,
Washing Machines,
Air Conditioners,
Mr. Hiroaki Nakanishi
Tele Visions, Small
- President
Appliances, Air
Purifiers and
Vacuum Cleaners
Manufactur
ing Unit/ Revenues
Distributors
Saudi Ensas
Olayan
Company for
Voltas
USD30
Engineering Contracting
million
Services
Company
W.L.L
Ltd.
Joint
Venture
N/A
Ibrahim
Shaker Co.
Ltd.
USD20
million
N/A
Zagzoog For
Home
Appliances
N/A
N/A
United
Technologies
Corp. & E. A.
Juffali &
Brothers for
sales and
marketing
N/A
N/A
Al-Jabr
Electronics
N/A
N/A
Hamad
Abdulla AlEssa & Sons
Co.
N/A
Source: Company Webs ites
17
© TechSci Research
6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
Saudi Arabia has an arid desert climate, characterized by extreme heat and low annual rainfall. Due to the
topographical variation and two coastal lines, the country witnesses some regional variations in climate, but most
part of the country is flat with sandy desert and experiences high temperatures throughout the year.
The climatic conditions in the country have been the leading driver for the country’s HVAC market. The country’s
seasonal sales for air conditioners have been classified into two seasons, i.e., summer and winter seasons, with
former accounting for highest seasonal sales during 2014.
Summer season in Saudi Arabia usually spans from March to October with temperature ranging between 39ºC to
45ºC. In some of the places, such as Makkah, temperature rises up to 50ºC. The highest demand for air
conditioners is traditionally witnessed during June and July, particularly in the residential sector, as during this
time the temperature in the country is at its peak.
18
© TechSci Research
6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
2.69
3.00
3.38
2011
2012
2013
2014
2015E
2016F
2017F
2018F
2019F
5.11
2.42
2010
3.84
2.19
By Value: 13.73 %
2.00
By Value: 9.61 %
1.83
CAGR 2015- 20F
1.68
CAGR 2010- 14
4.41
Figure 5: Saudi Arabia HVAC R Market Size & Forecast, By Value, 2010-2020F (USD Billion)
2020F
Market Size (USD Billion)
Source: TechSci Res earch
Saudi Arabia HVAC R market grew at a CAGR of around 9.61% in value terms during 2010-14, and is further
projected to witness growth at around 13.73% during the forecast period. Boom in the construction sector in
Saudi Arabia is a major factor driving growth in the market for HVAC R.
Saudi Arabia faces extreme climatic conditions, with temperature often shooting up to 50˚C during peak
summer, thereby increasing the significance of HVAC in the country.
Continuous rise in the number of inf rastructure projects such as expansion of the Makkah Haram, the Harmain
railways, various universities, hospitals, etc., is driving the demand for HVAC R in Saudi Arabia.
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© TechSci Research
6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
The implementation of the new rules and regulations, laid dow n by Saudi Arabia government, regarding the use of
energy efficient HVAC machines, is another factor driving growth in the market for HVAC R in Saudi Arabia.
Other factors contributing to market growth are rising population and increasing number of multinational
companies in the country. In addition to this, w ith technological advancements the price of HVAC R units has
witnessed a decline, which has further contributed greatly towards the increase in demand.
Riyadh, Jeddah, Dammam and Mecca are some of the major regions in Saudi that have witnessed the highest
growth of HVAC R systems across the country, due to increasing demand for more energy efficient systems which
help in saving elctricity and input cost.
20
© TechSci Research
6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
Figure 6: Saudi Arabia Market Share, By Region, By Volume, 2014 & 2020F
Northern Region
2014: 14.00%
2020F: 14.50%
Northern
Borders
Central Region
2014: 34.00%
2020F: 34.50%
Jawf
Highest
Demand
Generator in
Saudi Arabia
Tabuk
Ha’il
Qasim
Madinah
Riyadh
Eastern
Province
Makkah
Western Region
2014: 25.00%
2020F: 26.50%
Eastern Region
2014: 15.00%
2020F: 14.00%
Bahah
Asir
Najran
Jizan
East
North
Center
West
Southern Region
2014: 12.00%
2020F: 10.50%
South
21
Source: TechSci Res earch
© TechSci Research
6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
The central region of the country dominated Saudi Arabia HVAC R market in volume terms during 2014. Riyadh
province is one of the main contributors to HVAC R demand in this region. Central region accounts for highest
population in the country. Moreover, Riyadh is economically stronger than rest of the regions, with a large number
of people hav ing higher disposable income. All these factors have led to higher sales of HVAC R systems and related
products in the central region of the country. Other than this, high rise building projects such as Al Rajhi Bank
Tower by 2016, Elegance Medical Tower by 2016, Al Majdoul Tower by 2016, etc., will surge the demand for HVAC R
system in the region during the forecast period.
Some of the most important provinces in the western region of Saudi Arabia include Mecca and Medina. Mecca and
Medina attract a large number of pilgrims every year, leading to vast growth in the number of hotels and resorts.
This, in turn, has led to higher demand for HVAC R in the region. In terms of revenue generation, this region is
moderately important for Saudi Arabia HVAC R market.
The market share of western region is projected to increase from around 25.00% in 2014 to reach 26.50% by 2020,
due to rising construction activities that are likely to be carried out in this region in order to accommodate
increasing number of pilgrims. Also, the replacement of HVAC systems is expected to play a crucial role in
increasing the share of western region.
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6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
Being the most populous region in Saudi Arabia, Makkah has the largest number of hotel chains in the western
part of country. Being the holy city of Muslims, Makkah is also an invest ment hotspot for hotel and hospitality
companies.
Every year, around 3 to 4 million Muslim pilgrims visit Makkah Medina, which creates significant demand for hotels
and restaurants in the region. This is expected to buoy sales of HVAC in the region over the next five years as
well. Other key regions from where HVAC demand is likely to emanate include Riyadh, Jeddah and Al Khober.
Figure 7 : Saudi Arabia Hotel Chains, By City, By Volume, 2013
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22
15
13
19
18
16
8
7
4
2
Al Khober
17
Jeddah
3
Makkah
Economy and Middle class
5
3
Medina
Upscale
Riyadh
Luxury
Source: STR Global
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6 . S a u d i A r a b i a H VA C R M a r k e t O u t l o o k
The provinces in the eastern region of Saudi Arabia account for a moderate demand share of the country’s HVAC
systems market. The regional share of eastern region including Damam, Al Khobar, Jubail and Al Asha
accounted for about 15% in 2014, and this is expected to decline over the next five years. The primary reason
for the region’s low share is comparatively lesser population compared to other regions of the country. The per
capita income of the region is also low as compared to the other regions.
Southern and Northern regions accounted for over 12% and 14% of the HVAC sales volume in 2014,
respectively. Again, the HVAC market is small in these regions compared to other regions due to low population.
As compared to other regions, northern and southern region are less developed and the people are less aware
about high-end technologies, which are acting as the major factors restricting adoption of HVAC systems.
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7 . S u s t a ina b ilit y a nd E ne r g y S av ing in
S a u d i H VA C R M a r k e t
The Energy Efficiency Rat io (EER) for Air Conditioners is applied to units designed to operate in AC single phase
circuits (220 V or 230 V), or designed for dual voltage or vo ltage range including these values, and three phase
circuits (380 V or 400 V, 60 Hz). It covers units with capacities up to and including 70000 Btu/h (20 KW).
The Energy Efficiency Rat ing is determined in accordance with the following table, where the EER (Energy
Efficiency Ratio) is determined in accordance with the test procedures of the harmonized standards.
Table 8: Saudi Arabia EER and Star Ratings for Air Conditioners
EER limits (Tested Value)
(Btu/h)/w at T1
Star Rating
EER  18.1
10
18.1 > EER  16.8
9.5
16.8 > EER  15.6
9
15.6 > EER  14.5
8.5
14.5 > EER  13.4
8
13.4 > EER  12.4
7.5
12.4 > EER  11.5
7
11.5 > EER  10
6
10 > EER  9.7
5
Source: Saudi Standards , Metrology and Quality Organization
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7 . S us t a i na b i l i t y a nd E ne r g y S av i ng i n
S a u d i H VA C R M a r k e t
Saudi Standards, Metrology & Quality (SASO) is an organisation which is responsible for setting standards
for commodities & products, measurements, testing methods, meteorological symbols & terminology,
commodity definitions, safety measures, environmental testing, and other subjects approved by the
organization’s Board of Directors. SASO has set up energy efficiency standards for air conditioners, which
were modified in May 2013. SASO modified the Minimum Energy Performance Standard (MEPS) for the EER
under SASO 2663/2012 standard.
Table 9: Saudi Arabia Mandatory Energy Efficiency Ratio, 2013
Air
Conditioner
Appliance
Type
Window
type
Split type
and other types
Cooling
capacity limit
(CC)
(Btu/h)
Mandatory EER
(Btu/h)/watt
Phase 1: 7 September 2013
Mandatory EER
(Btu/h)/watt
Phase 2: 1 January 2015
At testing
conditions T1
(35°C)
T1 (35°C)
T3 (46°C)
T1
(35°C)
T3
(46°C)
CC <18,000
8.5
6.12
9.8
7.06
18,000
≤CC<
24,000
8.5
6.12
9.7
6.98
CC  24,000
8.5
6.12
8.5
6.12
All Capacities
9.5
6.84
11.5
8.28
Source: SASO
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7 . S us t a i na b i l i t y a nd E ne r g y S av i ng i n
S a u d i H VA C R M a r k e t
Table 10 : Saudi Arabia Building Thermal Insulation Regulations
Building
Element
Stage 1: November 2014
Stage 2: January 2017
Zone 1
Zone 2
Zone 3
Zone 1
Zone 2
Zone 3
Roofs
0.31
0.37
0.42
0.2
0.24
0.27
Walls
0.53
0.61
0.7
0.34
0.4
0.45
Vertical Glazing
2.67 SHGC0.25
2.67 SHGC0.26
2.67 SHGC0.27
2.67 SHGC0.28
2.67 SHGC0.29
2.67 SHGC0.30
Source: SASO
Energy Efficiency Rating
(EER)
is
used
for
product
labeling, specifying the energy labeling requirements and
the
Minimum
Energy
Performance
Standard
(MEPS)
requirements for single-package of window type, splitsystem, split- system ducted air-conditioners using air-
cooled condensers, and heat pumps using air-cooled
condensers
for residential,
commercial and
industrial
sector in accordance with SASO standards. Meet ing these
standards helps in reduction of electricity consumption.
Source: SASO
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7 . S us t a i na b i l i t y a nd E ne r g y S av i ng i n
S a u d i H VA C R M a r k e t
ISO 9001-2000 standard focuses on quality management system. This standard determines the quality
management principles, including process approach, system approach, continual improvement, customer
focus, etc.
ISO 14000 standard addresses various aspects of environmental management. The standard provides tools for
organizations, including air conditioner manufacturers, to identify and control their operational impact on the
environment.
OHSAS 18000 is an international occupational health and safety management system specification. The
standard is intended to help organizations, including air conditioner manufacturers, to address and control
occupational health and safety risks.
These standards are followed globally so that the quality production process and its environmental impact can
be improved continuously.
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