United Kingdom Commercial HVAC - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2024 - 2029)

The United Kingdom Commercial HVAC Market size is estimated at USD 1.83 billion in 2024, and is expected to reach USD 2.47 billion by 2029, growing at a CAGR of 6.14% during the forecast period (2024-2029).

Key Highlights

• The United Kingdom is witnessing a surge in demand for HVAC equipment in the commercial sector, primarily fueled by the increasing embrace of air conditioning systems. This uptick can be attributed to a confluence of factors: climate change, urbanization, evolving lifestyles, and technological advancements. Moreover, the market is further bolstered by enhanced commercial space construction activities, governmental support for green building endeavors, and the swift pace of urbanization.
• Governments are looking forward to introducing stringent regulations, thus mandating the incorporation of heat pumps and positively impacting the market studied. For instance, the European Union also announced the installation of 60 million more heat pumps by 2030, in line with the EU targets, which would reduce the gas demand in buildings by 40% by 2030 compared to 2022 and decrease its energy import bill by EUR 60 billion (USD 65.31 billion).
• The flourishing construction industry has unlocked substantial business opportunities for air conditioners installed for heating and cooling purposes in commercial facilities such as shopping centers, commercial complexes, parking units, and hotels.
• Landsec, a property developer, completed the Forge Bankside in January 2023. This commercial office development consists of two newly constructed 9-story buildings, offering a combined internal space of approximately 140,000 sq. ft. Notably, the Forge is the first commercial office project to comply with the UK Green Building Council's (UKGBC) net-zero carbon buildings framework. Governmental policies influence the HVAC market in the UK and find support in the European Union's ambitious target to slash carbon emissions significantly by 2050.
• The HVAC Industry is shifting towards advanced technologies due to a high level of AI and IoT integrations. Further, Artificial Intelligence (AI) is also a noteworthy trend in HVAC Systems. AI-powered heating and cooling technologies can automatically manage factors such as indoor temperature, set temperatures, outdoor temperature, and others. The leading HVAC system providers are incorporating the latest advanced technologies, which will boost the market growth in the coming years.
• Global manufacturers are focusing on energy efficiency as one of their key concerns. Many players, such as Daikin, Carrier, Robert Bosch Gmbh, Danfoss A/s, Mitsubishi Electric Europe Bv, and Lennox International Inc., have already started launching energy-efficient HVAC products, and hence, they have become price setters in the market. Thus, comparatively smaller players lack the financial capacity to match the level of technological innovations incorporated in these products, and they have to sell their products at a lower price point. Growing competition will limit the growth in coming years.
• Moreover, the ongoing war between Russia and Ukraine has brought instability in a political and economic situation that results in a decline in consumer purchasing power within the region. Military conflicts could disrupt the UK's trade with Japan, South Korea, and Taiwan, all of which might find themselves entangled in potential Sino-U.S. hostilities. Several consumer goods could face shortages, and UK manufacturing might struggle due to a lack of essential supplies. Severe shortages of manufactured goods and intermediate inputs could trigger a significant inflation surge in the UK and globally.

United Kingdom Commercial HVAC Market Trends

Heating Equipment is Expected to Grow with Significant CAGR

• Heating equipment will gain traction in commercial buildings in the coming years. In the commercial sector, heating equipment is utilized in various settings, including restaurants, residential lodges, shopping complexes, and offices. Heat pumps are preferred for commercial properties, offering advantages that exceed those of traditional heating and cooling systems. These advanced technologies enhance energy efficiency, reduce operational costs, and support environmental sustainability and decarbonization efforts.
• Commercial properties can reduce carbon footprint and enhance sustainability by adopting heat pumps. This strategic move not only improves efficiency and reduces costs but also establishes these properties as leaders in the transition to a more sustainable energy landscape.
• Commercial heat pumps find diverse applications in various property types, serving many purposes. The surge in commercial heat pump adoption is set to receive a significant push, primarily driven by heightened government initiatives. For instance, the UK government actively promotes heat pump technology as a green alternative to traditional fossil fuel boilers in commercial setups. To smoothen this shift, the UK offers an array of programs designed to aid companies in transitioning to heat pump systems.
• In May 2024, MCS reported 4,849 installations of air-sourced heat pumps in the United Kingdom, marking the second-highest month on record. The record was surpassed by March 2022, which saw a surge in installations to meet a grant funding deadline, totaling 6,335 units. In May 2024, installations of MCS-certified air-sourced heat pumps saw a significant 64% increase from the same period in 2023. Notably, 2023 marked a record high, with 36,799 air-sourced heat pumps installed yearly.
• Government initiatives and subsidies boost the segment's growth. Concurrently, continuous research and development endeavors are yielding cutting-edge heat pump technologies that boast enhanced efficiency and cater to the specific requirements of end users. Manufacturers are diligently designing economical heat pumps to fulfill the requirements of consumers.

Commercial Buildings End-Users Hold Signficant Market Share

• The commercial buildings segment is expected to witness significant growth in coming years owing to ongoing construction activities and increasing demand for air conditioning, heat pumps, and other HVAC systems.
• After a challenging 2023, the commercial property sector is experiencing a resurgence in investment activity. In 2023, the UK's total deal volume significantly lagged behind the 10-year average of EUR 53.4 billion (USD 67.6 billion). However, the fourth quarter of 2023 indicated a recovery, with a 14% increase quarter-on-quarter. This positive trend has continued into 2024, with both activity and deal volumes rising across the country. This growth is occurring despite ongoing geopolitical uncertainties, aided by easing inflationary pressures and the potential for future interest rate cuts.
• Leading companies are constantly investing in introducing various products catering to the demand for these heating systems in the commercial buildings segment. For instance, in November 2023, Daikin recently disclosed information regarding two upcoming VRV 51) heat pump systems scheduled to be released in the first half of 2024. These new systems, namely the Mini-VRV and the Top-blow series, are designed to cater to the growing demand for decarbonization in commercial buildings. Daikin is further enhancing its product portfolio to support the shift toward energy-efficient and more sustainable solutions. Such vendor activities are expected to increase the market's potential.
• The common commercial applications of Ductless mini-split air conditioners include office spaces attached to unconditioned warehouses or in the lobbies of commercial buildings. Moreover, mini-splits are smaller in size and are flexible for zoning or heating and individual cooling rooms. Such benefits are likely to propel the market's growth within the commercial segment.
• HVAC system applications have been growing in popularity among commercial building owners for the past few years. The commercial real estate market grows at a rapid rate, which is expected to create significant opportunities for HVAC systems. The European commercial real estate market was projected at over USD 9 trillion in 2023, according to The European Public Real Estate Association, with Germany, the UK, and France together accounting for more than 50% of the total market.
• Ductless mini-split air conditioners also have several potential applications in commercial buildings. Commercial buildings are most likely large and need substantial amounts of energy to heat and cool the areas, but they face issues due to the unavailability of ducts. These systems are also good options for small apartments and room additions, where spreading or installing distribution ductwork for a heating system and central air conditioner is not feasible. Such benefits are expected to augment the adoption of ductless mini-split air conditioners in commercial spaces.

United Kingdom Commercial HVAC Industry Overview

The United Kingdom commercial HVAC market is fragmented, favorably competitive, and has several prominent players. The market performers are focusing on expanding their consumer base across foreign countries. These enterprises leverage strategic collaborative initiatives to boost their market share and profitability. Companies such as Siemens AG, Honeywell International Inc., Daikin Industries Ltd, and Mitsubishi Electric Europe BV, among others operating in the market, are also acquiring start-ups working on HVAC technologies to strengthen their production capacities.

In March 2024, Mitsubishi Electric Europe BV unveiled its latest offering in the form of residential air-to-water heat pumps. The company's Hydrolution EZY monoblock stands out for its ability to generate hot water, reaching temperatures as high as 60°C, even in outdoor conditions plummeting to -25°C. This model comes in two power options: 10 kW and 14 kW.

In December 2023, Daikin Industries Ltd announced the introduction of Nepura, the new residential air-to-air heat pump range. With this product range, Daikin Europe aims to offer a reliable heating solution that works at temperatures down to 30°C and achieves heating efficiency values of up to A+++.

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