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Heating,, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 www.ventures-me.com Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Table of Contents Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 ................................................ ................................ Chapter 1. ................................................................ ................................................................................................ ........................................................... 3 Heating, Ventilation and Air conditioning (HVAC) Systems and the GCC .......................................................... ................................ 3 Chapter 2. ................................................................ ................................................................................................ ........................................................... 5 GCC Building Construction and HVAC Market Overview ................................................................ ................................................... 5 The GCC and Building Construction Overview ................................................................ ................................................................... 5 GCC HVAC Market Overview ................................ ................................................................................................ ............................................................ 10 Chapter 3. ................................................................ ................................................................................................ ......................................................... 13 New Technologies in the GCC HVAC Market ................................................................ ................................................................... 13 List of Tables Table 1: Major Building Construction Projects across the GCC (US$ Million), July 2012 .................................. 6 List of Figures Figure 1: HVAC Demand across GCC Countries (US$ Million), 2011 ................................................................. ................................ 4 Figure 2: GCC HVAC Systems Market Demand/Size by Country (US$ Million), 2010 2010-2012 ............................ 11 www.ventures-me.com Page:2 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Chapter 1. Heating, Ventilation and Air conditioning (HVAC) Systems and the GCC Heating, Ventilation and Air Conditioning (HVAC) systems are defined as technology used to enhance indoor or automotive environment comfort. Designing of HVAC systems assumes assum extreme importance in the in-built built architecture of medium to large residential bu buildings, ildings, office complexes, hospitals and healthcare centres in order to ensure safe and healthy regulation of temperature, ventilation and humidity in construction. Partly owing to the maturity of its construction market and partly to the extreme climatic conditions of the desert and the growing population with its rising standards of living, GCC constitutes one of the largest markets for HVAC in the world. HVAC is the single largest energy-consumer consumer in buildings. It accounts for almost 60 percent of the total energy cost in a building. An efficient HVAC system can reduce power consumption by 35 to 40 percent. These statistics assume importance in the context of the increasing trend in the GCC Construction sector toward the internationally popular Leadership in Energy and Environmental Design (LEED) ( certification of projects through bettering their HVAC design standards. Other important certifications toward a sustainable construction include the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE), also widely adopted by projects in GCC GCC. Therefore, HVAC systems form an important component of GCC building construction across its key sectors of commercial, residential, hospitality and retail. With construction across countries such as Qatar, UAE and Saudi Arabia moving at a greater pace toward environmentally sustainable designs, markets in the GCC where sustainability is the norm rather than the deviation lead the markets for HVAC systems and latest technologies in the field. The ffollowing figure shows the shares of countries in the GCC in the HVAC market as of 2011. www.ventures-me.com Page:3 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Figure 1:: HVAC Demand across GCC Countries (US$ Million), 2011 HVAC Demand across GCC Countries (US$ Million), 2011 Oman 4% Bahrain 1% Kuwait 6% Qatar 13% Saudi Arabia 51% UAE 25% Source: Ventures Middle East Analysis With demand for HVAC systems estimated at US$ 6.28 billion across the GCC countries, Saudi Arabia with its extreme climatic conditions, large and growing population and high disposable incomes accounts for the largest share of more than half of the market for HVAC systems as of 2011, followed b by UAE in and Qatar, all of which are considered pioneers and leaders in technology and adoption of sustainable building codes. As early as 2007, Saudi Arabia was deemed the world’s third largest market for HVAC systems after the United States of America and India by international analysts. While traditional air air-conditioning in itself is a steadily growing market across GCC countries due to its climatic conditions,, new technologies are being fed into the Saudi and UAE markets, which are highly receptive to such innovations, fuelling growth in the HVAC technologies adopted across these countries. www.ventures-me.com Page:4 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Chapter 2. GCC Building Construction and HVAC Market Overview With demand for HVAC systems primarily stemming from building construction, the health of the construction sector in the GCC and the projects ongoing are a stellar indicator of the growing potential of HVAC systems in the region. HVAC systems are an important part of the Mechanical, Electrical, Electr and Plumbing (MEP) market comprising 24 percent of the MEP value, which are an essential and ongoing component of a building construction market and follow the business cycles associated with the construction sector closely. A brief overview of the GCC and its building construction market in the GCC provides a bird’s eye view of the market potential of HVAC systems in the GCC. The GCC and Building Construction Overview While not immune to the global economic slowdown and the downturn in business cycles after a soaring property boom between 2007 and 2009, GCC markets were hit by a crash in 2009 in real estate markets. However, these countries were shielded from the worst worst, by the prudent fiscal policies of the government and ambitious diversification plans that resulted in heavy government spending across sectors to help revive faltering building construction markets. Recovery across GCC markets in 2010 and 2011 was stead steady though uneven, with varying focus on segments across different countries of the region. The downturn also brought about a note of caution amongst the erstwhile zealous spending countries and their ambitious diversification plans as prudent regulations were we introduced to prevent financial and quality breakdowns in the speedy build up of projects. The Arab Spring too,, far from adversely affecting the GCC economies, helped shift focus to core areas such as affordable housing and social infrastructure in cou countries ntries such as Saudi Arabia, Bahrain and Kuwait. Qatar emerged as the rising star of the GCC, having witnessed unprecedented growth on the back of its Nation Vision 2030 strategy alongside its winning bid to host the World Cup 2022 football event that sped up its construction plans in line with its National Vision. UAE UAE, after making a cautious recovery from the steep fall in its property markets, emerged with renewed hopes of a more stable and cautious real estate market market, www.ventures-me.com Page:5 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 with better regulatory checks whilee Oman has plans to ride th thee tourism wave to achieve its growth targets while shielding itself from the economic slowdown. Bahrain, the worst affected of the GCC countries by the Arab Spring and the global financial meltdown due to its place as a global ffinancial inancial centre, is however, still coping with its aftermath and its construction market is making a slower recovery, helped largely by the vast government spending on social infrastructure. Commercial and residential real estate markets across the GCC now command prices and rents at a premium over their international counterparts as they are now being perceived as safe havens for investors, amid the prevailing dismal global socio-political conditions,, the regional unrests of the Arab Spring and d the European economic turmoil turmoil.. Building projects worth over US$ 57.8 billion were awarded to contractors in 2011 across all the building sectors including residential, commercial, hospitality and retail and is likely to reach US$ 65.5 billion in 22012. These strong growth signals have also prompted analysts to revise growth estimates for the GCC region upward, citing fundamentals such as its strong and consistent economic growth, political stability amidst unrest in its neighbourhood, strong oil pri prices boosting their revenues, clear-cut cut government plans and vast spending to fuel the growth across its non non-oil sectors, for the revision. The following is the list of top building projects across the GCC as of July 2012: Table 1: Major Building Construction Projects across the GCC (US$ Million), July 2012 Project Name Country Al Khairan Kuwait Residential City Project Masdar City UAE in Abu Dhabi South Obhur Saudi Arabia Project Nebras Aviation City UAE www.ventures-me.com Client Consultant Public Authority for Housing Welfare (PAHW) Masdar (Abu Dhabi Future Energy Company) Gulf Consult; Not Appointed Atkins; Kuwait Rayadah Investment Company Strata Contractor Value (US$ Million) Status Design 27,000 Flack & Kurtz Consulting Engineers; ETA Ascon; Abu Dhabi; Transsolar; WSP Group; Abu Dhabi Sulaiman Al Khorashi Office Al Ahmadiah Contracting;; Hip 22,000 Hing Contruction - Hong Kong Construc tion - Design - - 15,000 10,000 Concept Stage Page:6 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Project Name Country Client Ghantoot Green City UAE International Capital Trading LLC - Makkah Gate Cultural Oasis Saudi Arabia - New Doha International Airport Qatar Al Balad Ameen Company for Urban Development; Makkah Municipality; Sumou Real Estate Company; Makkah Gate Company NDIA Steering Committee Barwa Al Qatar Khor Project - Urjuan Riyadh East Saudi Arabia Sub Center King Faisal Saudi Arabia University in Al Ihsa - Staff Accommoda tion - Phase 2 Kingdom Saudi Arabia Riyadh Land www.ventures-me.com Consultant KEO International Consultants; Abu Dhabi Al - Contractor Value (US$ Million) Status Design 10,000 Design 10,000 - Various Contractors 10,000 Construc tion Barwa Real KEO Estate International 9,600 Company Consultants; Qatar Hamed & Ahmed 8,000 Mohammed Al Mozainy Real Estate Co. King Faisal Arch-Centre for Al Arrab University Architecture & Contracting 7,012 Engineering Company Consultant; Saudi Design Kingdom Holding Company Design Omrania Associates (O&A); Saudi Arabia & - Tender for Construc tion Contract Construc tion 7,000 Page:7 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Project Name Country Client Consultant Boubyan Island Development Kuwait Ministry of Public Works (MPW); Kuwait; Mega Projects Agency (MPA) Hellmuth Obata Kassabaum (HOK); Gulf Consult; Mouchel; Kuwait Al Ghadeer UAE at Saih As Sidirah Sorouh Estate North Bahrain Bahrain New Town Project Main File Muscat Oman Ministry Works Housing; Bahrain International Airport Expansion Phase 1 Lusail Phase Qatar II - Fox Hills Energy City Qatar Project Phase 1 Viva Bahriya Qatar Sohar Zone Free Oman Khor Dubai UAE www.ventures-me.com Contractor Value (US$ Million) Hyundai Engineering & 6,640 Construction Company /Mohammed Abdulmohsin Al Kharafi & Sons Real Sun Jin Construction Engineering General 5,400 (South Korea) Contracting of & Ministry of Transport & Communicatio ns - - Status Construc tion Construc tion Design 4,500 COWI & Partners; Oman; Larsen Architects Qatari Diar Real Estate Investment Company (QDREIC) Energy City PFC Energy TAV Construction; 4,000 Turkey; Consolidated Contractors International Company (CCC); Oman 3,800 Construc tion - Design Design 3,000 United Development Company (UDC) Sohar International Development Company Dubai Culture and Arts Authority SRSS Associates & Various Contractors Mott MacDonald; Oman Premier International Project Kling Dubai - Consult; 2,000 Construc tion 2,000 Construc tion Design 1,907 Page:8 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Project Name Country Janayen Al Bahrain Hamala Housing Development Jaber Al Kuwait Ahmed Al Sabah Hospital New Oman Terminal at Salalah International Airport Kuwait Kuwait Cancer Control Center Expansion 20,000 Low- Bahrain cost Housing Project in Bahrain Phase 1 Amphibious Qatar 1000 Mutrah Redevelopm ent Oman Eco - Resort Oman at Ras alHadd Client Consultant Contractor Al Salam Bank Manara Developments Company Abdulla H. Al Mutawa Sons 1,325 Group (AMSG); Saudi Construc tion Ministry istry of Health; Ministry of Public Works (MPW) Ministry of Transport sport & Communicatio ns Gulf Consult; Kuwait Arab Langdon Wilson; Contractors 1,057 Kuwait Construc tion COWI & Partners; Oman; Larsen Architects Construc tion Ministry Health; Kuwait Value (US$ Million) Galfar Engineering & 760 Contracting; Oman; Larsen & Toubro of Pan Arab Alghanim Consulting International 597 Engineers General Trading (PACE) & Contracting Status Construc tion Ministry of Housing; Bahrain; Naseej BSC - Chase Perdana Sdn. Bhd. 550 Construc tion Seaquest Marine Technology Plc Muscat Municipality; Haya Water (OWSC) Ministry of Tourism; Oman; Qatari Diar Real Estate Investment Company (QDREIC) Giancarlo Zema Design Group 500 Concept Stage - 500 Concept Stage Dar Al Handasah; Oman; Spillis Candela DMJM - Design 300 Source: Ventures Onsite MENA Projects Database www.venturesonsite.com www.ventures-me.com Page:9 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 GCC HVAC Market Overview The HVAC system mainly comprises five main components, which have been together considered for the computation tation of demand /market size of HVAC systems in the GCC. These include the following: Air Handling Unit (AHU): These are devices used to condition and circulate air as a part of the HVAC system. It comprises a large metal box with a blower, heating or cooling elements, filter racks or chambers, sound alternators and dampers Fan Coil Unit (FCU): This compris comprises es a small terminal unit with only a blower and a heating and/or cooling coil (heat exchanger) Chiller: This is a machine that removes heat from a liquid via a vapour compression or an absorption refrigeration cycle. This liquid is subsequently circulated through a heat exchanger to cool air or equipment as required Pump: It forms the centrifugal core of any HVAC system, supporting the operation of chillers, boilers, cooling towers, water systems, and water distribution systems Cooling towers: These are heat removal devices used to transfer process waste heat to the atmosphere As HVAC systems account for as much as 60 percent of a building’s energy costs, the distribution of energy between these components assume significance in the design and iinstallation nstallation of an HVAC system. The percentage of distribution of energy costs are Chillers 52 percent, AHU 22 percent, percent Pumps 22 percent and Cooling Tower 4 percent. The market for HVAC systems was estimated at US$ 6.2 billion as of 2011 and growing at an average rate of over 3 percent annually annually,, is divided into district cooling which comprises a third of the market and the remaining two two-thirds thirds is for air conditioning equipment. equipment There is a thriving market for HVAC components and spares as components are sub subject ject to wear and tear and replacement over a period of time and given the maturity of the building construction market and the prevalence of HVAC systems in the GCC, this is a market that also offers ggreat potential. The following figure represents the estimated timated and forecast demand for HVAC systems by country in the GCC between 2010 and 2012. www.ventures-me.com P a g e : 10 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Figure 2:: GCC HVAC Systems Market Demand/Size by Country (US$ Million), 2010 2010-2012 7000 GCC HVAC Systems Market Demand/Size (US$ Million) by Country, 2010-2012 2010 HVAC Systems Demand (US$ Million) 6000 5000 4000 3000 2000 1000 0 2010 2011 Saudi Arabia UAE Qatar Oman 2012 Kuwait Bahrain Source: Ventures Middle East Analysis Driven by the four key pillars common to most GCC markets namely, growing and affluent population fuelling demand, extreme climate making HVAC more of a necessity than a luxury, a highly resilient and fast adaptive construction market receptive to the latest technologies ccausing ausing prices to be driven down for components, and large scale diversification programmes leading to mushrooming of new businesses, the HVAC market in the GCC is likely to recover from the past gloom passed on by the construction slump of 2009 and 2010 and d grow at a steady pace in 2012 as against 2011. Saudi Arabia, Arabia the world’s third largest HVAC market, has the largest share of the GCC HVAC market and is likely to continue to grow rapidly, rapidly spurred by the massive government spending on mega projects, social housing housing, and educational development schemes that includes construction of 13 new universities between 2010 and 2015. The recovery of the UAE construction markets, the traditional testin testingg ground for new technologies in the HVAC market, is also a positive sign heralding growth for the GCC HVAC market market, as also the ambitious plan to host the World Cup 2022 Football event by Qatar Qatar, which involves construction of eco-friendly eco stadia, environmentally entally sustainable cooling systems for its stadia, hotels, commercial and residential complexes to www.ventures-me.com P a g e : 11 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 accommodate players, organizers and tourists is another driver attractive enough for HVAC manufacturers to watch out for in the coming years. www.ventures-me.com P a g e : 12 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Chapter 3. New Technologies in the GCC HVAC Market For a highly evolved construction market with demand from a highly affluent population and government spending heavily on mega projects, air air-conditioning conditioning has gradually moved beyond simple air-conditioning air systems for or households into more intricate and sustainable systems that cover entire buildings and use technologies such as Variable Refrigerant Flow (VRF) which have evolved into advanced air conditioning systems that provide customizable temperature control funct functions ions for each user within a building. In the GCC, building management systems focus on energy efficiency and sustainability as the key operatives for technologies adopted in HVAC systems. Variable Speed Drives (VSD) and Variable Air Volumes (VAV) are other er commonly used technologies in HVAC systems. VSDs are used to regulate the speeds of HVAC systems that use less than its installed cooling or heating capacity when required resulting in energy savings and efficient part load operation and operating cost costs. s. An example of a green project using VSDs to save power is that of Mecca’s Holy Mosque in Saudi Arabia. Another popular technology in the GCC is that of evaporative air-conditioning conditioning as against traditional refrigerated air conditioning that consumes 20 percent less energy than the traditional air conditioning technology. The technology has currently been introduced only in UAE markets in a number of projects such as Al Wasl vehicle testing centres centres, large commercial kitchens for hospitality and a catering companies in Ruwais, the outdoor dining area for Fenyala Restaurant at Qanat Al Qasba Qasba, the Lucy switchgear manufacturing plant, RAK Ceramics’ kiln area area, leisure and heritage destinations like the Sharjah Heritage area successfully owing to the extremely hot climatic conditions suitable for this technology. Heat Recovery Ventilators (HRV) are another effective technology adopted in GCC HVAC systems that aid in making mechanical ventilation more cost effective by reclaiming energy from exhaust airflows. air Using heat exchangers to reclaim hot or cool incoming fresh air, HRVs help reclaim 60 to 80 percent of the conditioned temperatures that would otherwise have been lost. Thereby, the cooling loads on HVAC systems in climatic conditions such as the Gulf region are significantly reduced and moisture is also transferred by these systems from the humid outdoor air stream in summer to the exhaust air stream. www.ventures-me.com P a g e : 13 Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 Heat recovery wheels are yet another energy conserving technology that use an aluminium wheel coate coated with silica gel that transfers moisture through absorption. As the wheel rotates, it will absorb the hot air from the outside through the silica gel and cool it to lower temperatures enabling transfer to AHU’s subsequently with a significant savings in eenergy nergy consumption. This technology meets ASHRAE ventilation and energy standards. Energy conservation is again achieved with the Enthalpy control technology that redirects cool outside air into the system when the outside temperature is lower or more favou favourable rable than inside the building. The Mirdiff City Center Project in UAE is one example of the use of the Enthalpy control technology in its HVAC system that has helped in significant electricity savings. The world’s second largest tower Burj Dubai has also used an advanced district cooling technology involving a thermal ice storage facility that produces tonnes of ice slurry in off peak hours such as the night that saves electricity costs. Thermal energy storage using ice makes use of large scale heat from fusion of water, while using a fraction of the space needed by conventional cooling equipment for storage. The ultimate aim of a HVAC system is to optimize energy efficiency and reduce costs of operating a heating/ cooling and ventilation system by as much as 35 to 40 percent and achieve green building standards of LEED and ASHRAE which are achieved through these latest technologies. www.ventures-me.com P a g e : 14
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